There's a flipside to being undervalued, according to Minotaur Exploration managing director Andrew Woskett, whose business has a $21 million market cap.
The Adelaide-based explorer, which took over Perth’s Breakaway Resources in July 2013, believes it is about two years away from progressing its copper, gold and nickel projects in Queensland and Western Australia to a point where it could begin the transition to producer.
Minotaur was named the Queensland 2014 explorer of the year, a recognition from industry and the state government for its discovery of high grade copper, gold and zinc at its Artemis deposit, and Mr Woskett is upbeat about the company’s perceived and potential value.
He believes Minotaur is significantly undervalued, with an implied enterprise valuation of its five core projects near Cloncurry in Queensland and WA’s Goldfields of only $4.9 million.
“It’s not necessarily a negative because it really pinpoints the fact that there’s buying opportunities for people who see cycle turning in due course, as it always does,” Mr Woskett said.
Minotaur’s share price peaked at 28 cents last year in August on the back of positive news from its Artemis deposit, but has since fallen, trading around 12 cents this month.
“We’re trading back at pre-discovery prices, so all of the benefit of that discovery has been completely washed out in the market,” Mr Woskett said.
While many juniors are cutting back on exploration activities to save money in a challenging environment, Mr Woskett said Minotaur had almost doubled its exploration expenditure since spending $1.5 million in the September quarter.
“We want to maintain a healthy pace of activity because we don’t want our overheads to be a significant component of our total spend so in the last quarter of last year we spent almost $2.7m,” he said.
In contrast to many explorers and miners, which are letting geologists and geoscientists go, Minotaur is planning to hire a small number of staff across all its projects in the near future.
“It’s very unfortunate that there are a number of companies that have had to hibernate and it’s particularly unfortunate that they’re not doing the things that they were created to do,” Mr Woskett said.
“The only way you’re going to get success in this game is go out and drill holes ... if you’re not doing that then your overheads take up greater proportion of total expenditure and that’s a very bad look.”