under the radar

Mithril Resources managing director David Hutton hoping for Midas touch in gold exploration

Julian Swallow
April 05, 2013 11:30PM

As managing director of Mithril Resources, David Hutton is looking to mine the most value possible from a resources company that has flown under the radar of many investors.

He has moved Mithril Resources from a copper and base metals explorer concentrated on projects in the Northern Territory to one that hopes shortly to become a gold producer through its Spargos Reward gold mine in the eastern goldfields of Western Australia.

Drilling at Spargos Reward, which the company bought from Breakaway Resources for $200,000 in September, has unearthed drill intercepts of up to 13.67g/t and suggests the presence of a high-grade gold shoot that extends vertically to 400m.

Not only does the Monash University-trained geologist hope this will give the company a short-term path to production, he hopes it will give Mithril Resources a year-round story to tell the market and attract investors.

"One of the principal weaknesses of the company upon my arrival was that all its projects were located within the northern half of Australia," he says.

"The fundamental issue was that they're all subject to the northern wet season.

"Where that has a negative implication is that for a whole quarter you have no activity, you have no news flow," he says.

"And you're one of a thousand companies out there clamouring for money.

"If you're not out there putting stories, activities and news flow to the market, you drop very quickly off the investor radar."

The rationale behind the move for Spargos Reward is several-fold.

The first is that need to "weatherproof" the company through a year-round suite of projects.

Spargos Reward also permits the company to exploit proven assets in an area with good existing infrastructure lowering Mithril's risk profile.

"The obvious thing to do was to look for an advanced asset in an area that was accessible all year round and in a commodity that was lower risk and a commodity that was well understood," he said.

"So the obvious thing was to get into gold ... and if you're looking for gold you go to the goldfields."

And all this within an environment in which the global gold price has hit a height of $1790.30 an ounce in the past year.

In recognising Spargos Reward's potential, Mr Hutton's West Australian links have been formative.

Before joining Mithril Resources, Mr Hutton was managing director of Breakaway Resources from May 2010 to June 2012, so he understands the project well.

Spargos Reward sits astride the Coolgardie-Esperance Highway and was mined from 1936 to 1942 and again from 1989 to 1991. It was last drilled in 2009.

Mr Hutton, who has worked for MIM Exploration, Forrestania Gold, Western Metals and LionOre Australia in a 22-year career, says he has no regrets about crossing the Nullarbor last year to join Mithril Resources, bringing his family with him to Adelaide.

"There is a culture in this state for mining and exploration," he says.

"Certainly it's a smaller group than over in the west, but I'd argue that's it's probably more tight-knit and it's a bit more collegiate than over in the west too."

He points to the existence of bodies such as South Australian Chamber of Mines and Energy as evidence of the growing maturity of the sector, along with the advantages offered by population and geography. "There are couple of really key advantages to operating a business out of Adelaide," he says.

"First of all, the universities here generate fantastic geologists, so there is access to good skilled people.

"Adelaide is amazingly centrally located in Australia, so I can get to any one of my project areas and shareholder bases within a two to two-and-a-half hour flight.

"I think thirdly, coming out of Adelaide there's no longer the whole 'oh, you're not part of the whole west coast scene."' "You don't have to be and the fact you're not caught up in that whole intense fish bowl, you can sit back and cooly look at opportunities," he says.

"And people don't see you coming, quite frankly."

With an eye on those opportunities, Mithril Resources is once again gearing up to resume its exploration work at its Eastern Arunta Project Area in the Northern Territory as the wet season surrenders its grip on the country's north.

The next steps for the company include heritage clearance surveys, ground geophysics and reverse-circulation drilling focusing on its Illogwa IOCG area near Alice Springs.

All of which makes Mr Hutton optimistic that the story of Mithril Resources will no longer remain buried beneath the headlines.

"I think 2013 is already shaping up to be a dramatically different year ... and by the end of the year I think this company will be in a very interesting position and hopefully it will have made a significant copper discovery or it will have a potentially economic gold proposition," he says.