Exploration Potential, page-32

Thanks to all who make thoughtful posts
Hi Guys - Thanks for the kind words, JandJ, hoodle and goldatwidgie (Note, my name is in 2 words not 1, a la the wonderful red burgundy - which I'll crack one of when we really get going!). Thanks accepted gratefully and as a proxy for the many posters such as you two holders who repeatedly contribute thoughtful and valuable insights. You're both tagged below on particular points. Meaningful content that makes HC worth reading and contributing to. I agree HeliosUK (I like your work, too), that once the trolls invade, that's very offputting – so let's steel ourselves ...

Diversification is not for me – I prefer to focus, after ongoing solid research
JandJ – I'm always keen to read your posts. I like how you pull out quickly so much material and freely offer your obviously experienced and thoughtful insights. You're dead right – diversification is not my M.O. (but will suit many others). Greater diversification -> flattens risks – and rewards-> greater chance of 'normal' results. I strive for better than that but it's more risky and the highs and lows are more extreme. You'll know that the lows can test your patience and be quite stressful e.g. if you get it wrong it might be really wrong. It only suits certain personalities, but I continue with it for the potential higher reward. If you get it right it can be really rewarding.

Focus on almost irresistible A grade propositions - and de-risk with homework!
You've picked my thinking; if I find what I think is an A grade investment proposition why continue to invest scarce capital in say a C grade proposition?? Currently I have no C graders. I've certainly had them - and worse, unfortunately - but when I realise that I now trade them in on good ones (hopefully). I don't even think in terms of a 'portfolio' (that's not an objective, per se, for me). Rather, I think in terms of which individual stocks do I feel I almost compelled to buy. My homework/research often takes me a fair bit of time even though I try to be relevant and just focus on key value levers, and to not get distracted with interesting trivia that won't improve the odds. I find there's just not enough time to do it properly on many stocks. This helps me to not diversify.

Apparent A graders (for my targets, which usually are smaller resource stocks with not too many shares
I now only hold a few of what I think are A grade propositions. Vertex is one (I've held it since July 2022) and I expand on this below.
AHK (that you mentioned) is another - held since 2021. Although the following comments relate to AHK they show the level of knowledge that I find helpful when making a larger investment. I still regard it as an A grade proposition even though it needs cash (which shouldn't be a big deal as a CR was the start of VTX's re-rating). AHK recently lodged with the ASX a scoping study which IMO was a surprising under-statement of the Project's merits, which I think I know pretty well. That led to a share price dip when a differently presented picture IMO would have led to a price increase. Although annoying, it didn't change my view of the Project so I wasn't spooked to sell out. I don't blame the company BTW for the under-statement and my research helps me to realise it's probably smart to now just wait for the PFS (and other possible good news), which PFS I expect to create a better impression. Let's see...

My approach applied to Vertex
I'll comment on Vertex in the context of my usual investment criteria for the smaller resource stocks that serve me best. These are my impressions FWIW:

1. Jurisdiction – my starting point:

• I've lost too much money offshore and won't invest in such Projects again - (In some countries I say 'the better the project the higher the sovereign risk!'). However, I made one rare exception to that rule when I bought into Vulcan Energy in 2020 (when the shares were in the low 30c and the 28.5c exercise price options as low as 8.5c) as I saw it as an exceptional opportunity. Luckily, it went psycho – and I was blessed with a life changer.
• Australia is generally very good (albeit slow with some approvals) so I'm very comfortable re Vertex. Nonsense does still happen occasionally but not say like in Africa. Last year's ridiculous decision by Minister Plibersek on a Regis project led to a halted development, which is now subject to litigation. The Court may well find that the Minister acted unreasonably or without proper basis etc. –>So Tick, for VTX despite the Regis experience.

2. Sector - Gold is brilliant:

• It's a world market that will never be oversupplied.
• Most current politicians will continue to debase fiat currencies, so it's a good hedge, too.

• Logistics are good – you're not shipping bulks half way around the world, to then be told there are alleged 'quality' issues so we want a discount etc. - Tick

3 The Project, e.g.

• Status of Title? Mining lease = great.
• 100% equity? Great - no JV issues.
• ?, Approvals generally - sorted - Mining Lease with no need for tailings dam etc. - Tick
• Environmental footprint - no cyanide etc. Small site and thus disturbance. Minimal water needed and to be recycled. Ore sorter efficiency means stockpiles not hanging around for later processing. Country rock to go back in the mine at a later stage etc. - Tick
• Safety - no cyanide, more simple plant etc - Tick
• Development costs - low, for many reasons. We're about to produce, without the huge debt that so often accompanies new projects - Tick
• Scaleability - simple plant with possible expansion module capability e.g. 2nd ore sorter if significant exploration success - Tick.
• Infrastructure (including complexity) - simple gravity plant with optical sorter; doesn't get better than that. - Tick
• Product saleability - gold bars...easy to sell - form an orderly queue please buyers...
• Debt? - chicken feed minor borrowing re last equity raising, to be repaid soon or in equity - Vertex discretion - Tick
• Return on investment - could be phenomenal - Tick
• Timing to cash flows - likely very soon - Tick
• and so on. -

I ask myself what other projects get within a bull's roar of what Vertex offers on the metrics herein?

• 4. People (Projects don't develop themselves) – In addition to the vision to get this acreage - and the well-priced refurbished plant, and the ore sorter, and our own drill - and then the almost completed commissioning, supported by the thoughtful funding etc, our Directors have done a stellar job to date. It's a great effort with a micro sized team to be still be on time and within budget etc. Not many projects can boast this. The plant can be run by just a couple of people BTW, and their is good remote monitoring too. Staffing should be easier in the nice location where the plant is, and people will be less confronted than if we were using cyanide at the plant - Tick

• 5. Political headwinds or tailwinds (silly as they may be). Gold has allure all around the world and is free of the following sort of problems. By contrast, the oil and gas sector, despite its essential role, gets battered with mania (much of it dishonest) by mischievous opponents and this has clouded its investment proposition because some approvals take way too long as bureaucrats have gone to jelly and radical opponents are given far too much freedom to disrupt necessary work. It's especially hard for small caps to raise capital. No such headwind for the gold sector. - Tick

• 6. Market cap. – I'm very comfortable with our current MC. Naturally it's forward looking because we are a developer that will start production imminently and then will pull on the big value lever of near mine exploration and then greenfields exploration. The following appeal strongly to me:
• We hold 24km (more?) of contiguous tenements along the Hill End gold system in the Lachlan Fold Belt, only 60km across from Australia’s largest gold mine, the 40M oz Cadia.
• Our high-res. LiDAR and aerial photographic survey carried out in Sept. 2022 (reported to ASX on 18 January 2023) showed shallow mining activity along the whole 24km, with circa 3,500 workings identified - see pic.

Inevitably there will be something valuable in some of those 3,500 workings. If we get some good revenues from early production we should have plenty of money to do some serious exploration, without issuing more equity. Speaking of income potential, it seems the LiDAR will help identify feeder pits for the plant – see last sentence in comment below.

Recall that the historically mined Hawkins Hill Mine produced 435,000 oz at 309g/t! This was the mine from which the world's largest ever gold specimen, found by Holterman and Beyer, was found. It's right near our Reward resource – see following pic. What a great part of this famous gold belt in which to be doing modern exploration, which we will be able to do below the water table.

No wonder, when you put some of this together that one of our forum gurus,Wack , said in Post #: 77267015 that we "could have some massive exploration upside." I agree, and - more importantly - the company does too.

In his excellent Post #: 77345276 of 10 January 2025 hasti25 draws attention to the potential in our early planned drilling under the Reward resource and at the nearby Fosters Exploration Target - see pic below.


Here, looking back to our ASX release of 29 August 2023 are some Highlights re the then Exploration Target:

So why was Project not revisited earlier?

hoodle assembled a terrific Post #: 77508320 on 22 January 2025, which addressed why the previous tenement owners probably let the asset go. I liked his summary:"it looks like a classic case of management chasing rainbows and butterflies or the “new” thematic." After a long career in resources, I can say that sort of distraction and consequent blunder happens more than one might think. Vendors naturally don't crow about it, and Buyers usually show good grace and don't brag too much about their scoop – "There but for the grace of God go I..."

Again, it highlights the quiet and astute savvy of our Directors in picking it up. We have a lot to be thankful for and much to now look forward to. I'm pretty excited for when we get some serious drilling going, and get our eye in to how the geology is going. Having said that, we can see a lot of the geology from within the adits. There's another plus!