The Speculator

Western Turkey is proving to be a golden opportunity for Chesser Resources.

PORTFOLIO POINT: Our emerging Turkish gold miner Chesser Resources offers even more promise since being added to the portfolio in August.

My initial decision to buy into Chesser Resources (CHZ) three months ago was based largely on the calibre of its board and the emerging potential of its ground following the announcement of a maiden resource estimate.

Chesser’s flagship project is its 100%-owned Kestanelik epithermal gold project, located in western Turkey, some 10 kilometres south-east of the Dardanelles with ready access to essential infrastructure.

In May, the company announced a maiden inferred resource of 5.9 million tonnes grading 2.4 grams/tonne gold for 462,000 oz of contained gold (at a 0.5g/t cut-off grade). That resource included a significant higher grade component of 332,000oz grading 3.9g/t.

At the company’s annual meeting last week, managing director Dr Richard Valenta promised shareholders an updated JORC mineral resources by the end of the next June quarter in 2013.

The updated resource is expected to follow the completion of a 15,000 metre drilling program now underway in which much higher grades have been intersected.

The maiden resource was based on a total of 25,000 metres of drilling, which identified the first 3.5 kilometres of veins at Kestanelik. The company has now identified more than 30 kilometres of veins there, and approximately 90% of the low sulphidation, epithermal quartz vein system remains untested.

Some 70% of the current resource lies in oxide material within 50 metres of the surface, which Dr Valenta suggests is likely to be amenable to low-cost, open-pit mining methods.

Since the declaration of that resource, Chesser’s Turkish exploration teams have completed a 30,000-metre drilling program which yielded in Valenta’s words “very promising results” including:

  • 15.6m at 16.2 g/t, including 4m at 59.5g/t
  • 23.5m at 9.6g/t, including 3.9m at 25.3g/t
  • 15.4m at 6.2g/t including 4.9m at 17.2g/t and
  • 5.3m at 16.8 g/t including 1.8m at 24.3 g/t.

Chesser’s shares had traded down in line with much of the market from a high of 79c late last year to a low of 29.5c earlier this year before the maiden resource was confirmed. That enabled the share price to rally for a successful $8 million capital raising completed in June at 33.5c a share, half of which was placed with clients of Macquarie Bank funds.

I bought in August at 36c. The shares traded up to 40c last week, giving the company, with 152.8 million shares on issue, a market capitalisation of $61.16 million. There was remaining cash of $6.9 million at the end of the September quarter.

Analyst tips a target above 70c for Chesser

Ahead of last week’s annual meeting, Chesser commissioned a research report from mining analyst Keith Goode of Eagle Research Advisory Pty Ltd.

Goode rated Chesser a “spec” buy at 38c with a target price of more than 70c, and with a revised resource expected in the next June quarter.

This is one stock The Speculator will be carrying into the new year’s portfolio.

Viralytics wins an underwritten capital raising

Cancer cure hopeful Viralytics Ltd (VLA) at its annual meeting last week announced an underwritten share purchase plan to support the company’s research and development into the new year.

Stockbroker Patersons Securities Ltd will act as lead manager and underwriter to the extent of $2 million for a brokerage-free offering to existing shareholders at November 21 of new shares at 30c a share – a 16.5% discount to the volume weighted average market price to the previous five days of market trading.

Eligible shareholders will be able to buy as little as $600 worth up to a maximum of $15,000, with the offer scheduled to close on December 14.

The fund-raising comes in the wake of Viralytics’ announcement of a new chief executive – former Starpharma Holdings vice-president Dr Malcolm McCall.

In announcing the share purchase plan, the company reminded shareholders it was one of only two listed oncolytic virus companies globally. Its Phase 11 trials, using its trademarked Cavatak agent to destroy melanoma cancers in late stage sufferers, is advancing in the US with another four cancer centres joining the trials in recent weeks.

Top 20 shareholders have about 16% of the company’s present 75.4 million shares and 4.65 million options.

Since the stock has sold down in recent weeks from above 40c, it seems likely that astute shareholders may have sold down in anticipation of replacing stock with the likelihood of a share purchase plan at a discounted price.

They now have that opportunity, which will hopefully generate mega gains in the share price if the current Phase 11 trials achieve projected success levels.

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

The Speculator portfolio (as at November 27, 2012)

CompanyCodeNo of sharesBoughtPurchase priceCurrent priceCurrent value
Image ResourcesIMA*20,00031/12/2010* $0.338 av$0.195$3,900
Robust ResourcesROL6,00031/12/2010*$1.49 av$0.500$3,000
Scotgold ResourcesSGZ27,50031/12/2010*5.5 av$0.057$1,568
GoConnect LtdGCN250,00031/12/2010*0.034 av$0.012$3,000
Broken Hill ProspectingBPL30,00022/02/2011*0.132 av$0.092$2,760
Austpac ResourcesAPG40,0002/03/2011*$0.060$0.035$1,400
Potash West PWN11,05030/03/2011*$0.220$0.275$3,039
Cortona Resources CRC25,00013/04/2011*0.146 av$0.091$2,275
Golden Gate Petroleum GGP408,50020/04/2011*0.0145 av$0.007$2,860
TNT MinesTNT4,44022/07/2011*$0.000$0.250$1,110
Quickstep HoldingsQHL20,00023/11/2011*$0.185$0.170$3,400
Orpheus EnergyOEG19,25017/08/2011*0.164 av$0.060$1,155
Black Mountain ResourcesBMZ10,00017/04/2012$0.300$0.195$1,950
Chesser ResourcesCHZ12,00027/08/2012$0.360$0.385$4,620
Total value of portfolio$46,914
Owe the bank-$8,835
Portfolio change since January 3, 2012 (started with $50,000)-23.84%
All Ordinaries change since January 3 2012 (then 4155.22)7.66%
All Ordinaries close 27 November 20124473.4

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