The Speculator

PORTFOLIO POINT: Multi-metals prospector Robust Resources’ latest quarterly lifted its shares 12% last week, but that seems to have simply encouraged nervous sellers.

Our Indonesian-focused prospector Robust Resources (ROL) has confirmed encouraging extensions to its gold-silver-base metals project on Romang Island, 500 kilometres north-west of Darwin.

The release last week of its June quarterly report also confirmed the discovery of high-grade manganese grading up to 56.8% metal content with potential for direct shipping ore.

The news for those who were listening helped lift the shares from a week’s low of 71.5c to a high of 80c on a modest turnover of 361,400 shares. But the bears returned this week, and on a turnover of just 15,000 shares on Wednesday morning the stock was back to 78c.

At that price, Robust’s 87.9 million shares carry a market capitalisation of just $68.56 million. More than half of that is covered in cash and cash equivalents (share subscriptions receivable and convertible notes) totalling $35.54 million.

Directors confirmed in the quarterly report that they consider the company is fully-funded to complete its current exploration projects in all tenements.

The company has developed much more substance since it peaked at a speculative high of $2.62 in early 2010 ahead of a long decline in the current overall bearish market to a recent low in mid-July of 66.5c a share.

The Speculator’s holding of 6,000 shares was acquired at an average cost of $1.49 a share during 2010 and carried over to the present.

Robust’s major focus is its 77.5%-owned flagship Lakuwahi project, covering an extinct volcanic caldera on Romang Island, where the company has interests in five mineral titles totalling 10,000 hectares covering all geologically prospective areas on the 25,000-hectare island.

During the latest quarter the company confirmed a maiden JORC-compliant resource of 1.18 million ounces of gold equivalent (gold and silver) plus 1.44 billion pounds of base metals (lead, zinc and copper). The JORC resource was independently estimated by Micromine Consulting Services.

The managing director of the Sydney-headquartered company, Gary Lewis, explained the JORC resource was just a preliminary step in unlocking the value in Romang Island, which the company intends to execute through further aggressive exploration of new targets and follow-up of numerous extensions to the exiting mineralised zones. These include high-grade gold at depth.

Studies are under way for development of both the near-surface Lakuwahi oxide project and the deeper polymetalluic sulphide project. Lewis said preliminary results are very positive for the heap-leaching of the gold-silver ore and should provide a low CAPEX and OPEX entry into mining on Romang Island. A scoping study should be completed in the fourth quarter of calendar 2012.

Manganese discovery widens horizons

On May 16, Robust announced that during the course of exploration drilling for gold, silver and base metals it had intersected near-surface zones of manganese mineralisation.

High grades of up to 56.8% manganese were in 38 holes with mineralisation thicknesses from one metre to 33 metres.

The manganese occurs mainly as an oxide (dominantly Psilomelane) in the very topmost sections of existing drill holes. Some of the intersections are very high grade – with multiple intersections exceeding 50% manganese.

Lewis predicted: “If these grades continue, the company believes there is a strong possibility of forming a direct shipping manganese ore (DSO) operation on Romang Island.”

The manganese mineralisation occurs in close proximity to the gold-silver and precious metal bearing polymetallic deposits. Robust’s technical team believes it will be necessary to mine the manganese in order to access the other deposits.

Lewis added: “While still the subject of further exploration, scoping studies and further test work, it is likely that the manganese, gold-silver oxide and polymetallic sulphide projects can be sequenced in a manner complementary to their infrastructure requirements and in a way that could potentially enhance the economic returns from all three projects.”

Joint venture arrangements

Since mid-2010 Robust has developed a mutually beneficial joint venture arrangement with the Salim Group of Indonesia, which has significant interests in a diverse range of commodities, plus infrastructure, logistics and upstream processing with access to other exploration and mining opportunities in Indonesia.

Robust owns 77.5% of its Indonesian subsidiary PT GBU, which holds the five mining licences on Romang Island, with the remaining 22.5% held by the Salim Group. Salim, in turn, through one of its subsidiaries – Droxford International Ltd -- has now become Robust’s largest shareholder with an 18.7% stake.

If I had the money I’d buy more Robust, but as readers will note we’re in debt to the bank.

The Speculator portfolio, as at August 8, 2012

Company	Code	No of shares	Bought	Purchase price	Current price	Current value
Image Resources	IMA*	15,000	31/12/2010*	0.362 av	$0.300	$4,500
Viralytics	VLA	19,995	20/12/2011	$0.308	$0.260	$5,199
Robust Resources	ROL	6,000	31/12/2010*	$1.49 av	$0.800	$4,800
Scotgold Resources	SGZ	27,500	31/12/2010*	5.5 av	$0.061	$1,678
GoConnect Ltd	GCN	250,000	31/12/2010*	0.034 av	$0.020	$5,000
Minemakers	MAK	20,000	25/01/2011*	0.425 av	$0.155	$3,100
Platsearch	PTS	20,000	8/02/2011*	$0.130	$0.070	$1,400
Broken Hill Prospecting	BPL	30,000	22/02/2011*	$0.132	$0.105	$3,150
Austpac Resources	APG	40,000	2/03/2011*	$0.060	$0.031	$12,400
Potash West	PWN	11,050	30/03/2011*	$0.200	$0.215	$2,376
Cortona Resources	CRC	25,000	13/04/2011*	0.146 av	$0.085	$2,125
Golden Gate Petroleum	GGP	408,500	20/04/2011*	0.0145 av	$0.010	$4,085
TNT Mines	TNT	4,440	22/07/2011*	$0.000	$0.250	$1,110
Quickstep Holdings	QHL	20,000	23/11/2011*	$0.185	$0.165	$3,300
Orpheus Energy	OEG	19,250	17/08/2011*	0.164 av	$0.110	$2,118
Black Mountain Resources	BMZ	10,000	17/04/2012	$0.300	$0.270	$2,700
Gullewa	GUL	40,000	22/05/2012	$0.063	0.077	$3,080
Total value of portfolio						$62,119
Cash at bank						-$7,530
Total						$54,589
Portfolio change since January 3, 2012 (started with $50,000)						9.18%
All Ordinaries change since January 3, 2012 (then 4155.22)						3.76%
*Shares held from previous year, carried at their December 30, 2011 closing price.

David Haselhurst writes a monthly column for Money magazine. Please note that he is not able to provide personal replies to emails.