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Small Cap IPO Watch: North Stawell Minerals [NSM:ASX]

north stawell minerals nsm gold mining company review

Investors with a penchant for history will find some intriguing aspects to the North Stawell Minerals (‘NSM’ or ‘the Company’) IPO which closes on 28 August 2020.

The Company was established for the primary purpose of exploring and developing a gold mine site close to the Stawell Gold Mine (SGM) in Victoria, which has produced in excess of five million ounces of gold. Arete Capital Partners is spinning out acreage north of its resurrected Stawell Gold Mine into North Stawell Minerals, as it seeks further multimillion-ounce deposits.

Arete Capital Partners will operate the mine and will own 3.33% of NSM, post-listing. Arete Capital Partners, is chaired by Hugh Morgan, former CEO of Western Mining Corporation. Arete are intimately familiar with the area and plan to return the Stawell gold mine to production by expanding and utilising existing exploration programs to identify new viable resources.

 North Stawell Minerals has struck a cooperation deal with Stawell Gold Mines to share facilities and expertise. Of significance is the fact that North Stawell Minerals has acquired a large historical geological database from SGM in relation to the regional exploration and mining tenure, comprising almost 50 years of modern (1970s onwards) data. NSM believes that access to the geological data is a very beneficial endowment as it seeks to build a Stawell-specific exploration knowledge base, which is expected to save considerable time and money in exploration targeting. The technical team has commenced incorporating paper records into an integrated digital database.

It will use SGM’s Magdala orebody as an exploration model to test 51km of northerly strike extension of the known Stawell Mineralised Corridor. This corridor extends over 250km of strike length. North Stawell Minerals chairman Jerry Ellis said the company believes there is the potential for the discovery of a large gold mineralised system in this corridor. Jerry Ellis is a former chairman of BHP and is a Rhodes Scholar.

The initial public offering of 40 million shares at $0.50 per share is being led by the 54% owner Leviathan Resources, part of the well-known Victor Smorgon Group. The present majority shareholder will dilute to a 36% stake following the listing of North Stawell Minerals, scheduled for 16 September.

SGM is currently owned by the Victor Smorgon Group. The Smorgon Group was built over the years by the late Victor Smorgon and activities ranged across many industries including steel, meat exports, plastics and glass. It had its origins with Victor Smorgon’s father who, after arriving in Melbourne in 1927, opened a kosher butcher’s shop.

The State of Victoria hosts one of the world’s largest orogenic gold provinces and was Australia most prolific gold producing area for nearly 100 years, from the 1850s to the 1940s, before being surpassed by Western Australia. Victoria has recently experienced a resurgence of exploration interest following the discovery of high-grade gold in 2015 at Kirkland Lake Gold Ltd’s Fosterville Gold Mine, near Bendigo. Kirkland Lake Gold defined a 2.7Moz gold Mineral Resource exceeding 30g/t Au and produced 619Koz of gold in 2019, making it one of the world’s most profitable gold mines. Interest in Victorian gold exploration has subsequently expanded with major gold producers and junior exploration companies committing to exploration programmes.

Stawell is acknowledged to be a corner point of Victoria’s ‘Golden Triangle’, responsible for over 66 million ounces of combined historical gold production, dating back to the 1850s.  The Stawell gold mine is located adjacent to the township of Stawell, 250km northwest of Melbourne and home to the renowned foot race, the Stawell Gift.

NSM aims to be a junior gold exploration company with interests in three highly prospective gold tenements located north of the Stawell Gold Mine.

The Company is led by an experienced team of mining industry professionals with a proven track record of mineral discovery and production and is focussed on exploring its tenements for major gold discoveries by using modern exploration methods to improve mineralisation targeting. Arete CEO Campbell Olsen put together a crew of geologists in 2019 to review two container loads of historical data for about 160 kilometres worth of drilling and geophysics from Arete’s tenements north of Stawell.

Olsen is upbeat about the prospects for NSM in that Arete has found 17 domes that are “lookalikes” to the Magdala basalt dome where Stawell Gold Mines is mining. Olsen said core from an 806-meter diamond drillhole completed 12 months ago at the Glenorchy prospect 15 kilometres north of Stawell was “almost identical” to the 6 million-ounce Magdala dome.

This observation augurs well for the North Stawell Minerals IPO. And given the abundance of historical mining success within the Stawell region and names like Smorgon, Jerry Ellis and Hugh Morgan, this Stawell centric IPO just might turn out to be a gift.

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