Long-standing readers will know that I don’t usually ‘do’ ‘sponsored’ blogs, nor do I generally ‘do’ early stage mining explorers.
That’s because I like to make up my own mind about which companies to write about (whether as a buy or a sell). And in the case of mining hopefuls, because I’m not a geologist I wait until the professional consultants come up with their detailed assessments (which can cost $1millions) of what gold or copper or nickel or lithium might be there, and what it will cost to get out it of the ground and sell.
Its also because I prefer to judge for myself whether a company is worth, not just what its owners and sponsors think it is (I’ve never met one who doesn’t think he’s far too cheap – funny that) but also what ‘sponsoring’ brokers will conveniently overlook in the interests of selling the shares to the trusting investor.
Because the sad fact about the UK stock market is that, helped by a misguided FCA, there is absolutely no objective research available (because no incentive to produce it or means of paying for it) to the private investor, nor is it available to fund managers who don’t do their own due diligence or hire the few independent ’boutique buy side researchers’ (that investors don’t hear about) to provide real objectivity. And real objectivity needs more delving under the financial bonnets than sponsoring brokers, PR merchants, or most investors are prepared to do. Its why I tend not to make immediate recommendations, but to point out in my coverage what an investor should look out for so that he can time his own investment decision.
Having said that, a good rule always has exceptions and mine have included to write fairly glowingly in 2020 about Condor Gold which, having encountered many problems subsequently related not to its merits as a miner, which have continued to improve, but to local Nicaraguan politics, I’m relieved to see looking like coming good with a sale of the company – if not as good as I originally hoped. (Just as for the brokers who were also recommending it)
All that is to say I’m about to make another exception, simply because, although it’s for a mining explorer currently presenting at Mining Investor and other shows, the story looks better (in my view) than for most such early stagers, and one which many readers, I’m sure, will want to follow. They might prefer to do this by reading our separate report on the company which is written for more experienced professional investors and is more detailed and much longer than space allows in this blog.
Barton Gold since 2021 on the ASX
Barton Gold (ASX:BGD) current market cap £22.2m @A24cents is a young Australian gold exploration company – young in the sense of listing on the ASX only just two years ago, but old and experienced in the sense that it already has producing gold assets and exploration licences in a prolific but relatively unexplored, South Australian province called the Central Gawler Craton some 120 miles North-West of Adelaide.
Barton Gold’s South Australian mining assets
Cratons’ are among the oldest geological structures on earth and typically contain important mineral deposits including gold, diamonds, copper, nickel, and uranium, the latter typified at Gawler by the giant Olympic Dam copper-gold project at the eastern edge operated by BHP, Prominent Hill copper-gold and Challenger Gold and Kalkaroo located in the centre an in the south.
Even so, the part of the Craton where BGD is located, while producing high grade gold since the S Australian gold rush in the 1880’s, still has large areas and geological features prospective for high grade gold which have not been thoroughly explored as Barton is now, already successfully, starting to do, over its 5,100 sq km of licences.
Barton looks especially interesting because it was founded and is now run by an obviously ambitious, energetic, and well connected Australian financier Alex Scanlon, who has achieved a lot in only a short time since acquiring very cheaply, those mining assets. They were cheap because when gold was much lower than now, its previous owner had to cease its gold production and enter administration, enabling Scanlon before coming on to the market in June 2021, to buy for less than A$1million, assets now probably worth much more.
For example, through recent drilling and modern aeromagnetics, BGD has already expanded by 90% to a combined gold resource of over 1.1Moz, its two key acquire assets – a shallow open pit mine at Tarcoola sited on the Australian Transcontinental Railway which was producing up to 2018 and has enough gold left to warrant continuing to mine, and a newer, potentially larger but not yet permitted potential shallow mine at Tunkillia, 70 miles closer to Adelaide where local drilling and seismics indicates potential for considerably more. gold
A third asset is a gold milling and treatment facility at another, now depleted, high grade mine to the north at Challenger, which Barton plans to use to treat any ores it mines itself, as well as to licence to other miners for whom Challenger is the only treatment plant in the whole province. As for mining its own gold, extension drilling so far at Tarcoola has shown potential to restart mining even now, except that Barton prefers, for the moment, to spend its available financial resources to keep its exploration drilling going, before deciding whether, when, or where to process its own ore (probably with a new plant at Tunkillia) and restart mining.
Obviously Barton is still at an early stage evaluating and planning further exploration since acquiring those assets in 2019. But so attractive were they, and its exploration possibilities so prospective for finding more high grade and easily mined (in shallow deposits) gold, that Barton had no difficulty securing the services of respected mining banker Sprott Capital Partners, and brokers Canacord Genuity and Taylor Collison, to raise A$15m (@A21c) at a 2021 IPO for its initial drilling and exploration campaign. In addition, while only spending about half the IPO raise so far on drilling and surveys, Barton has already been able to secure another A$2.5m from selling gold still in process at Tarccola, and in grants from the S Australian Government, so that there was still A$8m in the balance sheet two months ago which should last well into 2024 before Barton has to raise more.
Like all early stage mining explorers of course, readers will know that capital raises are to be expected along the line until revenues come in. In Barton’s case, while nothing is certain, there seems every chance that its next drilling and exploration campaign which is about to start, will have generated enough new prospective gold or drilling targets for the shares to surpass the ipo price before any further funding becomes necessary. That will be helped if gold, as many expect, continues to rise, and in any case Barton still has gold remaining in its Challenger plant circuits to sell, and leases on some of its property to let which will help.
At this early stage Barton is valued (on its gold ‘in the ground’) cheaper than the Australian explorers (generally bigger) that it considers its peers on the ASX, yet it is the only one with its own processing plant.
Barton’s ambition is to become a mid-sized gold producer. Whether it will is not for me to say. But it seems on the way to expansion, whatever the end result. Just one example of what it has achieved in less than four years is to establish that the newer Tunkillia prospect already looks capable of being developed as a low cost open pit mine while drilling in the vicinity has found some excellent results at three other locations within 4km including 17m @ 3.20 g/t Au from 77m depth and 10m @ 4.77 g/t Au from 78m depth.
I can’t promise to keep up with what looks like being an interesting news flow before the end of this year, including the first official estimate of the additional resources being found, but interested readers can find more detail what to look out for in the longer review.