Larvotto is going where angels fear to treadIt is interesting to see that Larvotto Resources (LRV) has agreed to buy the Hillgrove gold/antimony mine from the Administrator for $8m, including $4.89m in environmental bonds. When the previous owner purchased the mine for $4m in paper (Red River Resources), I congratulated it on buying a project that had sent every previous owner over the past 40 years broke.I have actually kept a close eye on this project since the 1970s when Vam made a reasonable go of it on the back of the booming gold price, but the initial success fizzled out due to shortages of working capital and general operational difficulties. Since then Hillgrove has been owned by a succession of owners that have blown more than $200m on trying to make it work. Red River started to get some success on drilling for gold rather than worrying about the antimony, but it couldn’t carry on.Will Larvotto do any better? Maybe, but it won’t be easy. Nothing has ever been easy at Hillgrove. It has the benefit of associations with GAGE Capital Management, a Beijing- based asset manager, and Trafigura, a large global commodity trader, but it needs very good operational management on site more than strong shareholders. It will also need access to substantial capital.Antimony is a very scarce critical metal with 85% of supply being controlled by Russia, China and Tajikistan. The price has risen from around US$6,000 pt in 2020, to US$12-14,000 pt more recently. The Chinese will happily take concentrates but payment terms will be harsh. There is also a smelter in Oman that is also looking for concentrates. Gold is obviously increasing in favour just now but the mine is not producing yet.Larvotto has taken on a challenging project. There is no reason why it can’t work but there is also no guarantee that it will. We wish it the best of luck.
RVR Price at posting:
7.3¢ Sentiment: None Disclosure: Held
