There is nothing more exciting in small cap exploration than a new world class discovery.
....especially one in a location where nobody expected it.
Earlier this year, a company called Chalice discovered Gonneville at Julimar in WA, opening up an entirely new base and precious metals province.
Since January, Chalice has surged 1,600% to be worth over $1.2BN.
Naturally, a land grab surrounding this location ensued and now several companies are trying to copy this success.
We have a large position in the one with the smallest market cap.
We think it has the most leverage to upside in this new province right now:
Pursuit Minerals (ASX: PUR)
PUR has just announced its set to acquire a 593km2 tenement package, including ground which sits just 20km away from Chalice’s $1.2BN dollar discovery.
This is one of our HIGH RISK exploration plays - PUR is at the very beginning of it’s exploration journey - so like all ASX micro cap stocks, if you are considering an investment, invest with caution.
So what’s the story?
PUR has just entered the Julimar province, and it's at the earliest stage compared to other Julimar peers.
Chalice is the giant of course, capped at $1.2BN, and here are the players that have land in the same region as the Chalice discovery:
- Devex - $71M market cap
- Mandrake - $30M
- Liontown - $502M
- Caspin - $36M
Prior to news of today’s acquisition, PUR was capped at just $10M and looks to settle at around $15M at the time of this note.
What does this mean in the near term?
PUR has secured a prime land position and is planning on drilling in a few months time.
A quick glance at the performance of PUR’s Julimar peers see their valuations increase in the lead up to drilling. We expect this to happen to PUR.
In addition… A number of these other companies are gearing up to drill in a few weeks time. A positive discovery should lift all of the Julimar players, especially new entrant PUR.
We will be following all drilling in the region closely and will provide comment on any material updates that might impact PUR.
Remember - PUR has the smallest market cap right now giving the highest leverage to a discovery.
So what’s the plan?
Our plan is to hold our investment in PUR until the lead up to drilling early next year, when we are hoping the share price will be multiples from where it is today.
We expect the price drivers to be:
- Positive drilling results by the other nearby companies and
- Investor interest and excitement leading up to the PUR’s first ever drill.
In the lead up to PUR’s drilling event; we plan to lighten our position, ideally taking our initial outlay back and leaving the majority invested to see the drilling results - this is a typical strategy for micro cap explorers.
Our collective fingers are crossed for a huge result.
Speculating on early stage exploration drilling is HIGH RISK (but can be High reward), so remember to only invest what you can afford to lose.
Summary
We have invested in PUR and expect the share price to get lifted by drilling results from the other nearby players releasing positive results combined with excitement leading up to PUR’s first drill early next year.
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