Mallee Bull runROBIN BROMBY From: The Australian September 10,...

Mallee Bull run
ROBIN BROMBY From: The Australian September 10, 2012 12:00AM

"STRONG as a Mallee bull," is how Peter Strachan at Stock Analysis describes NSW explorer Peel Mining (PEX).

The good run for PEX shares, along with the recent sprints by Sabre Resources (SBR) -- from 10c to 36c in a day on copper news from Namibia -- and Sirius Resources (SIR) -- from 5.7c to $1.94 on the back of a nickel find -- shows it's still possible to see success stories among the resource juniors.

Peel was tipped by Pure Speculation back in January as an up-and-coming stock in a review of what we saw was an undervalued region around Cobar in NSW.

One problem was that the region's main mine, the CSA, was owned by Xstrata and therefore did not come up on local investor radars.

But we pointed to the progress being made by explorers such as Kidman Resources (KDR), Thomson Resources (TMZ) and YTC Resources (YTC) -- stories that continue to attract attention. There's also Cobar Consolidated Resources (CCU), which late last month shipped its first silver, all 18,100oz of it.

What we noted about Peel was that its Mallee Bull discovery 100km south of Cobar had enabled the junior's share price to swim against the market ebb tide, having risen from 7c to 17c by the time of our interest in January.

The stock touched 52.5c on Monday and the story is now well-known, with further drill results coming out during the week including 72m at 2.11 per cent copper, 41 grams/tonne silver, 1.13g/t gold and 384g/t cobalt.

But perhaps less known is how Peel has had a succession of lucky breaks, not the least being getting a non-rapacious joint-venture partner in Japan's Toho Zinc.

It acquired the ground in 2009 from the former Imperial Corp -- now knocking at the shale gas door as Empire Energy (EEG) -- which had operated the May Day open pit goldmine there.

Peel's initial hopes of something promising below the pit did not eventuate, so they flew a survey over the whole ground, especially in the northwest zone where the Four Mile goldmine had operated in the 1800s.

There was a marked magnetic anomaly. They weren't the first to notice this: it had been picked up by several previous holders of the ground including the former zinc giant Pasminco, Shell, a division of Union Carbide, Elf Aquitaine and Newmont Mining. But they were all looking for bulk-tonnage gold targets. Peel would settle for something else. Then came the drilling, and hole after hole missed the anomaly.

Finally, the seventh hole came up trumps in August last year. Peel's share price got its first upward bump and the junior was able to raise $2.6 million.

Then Mr Market got a fright and Peel's shares were dragged back to about 10c by April. Various brokers wanted to do a discounted rights issue, but then Toho-owned CBH Resources came to the rescue with $8.33m for a 50 per cent stake in Mallee Bull.

Usually the guys with the money want control -- anything from 51 per cent up to a level where the junior partner is left holding a very small minority interest.

So Peel has managed to get the necessary money, continue to be the operator and still have a respectable half-share. The company is counting itself very lucky.

http://www.theaustralian.com.au/business/opinion/metals-prices-high-on-hopes-of-another-monetary-easing-by-fed-chairman-ben-bernanke/story-fnciihm9-1226468510044

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