Spartan rubs shoulders at Diggers and Dealers with mooted acquirer Ramelius
Spartan’s Simon Lawson likes coffee almost as much as high grade gold
Lawson wants to make Dalgaranga ‘as big as possible’
The stars aligned on the final morning of Diggers and Dealers with the showdown between Never Never gold discoverer Spartan Resources (ASX:SPR) and Ramelius Resources (ASX:RMS), which has emerged as the logical acquirer for the major WA gold find after nabbing a top ranking 18% stake a little over a month ago.
Speaking one after another the fireworks many hoped for were replaced by gentility, as collegiate tones dulled hopes for a verbal punch up or hostile takeover a la Succession.
Rather more quaint, it seems.
RMS boss Mark Zeptner likes the look of Spartan’s Dalgaranga, including its 1.49Moz at 8.07g/t Never Never resource, but still says it’s a nice to have, not a must have despite the obvious synergies of plugging something thick and high-grade into its Murchison gold network just 65km from its Mt Magnet mill.
Lawson doesn’t regret making a comment that Ramelius didn’t have the firepower to take over Spartan after its shares surged on the announcement of the upgraded Never Never and maiden Pepper resource.
“I was feeling pretty optimistic and quite sort of heady that day,” he said.
“I actually think it was, it’s pretty accurate. And look Mark and I have spoken on it, and we’re good. It’s not that I was poking fun at his lack of firepower, it was more that we’re quite pricey as an exploration company. I think there’s no one that would disagree with that.”
They’ve previously had a coffee, Lawson said, something he apparently doesn’t mind.
“I always like a good chat. I like coffee,” he said talking about potential acquirers for Spartan.
“I’ve been looking at this the whole time thinking, who doesn’t want high-grade gold in front of processing infrastructure? It’s very difficult to build things, labour costs are high, infrastructure costs are high. There’s execution risk everywhere.
“I think there’s some pretty good recent examples of that. For me, I’m building this as big as I can, we’re going to bulletproof it with grade, because that’s what I know. As soon as you build a project with grade, you’re very much more insulated to those fluctuations in costs.
“And I think a lot of our peers see the same thing.”
After a 6% drop this morning, SPR is down 19% since July 24, but it still sits with a strong valuation of near $1.2bn, with Lawson noting the company, which also boasts lower grade open pits and a mothballed 2.5Mtpa plant, has far outrun gold producers in its value uplift this year (+107%).
That’s unusual for this part of the cycle.
Cheque Magnet
Mt Magnet is the driving force behind Ramelius’ emergence as one of the most reliable mid-tiers in Aussie gold, with Zeptner pointing out it’s generating more free cash right now than any ASX gold miner aside from Northern Star Resources (ASX:NST), Evolution Mining (ASX:EVN) and Perseus Mining (ASXRU).
But it’s winding up its Edna May mine after finding a $300m cutback too rich.
Capex is likely to lift through the back end of FY2025 depending on whether it goes open pit or underground at Eridanus, a decision on which could result in an upgrade on its Mt Magnet mill.
Dalgaranga could make the Murchison an even bigger cash cow for Ramelius, which is also weighing up the development of a new project at Lake Roe 100km east of Kalgoorlie that could deliver ~100,000ozpa from 2027.
While cost inflation has been a big talking point in recent years, Zeptner thinks job cuts in iron ore, lithium and nickel will help fill gaps at lower costs.
“Come the time to build a Rebecca/Roe, a little bit of heat is coming out of the market,” he said.
“No one likes to see operations shut down. But the reality is if there’s 6000-7000 people in other commodities looking for work, I think that’s going to take a little bit of pressure off us when we go to build a new project.”
Zeptner says he liked Dalgaranga being in Ramelius’ backyard and that its mineral resource came out as expected.
But there seems no commitment on a bid yet, with RMS also saying it has no intention of going back for another stab at Westgold Resources (ASX:WGX) after its merger with TSX-listed Karora Resources last week.
Interestingly, Lawson, who compared the excitement of the past year to his early days watching the enormous market growth of Bill Beament’s Northern Star Resources (ASX:NST) as one of its rock kickers, sees analogies between Dalganraga and the ancient Mt Magnet field.
“I’ll make it as big as possible. And what I find really interesting, and I probably should have made the association up on the stage again, referring to Mount Magnet is not by mistake,” he said.
“It’s not a nearology thing. This is not an exploration thing. That’s a 6 million ounce system that’s had 100 years of work on it.
“We are almost 3 million ounces now at Dalgaranga, only 65km away, and it’s got exactly the same types of structure. So I don’t think there is a world where I would give it up unless we were rivalling that kind of size.
“And I think that’s where our shareholders heads are at as well.”
At *, we tell it like it is. While Spartan Resources was a * advertiser at the time of writing, it did not sponsor this article.
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