BCN - with the good write up in the speculator. If it can crack 1.9 - 2 cents will likely run.
PORTFOLIO POINT: Gold prospector Beacon Minerals snares a 400% profit on a smart market play. We boost our holdings ahead of renewed drilling.
Our West Australian gold prospector Beacon Minerals Ltd (BCN) has scored a paper profit of 400% on a well-timed investment in emerging Queensland miner Consolidated Tin Ltd (CSD) all in the space of about two weeks.
This underpins Beacons strong cash position to accelerate drilling on its Lake Barlee project covering 300 square kilometres of exploration tenements 200 kilometres north of Southern Cross in WA (for more on the Lake Barlee project, click here).
Beacon announced a mining lease application had been lodged over a 12 square kilometre block within its exploration tenements on October 6. The block embraces the shallow, high-grade Halleys East discovery with a JORC-inferred resource of 299,000 tonnes of 6.7 grams/tonne gold for 64,000 ounces of contained gold.
A week later, on October 13, the company announced a renewed drilling program to begin in November of in-fill drilling on three other nearby identified gold targets, together with the commissioning of a high-resolution aeromagnetic survey over the Barlee tenements.
At the foot of that announcement, almost as a throwaway line, Beacon managing director Darryl Harris revealed the company had taken a strategic position in Consolidated Tin Mines Ltd, which is developing the Mount Garnet tin prospect in Queensland.
Beacon, in fact, is now the tin miners biggest shareholder with a 12.35% stake (for more, see Has tin become a precious metal?).
He added that Beacon had completed due diligence on Consolidated Tin and believed it to be significantly undervalued with a highly prospective tin project in the final stages of development
Harris an engineering metallurgist of 30 years experience also confirmed he had joined the board of Consolidated Tin as a non-executive director but reassured Beacon shareholders that the company remained focused on the exploration and subsequent development of the Barlee gold project.
The first hint of Beacons diversification appeared in an announcement from Consolidated Tin on October 7, that it had successfully placed 50 million shares at 4 each, being the shortfall of a one-for-one entitlement issue of 54.5 million shares offered to existing shareholders last June.
Those so-called professional and sophisticated investors who took up the shortfall can thank the many existing Consolidated Tin shareholders who kept their hands firmly in their pockets. For since the successful placement at 4 was confirmed on October 7, the Consolidated Tin shares have soared to a peak this week of 16.5.
Beacon, with a 14.5 million shares at a cost of $580,000, has seen its holding quadruple to a value of $2.32 million at 16.
With Beacons Harris joining the board of the tin miner, there is no suggestion that the gold prospector sees it as a short-term play and a chance for it to cash in its stake. Nor does it need to for Beacon remains well cashed-up.
Beacon is yet to release its report for the September quarter. At the end of June the company had remaining cash of $4.187 million after meeting that quarters costs of $1.135 million, including exploration expenditure of $944,000.
The companys estimated outflow for the latest September quarter was $1.77 million (including $1.5 million on exploration). During that quarter, Beacon raised another $2.3 million through the exercise of 229.95 million listed options at 1 each, taking issued capital to 980.07 million shares.
The impending September quarterly report, due to be lodged with the ASX in about 10 days, should confirm Beacon has remaining cash of $4.7 million less $580,000 invested in the Consolidated Tin placement.
Along with other tin hopefuls, Consolidated Tins share price has been driven by the surge in the world tin price, now above $US26,800/tonne and well above its previous peak in May, 2008.
Consolidated Tin has so far established a JORC-compliant resource of 7.3 million tonnes of material grading 0.6% tin at its Mount Garnet project area, with drilling continuing ahead of a planned pre-feasibility study on opening a mine.
Hopefully, that may be reflected in Beacons favour as it, too, expands field work on its gold prospects. With 980 million issued shares at 1.6, Beacon carries a market capitalisation of $15.68 million, backed by estimated cash of $4.1 million and shares in Consolidated Tin with a market value of $2.3 million.
That leaves a value of less than $10 million on its extensive gold tenements recognised as elephant country for the discovery of previous large-scale mines on the northern Yilgarn greenstone belt of WA (For more, see The Speculator column from September 8.)
