Here's the Patersons' BUY recommendation for anyone looking for it. It was made on the 3rd December and magpie made a thread about it. The annotated version is publicly available at:
Artemis Resources Ltd (ARV) is a fully funded, Sydney-based exploration company with interests in gold, uranium and rare earth elements at projects in Western Australia and Queensland. We recently visited the Mt Clement gold project in the Ashburton gold province in the Pilbara. Recent drilling returned encouraging results, highlighting Mt Clement as a near-term production proposition, owing to its close proximity to existing mine infrastructure. We anticipate exploration momentum and further drilling results will provide key catalysts for ARV in Q4 CY10. Strategic value. ARV?s 80%-owned Mt Clement project is located 30km from the Paulsens gold mine and processing facility, where 20% joint venture partner Northern Star (NST) has a 350ktpa CIP gold plant operating at 80% capacity. We note that ARV would be a logical counterparty to supply oxide material to sustain milling rates at Paulsens. NST acquired the Paulsens operation from Intrepid Mines Ltd for $40m in June 2010 with a reserve of 55,000oz.
Resource development. While at an early stage, drilling at Mt Clement has returned several encouraging intercepts, including a recently discovered steeply dipping high grade gold, silver and copper zone. Intercepts included 20m at 7.3g/t Au with silver and copper grades of 395g/t and 0.82%, respectively (10-11g/t Au equivalent). ARV is currently undertaking a 4,000m drilling programme to extend this deep, high grade gold, silver, copper mineralisation and expand and infill shallow gold mineralisation within 50m of surface. Mineralisation remains open in all directions and is likely amenable to an open pit operation.
Underexplored. The Mt Clement project area remains relatively underexplored. Previous exploration, mostly by BHP in the 1970?s, involved shallow drilling to test for oxide mineralisation within 50m of surface. This exploration was undertaken when the gold price was circa US$100/oz and before Paulsens had been discovered. Recent results from a hand held XRF analyser identified encouraging targets along strike from Mt Clement, which require drilling to potentially extend the strike length of Mt Clement to more than 1km.
Investment thesis. Very little exploration has been undertaken in the Mt Clement region, despite excellent access, infrastructure and facilities. Mt Clement is located 30km from the Paulsens gold mine (>0.5Moz) where there is a plant with capacity to treat 350ktpa of ore. Based on our assumption that ARV is a logical counterparty to provide ore to Paulsens, Mt Clement may provide ARV with an advanced route to production as the project consists of three granted mining leases (and two exploration licences). Alternativley, ARV may consider a heap leach production route. ARV has generated several promising targets for drilling along proven mineralised structures. Ultimately, we expect ARV to shore up a resource of +250,000oz at Mt Clement with further drilling.
Catalysts. (1) Exploration momentum and positive assay results from Mt Clement in December/January, (2) further strike extensions with step out drilling, (3) enhanced business relationship with Northern Star (potential for toll treating/acquisition).
Risks. (1) ARV is at an early stage of exploration at Mt Clement and no JORC-compliant resources have been delineated, (2) limited work on metallurgy, (3) conventional feasibility risk associated with mineral exploration.
Disclosure: Patersons Securities acted as Lead Manager and Underwriter to a Share Placement in September 20109 at 5.5 cents and a Rights Issue at 5.5 cents in November 2010s. Patersons received fees for this service.
ARV Price at posting:
5.9¢ Sentiment: None Disclosure: Held
(20min delay)