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AUSTRALIAN EXPLORATION SECTOR
ASX exploration success stories re-rating
In Kincora’s view, while Australia is often viewed as a mature mining and exploration jurisdiction, government support and smart exploration thinking are seeing juniors, mid tiers and major companies are having considerable success with new greenfield and brownfield discoveries.
This success has often included applying modern exploration techniques, gathering new data and/or applying new concepts to “old” ground, as well as “new” regions. In our opinion, credit has to be given to various Australian State and Federal geoscience departments, often working with the private sector, following recent significant investment into new public access data that has also been greatly assisting the private sector. This is particularly the case in NSW. Sensitivity studies indicate that each additional dollar spent on exploration generates an extra $11.40 in revenue, supporting a clear and favourable value propositions for governments supporting exploration2.
Recent ASX exploration success stories have been significantly rewarded in the stock market. To demonstrate this, and also benchmark Kincora’s first drill hole at the Trundle Project (TRDD001), Kincora commissioned opaxe.com to undertake a review of recent gold and copper discoveries in Australia and other jurisdictions for comparable styles of mineralisation, and the re-rating enjoyed since with continued positive exploration progress.
At that time, seven companies with recent exploration success stories had re-rated 4.7x and created over A$2.6 billion in shareholder value (pricing June 30th, 2020)3. These same companies in the next quarter (pricing ended September 29th, 2020) had in total re-rated over 8x and created A$4.6 billion in shareholder value3.
Kincora’s first hole at Trundle screened well relative to the initial discoveries within this peer group.