Australian Silver in Focus
One common complaint from those wishing attain leverage to a rising silver price has been the lack of viable investment opportunities in Australia. The major producing operations are in the hands of the larger mining houses and these barely rate a mention in the company's profile and associated ASX announcements. For those looking towards the more speculative investments (junior explorers) only Macmin Silver (MMN) thus far has attracted any meaningful interest through it's Texas silver project. This situation is slowly changing as companies are becoming increasingly confident to put forward a bullish stance on the sector, along with allocating significant capital towards silver exploration and/or project development.
Major Silver-Bearing Ore Deposits in Australia
- Cannington Qld, 43m t @ 538 g/t. (746m ounces)
- Olympic Dam SA, 2,000m t @ 3.5 g/t (226m ounces)
- McArthur River TAS, 227m t @ 41 g/t (300m ounces)
- Century QLD, 167m t @33 g/t (178m ounces)
- Broken Hill (NSW) 180 m t @ 175 g/t (1,016m ounces)
Junior Silver Explorers/Emerging Producers
In comparison to the traditional gold and base metal situations the junior silver sector has been somewhat neglected, and only recently have we seen the emergence of a new IPO with silver it's main focus. Lethargic silver prices and investor interest would hardly provide the inspiration for new listings, and those companies with silver projects have tended to concentrate on their other projects in terms of promotion and exploration expenditure. Some juniors with silver prospects include,
- Macmin Silver (MMN)…. aiming to develop the Texas Project near the NSW/QLD border.
- Golden Cross Resources (GCR)…11.4m ounces of silver at the Kempfield silver-lead-zinc-barite deposit.
- Austminex (ATX)…currently drilling at Boorawa NSW for high-grade silver. (Historical production at 269 g/t silver).
- Mt Conqueror (MCO) and Central West Gold (CWG)…prospective tenements in the New England Fold Belt.
- Platsearch (PTS)…significant tenement positions in the Broken Hill region prospective for silver.
- Malachite Resources (issue open, proposed ASX code MAR), high-grade silver targets in the New England Fold Belt.
New England Fold Belt
- Extends to the north of Sydney, through to North Queensland (South of Townsville). The Belt also encompasses regions inland (Armidale, Inverell).
- Historic silver producing region with the Conrad mine in operation in the early and mid 1900's with historical production of 600 g/t (20 oz/t).
- Considerable old workings in the region that have not had any modern exploration techniques applied to them.
- Tenements on mining leases (no significant native title issues).
- An under explored region, despite significant tenement pegging taking place during the POS weakness.
- High-grade zinc-lead-gold and tin also located in the region, which could enhance the economic parameters of moves towards silver production.
- NSW Government committed to mining studies on the region in terms of exploiting the vast resource potential.
The New England Fold Belt has all the hallmarks of becoming a region that is the scene of a considerable exploration/mining boom similar to the Gawler Craton in 1996-1997. The high-grade nature of the silver deposits (production up to 1200 g/t) offers an ideal an environment for further discoveries and investor interest as the money flow trickles down to the smaller capped exploration companies.
Lachlan Fold Belt
This region has continually promised considerably more than it has delivered to speculators of late, however with renewed interest in the exploration sector the juniors are chasing considerable gold-silver and base metals targets in the region.
- Extends through Southern Victoria through Mid West NSW and South West Queensland.
- Considerable silver production in the Broken Hill region and in the Southern Highlands region. (Kangiara and Woodlawn Mines).
- Large influx of juniors with the backing of major resource houses undertaking significant exploration programs, which enhances the opportunity of a major discovery and a subsequent regional boom.
A region that has attracted the attention of numerous junior explorers that has the potential to rise to prominence through exploration success and renewed investor interest.
LEVERAGE POTENTIAL OF THE JUNIORS
With the vast majority of the exploration companies in the New England and Lachlan Fold Belts having share prices under 20c the leverage potential is considerable and would be further enhanced by upside in the prices of both gold and silver. With companies focused on more grassroots exploration projects, the blue sky potential is clearly in the definition of resources and reserves rather than near-term cash flow potential through production.
In order for the junior explorers to flourish the speculative money flow has to infiltrate the mid-caps before we can witness a broader based sector re-rating. At this stage the juniors are holding their ground on relatively low volume in anticipation of the next stage of the precious metals bull market. The Australian silver sector offers investors considerable leverage to exploration success based on low market capitalisations and in some cases tight capital structures.
The stocks mentioned in this article are for illustration purposes only and are not be taken as investment advice. The companies mentioned are speculative in nature and are prone to significant company/market risk, and before making an investment decision investors should consult their financial advisor. The author has personal holdings both direct and indirect in the companies featured and may change these holdings without notice.