Thomson Resources could be positioned to capitalise on a precious metal resurgence, with its existing gold portfolio and pending acquisition of two silver assets.
The New South Wales focussed explorer is set to acquire 100 per cent of two transformational silver assets in early 2021, including Australia’s highest grade undeveloped silver asset, the Webbs project.
This will be complemented by the Conrad silver project, also in New South Wales, with due diligence to be completed in January.
The prices of precious metals like gold and silver have experienced slight pull back in recent months.
For many, particularly leveraged early stage stocks, this suggests a likely return to form in the early months of 2021.
This is especially true for silver stocks, as analysts believe the price of silver is poised to run hot next year.
“Once industrial demand picks up, more tailwinds for silver will push the metal closer to the $35 to $40 an ounce range next year,” Kitco analyst Peter Hug said.
This positions Thomson well, with Conrad’s historical workings showing a very large “in ground value”, one which the previous owner demonstrated to have value of almost one billion dollars.
Both projects have seen historic silver production and have a resource defined compliant with the JORC Code 2004 as follows:
- Webbs: 1.5 million tonnes at 345 grams per tonne of silver, equivalent of 16.5 million ounces of silver
- Conrad: 2.65 million tonnes at 206 grams per tonne of silver, equivalent of 17.5 million ounces of silver
Both silver projects are located in the New England Fold belt in New South Wales and combined, equate to an acquisition of over 30 million ounces of silver equivalent resources.
The projects will be acquired from the $207 million capped Silver Mines and as part of the acquisition, Silver Mines will hold 19 per cent of the issued shares of Thomson Resources, which will be escrowed for 12 months.
Silver Mines managing director Anthony McClure will take a board seat as a non executive director of Thomson.
The company is aiming to start aggressively expanding its silver resource base over the coming months, both organically and via acquisitions.
There is an experienced management team driving this agenda and it has been strengthened by the engagement of global ore discovery, led by Stephen Nano.
Global Ore is assisting with running the due diligence process of on the silver assets and has a history of silver project generations that lead to takeovers.
Thomson stacks up
Thomson has a $30 million market cap, and recently raised $6 million, so appears well funded for near term exploration.
With the early stage nature of Thomson’s silver ambitions, the company is provided significant leverage to this metal heading into 2021, and compares favourably with other ASX listed silver stocks.
Its closets peer is Investigator Resources, which is currently capped at $63 million. Investigator’s South Australian Paris silver project has a resource of 9.3 million tonnes at an average 139 grams per tonne of silver and 0.6 per cent lead for a contained 42 million ounces of silver and 55,000 tonnes of lead.
Thomson’s peers also provide a pathway to growth, favourably indicating how the market values silver ounces in the ground.
The company seems severely undervalued compared to its peers on a market cap vs silver grade basis, however once the transaction is completed and resource inventory grows, Thomson is expected to catch up.
Aside from silver, Thomson has a number of quality intrusion related gold systems in New South Wales and Queensland, where it is undertaking extensive rolling drilling programs that build on previous high grade results.
Silver, with a side of gold
It is clear that Thomson exhibits ample upside moving into the new year.
Thomson is focussed on building a strong silver resource base in 2021, whilst being supported by existing gold assets.
In the coming weeks, the company is set to complete its due diligence to acquire high grade, undeveloped silver assets, with the acquisition to be completed early in 2021.