Home is where the gold is
Mark English, Managing Director of Auric Mining Ltd (ASX: AWJ), is proud to live and work in Perth. A chartered accountant by profession, he likes to calculate risk and return before taking the plunge.
Luckily, with a gold geologist literally in front of him, he didn’t have to look far for his current ASX business.
Mark’s father traveled for his job with a multinational company and as a child Mark moved around quite a bit – he had attended six primary schools in three states in Australia by the age of 11.
Once they settled in Perth and Mark went to high school and university, he felt he had come home.
“I graduated with a business degree in the late 1970s and graduated as a CPA in the early 80s,” Mark said. Proactive.
“I’ve worked in London and Sydney, but really I’ve worked in Perth for most of my working life.”
WA is the natural home for mining companies in Australia, especially small-cap explorers and developers. “It’s our bread and butter. I have been involved in this space for the last 40 years of my life and acted as a director of a few public companies during that time.
When your neighbor is a geologist
Mark’s conversations with one of Auric’s other future directors, Stephen Strubel, a Melbourne financier, and John Utley, a neighbor who, incidentally, was a gold geologist, ignited the spark that became Auric.
“John and I, like you do on a Friday afternoon over a few beers, talked about golden opportunities and we raised funds in 2019 to give John the mandate to go after opportunities in a jurisdiction leading, in Australia or Canada,” said Marc.
The start-up set out to relieve a number of companies of their gold holdings while focusing on the battery metals market.
“John went 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 money and bought it back from them in September 2020.”
Mark and John then found another company, Mincor Resources NL, which was looking to offload its gold holdings to focus on nickel again: “We also bought a project from them,” Mark said.
“We completed the two transactions in September 2020, registered a prospectus with ASIC at the end of November 2020, raised approximately $7.3 million and listed on the ASX on February 12 the following year.
In June 2021, the company acquired further properties from Neometals Ltd (ASX:NMT, OTC:RDRUY, AIM:NMT), which had “climbed higher in the food chain” and was no longer interested in exploration gold, moving instead to 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
The Auric outlook is concentrated in WA and centered on Widgiemooltha, approximately 100 kilometers in either direction between Kalgoorlie and Norseman. It’s strategic.
“It is a very good province, mainly known for nickel rather than gold, but there are companies with good large gold mining operations in the area, especially Karora, a Canadian listed company,” Mark said. “It’s the blue belt of mining in WA – all of our properties are located there.”
“Everything is beautiful and easy. The location is fantastic – you have everything you need to run a good mineral exploration development company in Kalgoorlie. You are not in the Kimberley, the Pilbara, Mongolia or Mozambique. It’s a solid Tier 1 infrastructure.”
“Our Munda project is only five kilometers off the tarmac, and the construction of a short gravel road in WA is nothing unusual. We are 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 don’t understand the legal systems.
“Home from home and Covid has taught us that there’s nothing wrong with being in Aussie’s little old downtown.”
Safe and autonomous
“The geopolitical risk has come to the fore, especially over the past year, may God help the Ukrainian people.
“Covid has made people focus a bit more on where they are and what they’re doing, focus on things that are close and you can control.
“If you had tried to run a small exploration company out of Perth for the past two years and all your projects were in Africa, you wouldn’t have done anything. You would have just spent money and gotten next to 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 tough times, and there’s no denying that WA is vast.
Mark stresses that the company’s operations are self-sustaining. One of the company’s projects is Jeffrey’s Find, approximately 45 kilometers east of Norseman on a granted mining lease, which contains approximately 47,000 ounces.
“The plan is to transport it 230 kilometers to Kalgoorlie, to Lakewood, or something closer like Higginsville with Karora, where it is processed and we generate free money from this event,” said Mark said.
“It will give us capital to continue our exploration and development activities in other places without continually going to shareholders and the market and raising funds and diluting ourselves.”
Gold – “a nice and safe place to be”
So why gold, rather than the nickel, lithium and battery metals that are all the rage right now?
The good fortune of John’s expertise tells part of the story, and Mark adds: “Gold is pretty easy, nothing wrong with gold.
“The gold space is now different than it was two years ago. Lithium, rare earth elements (REE) and nickel have all but exploded lately, while gold is a bit outdated, that’s not the feeling right now.
“It’s daggy – but there’s nothing wrong with daggy. Your ugg boots are daggy too, but they keep you warm.”
“Gold is used in many processes and end products. And with the price up nearly AU$2,550 an ounce, you’re in for a lot of money. »
“I think lithium and battery metals and all of that stuff is fantastic, and we need that,” Mark said. “But gold is simple – really easy to mine, process and turn into cash, and adoption of the commodity is always going to be very strong.
“There’s a little heartbreak in the world, and gold is a nice, safe place.”
So what does it take to be a successful small cap?
For Mark’s money, a successful small cap needs physical assets and a team of experienced directors with diverse skill sets.
It is also advantageous to focus on one area, geographically and geologically.
“Don’t spread yourself too thin – the cost of managing projects anywhere is colossal,” Mark said.
“Watch your depletion rate and where you spend your money – we spent 75% of our money on mining and mining-related activities. We have a small office. You don’t need flashy desks, it doesn’t create wealth.
“The only thing that’s going to create value for our shareholders is to increase our gold reserves, and you’re only going to do that by drilling or by acquisition.
“We have purchased exceptionally well and have been able to grow through our exploration activities. We now control approximately 250,000 ounces of gold in the ground.
“We are grossly misunderstood in the market. We have a market capitalization of approximately $8.5 million with approximately $1.5 million in the bank, representing an enterprise value of $7 million.
“You would be hard pressed to find a company on the ASX with 250,000 ounces of gold, most in the listed category, with an enterprise value of $7 million.”