OZ Minerals’ $100 million plunge on shares in Western Australian copper explorer Sandfire Resources has refocused attention on what is shaping as Australia’s next great copper province.
OZ Minerals’ $100 million plunge on shares in Western Australian copper explorer Sandfire Resources has refocused attention on what is shaping as Australia’s next great copper province.
It has also underlined copper’s renewed status as a hot investment following its exclusion from the federal government’s new mining tax, and a near 50 per cent price rise over the last year.
Oz, which owns the rich Prominent Hill copper-gold mine in South Australia, last week paid an average $3.87 a share to acquire a strategic 19 per cent stake in the Karl Simich-led explorer.
Sandfire first put Doolgunna, 150 kilometres north-east of Meekatharra, on the radar in May last year, when it announced wide intersections grading up to 5.3 per cent copper at the DeGrussa prospect.
After announcing an initial resource of more than 370,000 tonnes of contained copper in February, it this week made its fourth discovery and hopes to start mine construction next year.
Sandfire’s market value has consequently raced from $20 million to $530 million in a little over a year, based on current prices around $4.10.
Doolgunna leases are now among the most keenly sought in the nation.
At least 20 companies now hold permits in close proximity to DeGrussa and the host Narracoota Formation, a wide band of volcanic rocks running broadly east-north-east for more than 100km.
The aspiring Doolgunna copper hunters include an intriguing mix of high-profile local mining identities, and big and small companies, both listed and private.
Leading the pack is former Kimberley Diamonds boss Miles Kennedy, who quit as chairman of Sandfire late last year following a widely publicised disagreement with his long-time colleague Karl Simich over the company’s future strategy.
Mr Kennedy confirmed to WA Business News that he had since sold some of his Sandfire shareholding through broker Argonaut Capital, which managed the on-market share purchases for Oz.
Ironically, another Kennedy-led explorer, Resources & Investment, in April secured a highly strategic tenement immediately south of the Degrussa project area, in which it began mapping and sampling work this week.
The tenement was originally held by Sandfire but relinquished in line with standard lease obligations and taken up by private explorer Ascidian Prospecting. Since the acquisition, Resource & Investment shares have climbed sevenfold to 28 cents.
Other tenements relinquished by Sandfire now form the core of Talisman Mining’s Doolgunna tenements immediately east of DeGrussa. The blue-chip explorer is backed by former Jubilee Mines boss Kerry Harmanis, and run by Jubilee’s former executive team.
Veteran WA explorer Phil Crabb has also emerged as a key player in the region, via listed nickel miner and explorer Thundelarra Resources.
Thundelarra scored a massive coup in April by striking a deal to acquire a granted mining lease just 500 metres from the Degrussa discovery and six other nearby exploration licences held by veteran prospector Bill Richmond.
Holding the ground along Sandfire’s southern border is explorer Enterprise Metals, run by former Great Central Mines exploration chief Dermot Ryan, while Mike Doepel’s Sipa Resources holds one of the bigger Doolgunna packages immediately west of Talisman.
Great Western Exploration holds arguably the largest ground position, abutting Sipa’s ground to the south, where the Tom Bannerman-chaired explorer has identified 39 high-priority targets in an area that is largely undrilled.
Lodestar Minerals, run by former Dioro Mines chief Rhod Grivas, has secured two tenement packages north and east of DeGrussa, while explorer Ausgold, chaired by former Resolute chief Bob Pett, has ground immediately west of Sandfire’s leases, adjoining tenements held by Alchemy Resources.
Intriguingly, WA’s largest private electrical construction group, Everett Smith & Co, assembled one of the bigger tenement packages at the southern end of the Doolgunna area. The ground has since been vended into listed explorer Rubianna Resources, of which Everett Smith founder Terry Smith is now a non-executive director.
Meanwhile, Oz is not the only major company watching closely for news of any new discoveries in the area.
Mining giant Rio Tinto holds tenements north-west of DeGrussa, while Canada’s Barrick Gold owns the big Plutonic gold mine just 30km to the north, and China’s Sinosteel holds strategic leases on Sandfire’s south-west border.
