Alto Metals Ltd. is rebuilding momentum in what financial advisory Bell Potter says is a "crucial year" for the junior's Sandstone gold project in Western Australia, assisted by a unique model involving a "high-powered" research committee.
Alto had built considerable momentum, but Bell Potter resources analyst Peter Arden said that Terry Streeter resigning as chairman in November 2018 just months after being appointed to the position "derailed" the junior. Its shares sank to a two-year low of 3.9 Australian cents per share in December 2018, from a high of 15.5 cents on Nov. 1, 2016.
Arden said that with its largest shareholder Terry Wheeler on board as acting chairman of Alto, 2019 will be a "crucial year" for the junior. Wheeler is the former chief chemist of the Kambalda nickel operation, previously owned by Western Mining Corp. Pty. Ltd. that was purchased by BHP Group Ltd. in 2005.
Arden believes there is "a real chance to make something significant" out of Sandstone, whose resource currently stands at about 4.9 million tonnes at 1.7 g/t gold for 261,000 ounces of contained gold. At the Vanguard and Indomitable prospects, Alto recently defined an inferred resource of 2.6 million tonnes at 1.49 g/t gold for 124,000 contained ounces.
The analyst has high regard for Alto Managing Director Dermot Ryan, who he describes as a "deep-thinking geologist," and University of Western Australia emeritus professor of geology David Groves, who chairs the junior's external research advisory committee formed in 2016 to advise on its exploration programs.
Arden describes Groves as a "legend" of mining and geology in not only Western Australia but the whole country. Alto also has a person doing a PhD through the university on the Sandstone greenstone belt, to feed into Alto's geological understanding.
"I really rate [Ryan] for his incisiveness, and that very high-powered research technical group is a real value-add that no other junior I know of has," Arden told S&P Global Market Intelligence.
Also assisting Alto is geophysical consultancy Terra Resources Pty Ltd's Barry Bourne, who started as a graduate in Mount Isa with CRA Exploration in the early 1990s when Ryan was also at that company, and Bourne went on to become Barrick Gold Corp.'s chief geophysicist for global exploration.
Sandstone ready for 're-awakening'
Arden, however, said the market has been slow to pick up on the Sandstone project's potential, partly due to historical reasons.
"I think [Sandstone] is ripe for some sort of significant re-awakening, as the previous mining operation there by Troy Resources Ltd. only focused on the near-surface oxide material, and didn't consider anything that was remotely hard [due to] a process plant which just couldn't handle hard ore," Arden said.
While the market — both industry and investors — seemed to believe that there was no more gold to find once Troy had mined out the easy-to-find shallow material, Arden said Alto's deeper drilling has shown there is primary mineralization there.
Alto has also supplemented that with a "back to basics" approach to understand the geology and geochemistry, which has shown up some new areas that Arden said were completely overlooked by previous operators.
"[Ryan] is now drilling those out and proving resources, and this year I expect he'll make a really big advance on showing that there are substantial resources there," Arden said. "He doesn't have a very big resource but I would believe that there's real prospectivity for there to be multiples of that, perhaps 5 million ounces, with very good structures."
He said Middle Island Resources Ltd., which has a small parcel of land in the Sandstone belt comprising a mill, has shown that there are some very interesting porphyries containing gold mineralization that, while probably too small to mine, verifies the porphyry signature theme which Ryan has picked up on.
Ryan told S&P Global Market Intelligence he finds confidence in Sandstone partly because of what he achieved at junior company Johnson's Well Mining N.L. in the 1990s, when it found the 1.3-million-ounce discovery Rosemont, which is now one of the key projects of gold producer Regis Resources Ltd.
Like Regis, Ryan said "there's no reason why Alto couldn't be a A$2 billion company, but you need the money to spend and the guts, determination and time frame to do it."