ASX BRIEFS
Welcome to 'ASX BRIEFS,' the definitive podcast for enthusiasts, investors, and professionals keen on staying ahead of the curve in the Australian Stock Exchange (ASX). Hosted by Andrew Musgrave, 'ASX BRIEFS' delves deep into the heart of Australia's financial markets, bringing you insightful conversations with the minds shaping the future of investing down under. Each episode, join Andrew as he interviews a diverse lineup of fund managers, executives, and industry insiders, offering you a unique blend of expert analysis, strategic insights, and the latest trends affecting the ASX. Whether you're a seasoned investor or just starting out, 'ASX BRIEFS' is your go-to source for comprehensive updates and thought-provoking discussions designed to inform, inspire, and empower your investment journey. Tune in to 'ASX BRIEFS' and take the pulse of Australia's financial markets right at your fingertips.
ASX BRIEFS
ADELONG GOLD LTD (ADG) - How Adelong Gold is Positioning for Near-Term Production While Unlocking Critical Mineral Potential
Gold has touched an unprecedented AU$5,000 per ounce, and Adelong Gold Limited (ASX:ADG) is strategically positioned to capitalize on this remarkable market. Managing Director Ian Holland joins us to reveal the company's ambitious dual-strategy approach that sets it apart in Australia's competitive mining landscape.
At the core of Adelong's near-term value proposition is a clever joint venture with Great Divide Mining for the Adelong Gold Project in New South Wales. This partnership aims to fast-track production without diluting shareholders, targeting first gold within just 12 months. The economics are compelling – 15,000-20,000 ounces annually at costs below AU$2,000 per ounce, potentially generating hundreds of millions in free cash flow at current gold prices. Shareholders maintain 49% project interest while enjoying significant downside protection.
Meanwhile, the company's recently acquired Apollo Gold Project in Victoria has delivered exceptional exploration results. Multiple drill intercepts exceeding 100 gram-metres indicate substantial economic potential, but the real surprise came from Hayfield Reef, where high-grade antimony-gold mineralization (exceeding 3% antimony) was discovered. This epizonal deposit shares characteristics with economically significant regional projects like Fosterville and Sunday Creek. With China dominating the antimony supply chain and the mineral's critical status in Western economies, this discovery adds strategic value beyond gold alone.
Despite these compelling assets and near-term production potential, Adelong trades at a modest $7-8 million market capitalization. For investors seeking exposure to gold's strength while gaining leverage to critical minerals, Adelong offers a unique opportunity that warrants close attention as both projects advance toward their respective milestones. Follow their progress as they work to create substantial shareholder value through the coming year.
Andrew Musgrave Host
Welcome back to ASX Briefs, the podcast where we speak with the leaders of ASX-listed companies, and joining me today is Ian Holland, the Managing Director of Adelong Gold Limited. Adelong Gold is a dynamic mineral exploration company with a dual focus on gold and critical minerals, advancing its Apollo Gold Project in Victoria while also working towards near-term gold production at the Adelong Goldfield project in New South Wales. At Apollo, recent exploration has confirmed a significant high-grade antimony gold mineralisation, reinforcing the strategic value of the project. Meanwhile, the company's JV agreement with Great Divide Mining for the Adelong Gold project is set to fast-track production, targeting first gold within 12 months. Ian, thanks for joining me today and welcome to the ASX Briefs podcast.
Ian Holland Guest
Thanks very much, Andrew. Great to be talking to you and a great opportunity to talk to your listeners.
Andrew Musgrave Host
So, Ian, for listeners that may be unfamiliar with Adelong Gold, can you just provide a brief overview of the company?
Ian Holland Guest
Adelong has been around for a reasonable length of time, but what we'd like to really say is that it's been through a period of rejuvenation over the last year. So, all of the board members have essentially been assembled over the last year and we're taking a fresh approach to the company. Two core project areas that I'd like to discuss. So the Adelong Gold Project in southern New South Wales, which we've just ended into a joint venture with which we'll talk about in some more detail, and then just recently, within the last month or so, the Apollo Gold Project in Victoria, a pretty exciting antimony gold exploration project for us, and it leverages off a lot of internal knowledge, history and experience that we have within the company. So, I'd like to discuss that as well.
Andrew Musgrave Host
Okay, and we'll get into all of that. So, first of all, can you walk us through the strategic rationale behind partnering with Great Divide Mining for the Adelong Gold project and what makes this the right time and the right partner?
Ian Holland Guest
So, Adelong Gold released a scoping study on the project in late 2022, pretty attractive economics a relatively small-scale project but with some high margins. So, 15,000 to 20,000 ounces of gold production annually over a five-year period with all-encompassing costs below $2,000 Aussie. So, it spun off a lot of cash in the scoping study. At today's spot we're talking about several hundred million dollars of free cash flow. There was a capital spend that came with that, so 12 to 15 inclusive of working capital in the scoping study. You know we're a relatively small company. We were looking for options on how to move the project forward to production aggressively and without diluting our shareholders excessively through capital raising, and ultimately, we settled on this path where we've partnered with Great Divide Mining who are also an ASX listed company. They have a lot of operational experience and expertise within their company DNA. We've also structured the deal where we really have some significant downside protection for Adelong shareholders, but we absolutely share in the upside. So let me just explain what I mean by that. Let me just explain what I mean by that.
So, the way it's structured is GDM have come in with a 15% interest in the company to begin with, but their major milestone is that they have to produce first gold within 12 months of the execution of the agreement, which was only a couple of weeks ago. So, the clock's ticking already in that sense. You know, it is an advanced project. There's an existing processing plant on site which was in operation as late as 2017. And there's a lot of permits already in place, but there's still a lot of work to do.
They have made a commitment to produce first gold within that 12 months and in doing so they moved to 51% of the project and Adelong and its shareholders remain at 49%. So, no cost, no cash out the door for Adelong during that earn-in period. So, it is a free option in that sense. If GDM aren't able to get to production, then the project reverts 100% to Adelong and there will have been significant advance on the project. If they can get to first production, which means cashflow, then Adelong will share 49% of that. So, we think it's a pretty good balance in that sense.
Andrew Musgrave Host
Okay, now touching on the Apollo Gold project, the recent results from Heyfield Reef are impressive. So how do these compare to regional peers and what's the next step in the exploration program?
Ian Holland Guest
So, two things I'd like to say about this is you know, really it's not just about Heyfield Reef, it's really around the high-grade gold intercepts for the Apollo Project itself. So, there's a drill program by the vendor, a Toronto-listed company, in 2022, which drilled at least a half a dozen holes which were 100-gram metre, so grams per tonne grade times, metre length holes which are really strong economic indicators drilled in this project. We will look to extend those. These are effectively gold only. We have drill permits in place already so we can be on the ground in a relatively short period of time drilling there.
But we also released something on the Heyfield Reef project, which is in the southwest part of the tenement area and, and the really interesting part there is that it's got an epizonal antimony gold signature to it. All that means, without getting too geological, all that means is that it's been deposited in a fairly shallow environment and that's similar to some of the really economically interesting analogues in the area. So, the Costerfield mine in central Victoria and the Sunday Creek deposit which is being developed by Southern Cross Gold, which isn't too far away. So, we think, yeah, pretty exciting. You know, we're talking about drill intercepts with, you know. 3% plus antimony. That's high grade when you consider the price of antimony in the current market. So pretty exciting.
Andrew Musgrave Host
Okay, and obviously antimony is classified as a critical mineral. So how does this discovery shift the strategic value for the company?
Ian Holland Guest
Yeah, I think it just really adds to it. I mean, we are a gold focus, with Adelong and with Apollo. Gold is the core and today's pricing it touched $5,000 an ounce Aussie yesterday. I mean it's unprecedented numbers. But this antimony really does add an extra layer to that. It is a critical mineral. China dominates the current supply chain for antimony, so Western sources of antimony are increasingly important and are going to continue to be so and that will support pricing and for us we absolutely intend to leverage off that.
Andrew Musgrave Host
Okay, and now, with a dual focus on near-term gold production and long-term exploration upside, how do you see Adelong Gold positioning itself within Australia's mid-tier mining space?
Ian Holland Guest
Thanks, Andrew. I mean we're in a really unique position I think. You know there are lots of explorers. It's a crowded, competitive space on the ASX. But one of the things that really differentiates Adelong Gold (ADG) is that we have, you know, near-term production, near-term production. So that deal with GDM, where you know we are working towards gold production and cash flow within 12 months, coupled with, you know, deep exploration potential, both at Adelong, because it can grow further, but at the Apollo Gold Project, I already think marks us out as something different and something to really worth your listeners keeping a close eye on going forward.
Andrew Musgrave Host
Okay, and finally, just to wrap things up for investors and potential investors what's the key message you want to leave with them about Adelong's progress in the next 12 months?
Ian Holland Guest
Look, I think we're really under the radar. You know a current market cap of $7 or $8 million. I think our assets really demand a valuation significantly in advance of that, particularly given current gold pricing and antimoney for that matter. I think we'll see lots of news flow over the coming 12 months with both the joint venture and with the project in Victoria, and I'd really like to think that will deliver a re-rating and an opportunity for your listeners to benefit from that. So, our boards really committed to creating value for shareholders and that's what we're aiming to do.
Andrew Musgrave Host
Okay, Ian. Well, it's been great to chat today to get an update on the company, and we look forward to further updates from Adelong Gold in the upcoming months.
Ian Holland Guest
Thank you, Andrew, much appreciated.
Andrew Musgrave Host
That concludes this episode of ASX Briefs. Don't forget to subscribe and we look forward to catching you on our next episode.