Auric Mining Ltd (ASX:AWJ)'s managing director Mark English is proud to live and work in Perth. A chartered accountant by profession, he likes to calculate risk and return before he takes the leap.
Luckily, with a gold geologist literally across the road from him, he didn’t have to look far for his current ASX venture.
Mark’s father travelled for his work with a multinational and as a child Mark moved around a bit – he had been to six primary schools in three states of Australia by the time he was 11.
Once they settled in Perth and Mark went to secondary school and university, he felt he had come home.
“I did a commerce degree in the late 1970s and qualified as a chartered accountant in the early 80s,” Mark told Proactive.
“I’ve worked in London and Sydney but realistically I’ve worked in Perth for most of my professional life.”
WA is the natural home of mining enterprises in Australia, in particular the small market cap explorers and developers. “That’s our bread and butter. I’ve been involved in that space throughout the last 40 years of my life and acted as a director of a couple of public companies in that time.”
When your neighbour’s a geologist
Mark’s conversations with one of Auric’s other future directors, Stephen Strubel, a finance guy from Melbourne, and John Utley, a neighbour who fortuitously happened to be a gold geologist, lit the spark that became Auric.
“John and I, as you do on a Friday afternoon over a couple of beers, talked about gold opportunities and we raised some money in 2019 to give John the brief to go looking for opportunities in a tier one jurisdiction, either Australia or Canada,” Mark said.
The fledgling company set about relieving a number of companies of their gold holdings while they turned their attention to the battery metal market.
“John ploughed through data and documents in Victoria, Queensland and WA, and we came across a project called Munda, owned by Estrella Resources Ltd (ASX:ESR), a company that wanted to focus on nickel. We raised some money and bought it off them in September 2020.”
Mark and John then found another company, Mincor Resources NL, which was looking to offload its gold holdings to concentrate again on nickel: “We bought a project off them too,” said Mark.
“We consummated both deals in September 2020, registered a prospectus with ASIC in late November 2020, raised circa $7.3 million and listed on the ASX on the February 12 of the following year.
In June 2021, the company acquired further tenements from Neometals Ltd (ASX:NMT, OTC:RDRUY, AIM:NMT), which had “gone further up the food chain” and was no longer interested in gold exploration, instead moving towards the battery technology space in Germany and Scandinavia.
The company also has a joint venture with Widgie Nickel Ltd: “They own the lithium and nickel rights and we own the gold rights.”
Still calling Australia home
Auric’s prospects are concentrated in WA, and centre on Widgiemooltha, about 100 kilometres in either direction between Kalgoorlie and Norseman. This is strategic.
“It’s a really good province, principally known for nickel rather than gold, but there are companies with good large gold mining operations in the area, particularly Karora, a Canadian listed company,” said Mark. “It’s the blue belt of mining in WA - all our tenements are located there.”
“Everything is nice and easy. The location is fantastic – you’ve got everything you need to run a good mining exploration development company in Kalgoorlie. You’re not in the Kimberley, the Pilbara, Mongolia or Mozambique. It’s solid, tier one infrastructure."
“Our Munda Project is only five kilometres off the bitumen, and building a short gravel road in WA is nothing unusual. We’re just in the right area.
“It’s hard enough in Australia, let alone places where you don’t know anyone and you don’t speak the native language and understand the legal systems.
“Home’s home and Covid has taught us that there’s nothing wrong with being in little old downtown Aussie.”
Safe and self-sustaining
“Geopolitical risk has come home to roost, particularly over the last year, God help the people of Ukraine.
“Covid has made people focus a little bit more on where they are and what they’re doing, concentrate on the things that are close and that you can control.
“If you were trying to run a small exploration company out of Perth in the last two years and all your projects were in Africa, you wouldn’t have done anything. You would’ve just burnt cash and achieved virtually nothing.”
A big overhead is the cost of diesel, which is why it’s good to be close to home. Fuel is the first domino in trying times, and there’s no escaping that WA is vast.
Mark points out that the company’s activities are self-sustaining. One of the company’s projects is Jeffrey’s Find, about 45 kilometres due east of Norseman on a granted mining lease, which contains about 47,000 ounces.
“The plan is to cart it 230 kilometres to Kalgoorlie, up at Lakewood, or something closer like Higginsville with Karora, where it gets processed and we generate free cash out of that event,” Mark said.
“This will give us capital to continue our exploration and development activities at other places without continually going to shareholders and the market and raising cash and diluting ourselves.”
Gold – “a nice, safe, place to be”
So why gold, rather than nickel, lithium and battery metals, which are currently all the rage?
The good fortune of John’s expertise tells part of the story, and Mark adds: “Gold’s pretty easy, nothing wrong with gold.
“The gold space is now different to where it was two years ago. Lithium, rare earth elements (REE) and nickel have virtually exploded over last little while, whereas gold is a bit passé, it’s not the sentiment right now.
“It’s daggy – but there’s nothing wrong with daggy. Your uggboots are daggy too, but they keep you warm."
“Gold is used in so many processes and end products. And with the price up near A$2,550 per ounce, you’re going to make good money.”
“I think lithium and battery metals and all those things are fantastic, and we need them,” Mark said. “But gold is simple – really easy to mine, process and turn into cash, and the take-up of the commodity is still going to be really strong.
“There’s a bit of grief around in the world, and gold is a nice, safe place to be.”
So what does it take to be a successful small-cap?
For Mark’s money, a successful small-cap needs physical assets and an experienced team of directors with diverse skills.
It also pays to focus on one area, geographically and geologically.
“Don’t spread yourself too thin – the cost to manage projects all over the place is colossal,” Mark said.
“Watch your burn rate and where you spend your money – we’ve spent 75% of our cash on mining and mining-related activities. We have a small office. You don’t need flashy offices, that doesn’t create wealth.
“The only thing that is going to create value for our shareholders is increasing our gold reserves, and you’re only going to do that through the drill bit, or through acquisition.
“We’ve bought exceptionally well and we’ve been able to expand through our exploration activities. We now control around 250,000 ounces of gold in the ground.
“We are grossly misunderstood in the market. We have a market cap of around $8.5 million with around $1.5 million in the bank – that’s an enterprise value of $7 million.
“You’d be hard-pressed to find a company on the ASX with 250,000 ounces of gold, most of it in the indicated category, with an enterprise value of $7 million.”