As a follow up to my note yesterday, I thought I would step out why I am invested in STM as the story is a bit different to most other juniors and it is this difference that I like.
The primary driver for me is that STM has three emerging assets - any one of which justifies the current market cap:
Limon - in its own right and on any given day, this asset would justify a $40m market cap for a ASX junior. From my perspective, Limon is shaping up very nicely as a low-medium grade, open pit prospect with the potential for a 1.5Moz resource to be established. At current gold prices and when you scan the cost structures for open pit operations, this in itself is a nice, tidy asset. Assuming that they can prove up the ounces here, at a $40m market cap, this has nice upside and prospectively could evolve into an operating mine as it could be developed with relatively low capex.
Brama-Alba-Melonal - adjoins Limon and has a current (early stage) resource estimate of 2.7Moz and some really interesting targets to take this to a much larger asset. Again, in its own right, would justify a $40m market cap (quite cheap for the asset) with some really interesting upside potential if they can prove this out to the 8Moz that they think it could deliver. Becomes a very long life Tier 2 style asset that requires big $ to develop, but if proven up to a PFS, they will have options as to how to take if forward (JV's etc).
El Palmar - Then we have yesterday's announcement of some really interesting trenching results backing up earlier drill results to suggest that El Palmar could evolve into a significant resource. Long way to go, but again would justify a $40m market cap in its own right.
So, for me, the attraction is that they have three very prospective irons in the fire. Often with juniors you have one interesting asset and some other ground that they are picking over, so heavy concentration of risk to the one promising asset. Here they have three interesting assets and for me, that diversifies the risks / increases the odds of an eventual pay-off. Lots of hurdles to overcome in the meantime, but at least all the eggs are not in one basket for such a low market cap entity. I would be less thrilled, less interested if this was trading with a nine-figure market cap, but at these levels, I like the odds.
This is not meant to be investment advice, but more just laying out my thinking of this company at this point in time.
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