For mining sector specialists who have become accustomed to hard times, the recent jump in share prices from the likes of Greatland Gold PLC (LON:GGP) and Eurasia Mining PLC (LON:EUA) looks nothing short of miraculous.
Deep into a bear market, shares in both companies have also jumped by more than 100%.
The respective market capitalisations of these two juniors are now £167mln and £194mln, although Eurasia’s shares are now suspended so that is not a live number.
What are we to make of this?
Eurasia does have some modest alluvial PGM production at one of its Russian sites, but by and large these two companies should be treated as representative of the exploration and development end of the junior market, rather than the producers.
The simplest explanation of course is that the quality of the respective assets - PGMs in Russia for Eurasia and gold in Australia for Greatland – is at last starting to excite investors. In Eurasia’s case, the Monchetundra project is all about the two million ounces of palladium and platinum it holds. In a market where the palladium price has been touching 30-year highs, Monchetundra’s high palladium content has attracted a lot of attention, including a Chinese joint venture partner which the speculation says may now be on the cusp of making an offer.
And in the case of Greatland’s Havieron gold project in Australia’s Paterson Range, joint venture partner Newcrest (ASX:NCM) is so impressed that’s it’s drilling all-out and hopes to have a resource out by the end of the year. The speculation here is that it’ll be at least four million ounces, and possibly higher than five-and-a-half million.
So, two exceptional projects bringing renewed interest into London’s junior market.
Seasoned investors will know it isn’t always that simple though. In a market were liquidity can be a real issue, it takes sentiment as well as quality to get prices really on the move.
And it’s here that both Greatland and Eurasia have played a key role. Because although the share price jumps in both companies have been spectacular since the New Year, in fact both also performed strongly throughout 2019. And that in turn has helped bring investors back to the idea that there is real money to be made from exploration and development.
So the scene has been set whereby positive newsflow can once again have a significant effect on share prices. Shares in Katoro Gold PLC (LON:KAT) jumped by more than 300% after it signed a deal on some old South African mine dumps, shares in Shanta Gold (LON:SHG) have risen by 25% since December, and were up significantly when it acquired new exploration ground in Kenya from Barrick, shares in Chaarat Gold (LON:CGH) have risen by 33% since they dipped in December, shares in Rockfire Resources (LON:ROCK) have more than tripled since November, and shares in Conroy Gold (LON:CGNR) are up 350% since the start of the year.
Not everyone’s a winner, of course. With doubts about the global economy still lingering in the wake of the coronavirus, base metals companies haven’t done so well. And even in the precious metals space, stalwarts like Condor Gold and Jubilee Metals are holding their own, but hardly flying. For those with more marginal projects, funding is as hard to find as it ever was.
And yet, it seems clear enough that those companies that can provide interesting projects, decent liquidity and positive newsflow will be met by plenty of appetite and interest in the market. Whether that selective positive sentiment becomes general any time soon remains an open question. But London’s junior mining market is alive, and for now that’s progress enough.