Spartan gearing up for next leg of value creation
Managing director Simon Lawson says Never Never is a globally significant gold deposit
Western Australian gold producer Spartan Resources (ASX: SPR) has been one of the standout gold discovery stories on the ASX in the past 18 months, thanks to the high-grade Never Never gold discovery.
Spartan Resources will present live at Gold Forum Americas. Go to:
https://www.goldforumamericas.com/company-session/3465/
In March 2023, Spartan was trading at just A10c and had completed a recapitalization following the suspension of mining and processing at its low-grade Dalgaranga gold project.
However, the discovery of high-grade gold just 600m from the idled plant changed the story.
Fast-forward 18 months, and Spartan shares have risen by 1310%, which is not far off an all-time high.
With a market capitalization of A$1.56 billion, Spartan will join the S&P/ASX 300 index on September 23.
While managing director Simon Lawson has admitted in the past the company was expensive for an explorer, he said there was more value to be created.
“How do we build value from here? We just keep drilling and we show a path to production with a really well-summarized and calm – I think that's the key part – feasibility study with reserves that make a lot of sense, and no obvious risk to the shareholders,” he said ahead of his presentation to the Gold Forum Americas on Monday morning.
“I just want to make sure that people understand we're going to build this with the shareholder support we have. It's been proven several times now that we can raise money from our shareholders.
“We keep delivering the exploration upside and discovery potential, and we deliver outcomes and for me, that's why our share price has got to where it is now, and all we have to do is keep doing that.”
In July, Spartan upgraded the high-grade resource at Dalgaranga to 2.48 million ounces grading 4.79 grams per tonne gold.
The Never Never resource stands at 1.48Moz at 8.07g/t, while the more recent Pepper discovery has a resource of 438,100oz at 7.66g/t.
In late August, Spartan reported a hit of 27.01m at 39.15g/t from 606.7m, including 5.1m at 121.35g/t and 7.5m at 50.72g/t at Pepper, the best intercept at the project to date.
“There's been a few people joke that if we keep finding stuff, we’re going to keep delaying things. I'm delaying it because Pepper is so significant so quickly, and it's right next to Never Never,” Lawson said.
“So if I delay the reserve and the feasibility study, based on finding half a million ounces that very likely will be a million by the end of the year, I think it would be in the best interest of shareholders to delay that by a few months, just to make sure we can get that into indicated and make it available for reserves.”
Because of the geometry of the orebody, Lawson said the company expected to be mining 14m-wide stopes.
“Our asset is not average – 14m-wide stopes, you're running 8-10 grams, you're going to pull 12,000-15,000 ounces per stope. That's like the quarterly production for most mid-cap producers from seven different areas,” he said.
“So the cost to liberate every ounce that we have is going to be, without question, industry leading, maybe not just Australia, but maybe globally. There's not many deposits being mined like that.”
Spartan’s success has attracted Ramelius Resources (ASX: RMS) as a new major shareholder.
Earlier this year, Ramelius paid A$180 million for a 17.9% stake in Spartan. Its flagship Mt Magnet operation is just 65km from Dalgaranga.
Lawson said the two companies had a good relationship and would likely catch up during the conference.
“There's probably no one better qualified in the whole of Australia to mine what we have. I've got a lot of respect for Mark [Zeptner] and his team,” he said.
Still, Lawson can see a scenario where a party other than Ramelius is attracted to Spartan.
“Someone with more horsepower could come along and say, ‘you know what, that 18% represents a strategic investment by Ramelius, we're happy to pay overs to get that 80%’ and then take the rest of the company over for X amount of dollars,” he said.
“I don't think it'll be a domestic, to be honest.
“I think Ramelius is capable, and if they really wanted to, and they're motivated, they can find the firepower.
“I like to think that there would be a world where someone, in a more global sense, may even wait for them to do that, and say ‘you did that deal and now we'll take you both out’.”