This article is a sponsored feature from Mining.com.au partner Alchemy Resources. It is not financial advice. Talk to a registered financial expert before making investment decisions.
There’s a psychological principle called the Choice Overload Effect, which states that too many options can be a bad thing as they tend to confuse, overwhelm, and create difficulties making sound decisions.
Also known as ‘overchoice’, the principle suggests once a decision has been made amidst a myriad of potential options, disappointment can arise due to lingering uncertainty around whether it’s the right choice.
In the world of junior exploration having choices aplenty is a luxury. Most notably, having multiple commodities and assets derisks a portfolio as not all eggs are in one basket, so to speak.
While CEO James Wilson considers the term ‘overchoice’ as overly exaggerating, the aforementioned psychological principle does highlight the current, albeit blessed situation Alchemy Resources (ASX:ALY) is facing.
With 15-plus years of experience in exploration and operational roles, 14 additional years as a mining analyst – including at Argonaut Securities – and a graduate of the Australian Institute of Company Directors, Wilson has a storied career making decisions with clarity even amid a bubbling cauldron of choices.
“I don’t want to use the word ‘land banker’ but Alchemy has always had a large package of tenements all over the place and as an explorer, that’s a challenge to explore all of those simultaneously because there’s only so much you can do in terms of people and available capital,” the CEO tells Mining.com.au.
“It’s not been a juggling act, but the size of the package of the ground Alchemy has ultimately has led to the easiest way to deal with that – to joint venture them, to use someone else’s money to help advance it.
“If you’ve got two million bucks in the bank and you’ve got three main projects, what are you going to spend your money on? That’s where JVs work out really, really well. A joint venture model works great to attract significant capital spend to our portfolio whilst maintaining our own 100% owned exploration tenure.”
Pick of the bunch?
The so-called Choice Overload Effect is less of a dilemma and more of an opportunity if not an embarrassment of riches. Alchemy has clarity amid its bubbling cauldron of choices.
When compared to peers – many of which are single-asset companies – the $8.25 million market capitalisation company has a range of advanced gold, base metals, and iron ore projects throughout Western Australia and New South Wales.
Just how sizeable is Alchemy’s overall landholing? Two notable assets and main picks of the bunch are its Karonie project 110km east of Kalgoorlie with a 722km2 tenement package, and Lake Rebecca which totals 570km2.
The 100% owned Karonie Project surrounds Vault Minerals’ (ASX:VAU) Aldiss Mine and is along strike to the south of Breaker Resources’ (ASX:BRB) Bombora deposit.
Lake Rebecca is located 10km southeast of the Northern Star Resources’ (ASX:NST) 4.6 million ounce Carosue Dam gold deposit, and immediately west of the Apollo Consolidated’s (ASX:AOP) 1.1Moz Rebecca, Duchess, and Duke deposits.
Alchemy has also earned an 80% interest in the Lachlan projects in New South Wales, located in ‘well-endowed’ gold, base metal, and nickel-cobalt districts along the Gilmore Suture with significant upside for high-grade and bulk tonnage mineralisation.
Then there’s the free-carried 20% interest in the Bryah Basin joint ventures. The JV with Catalyst Metals (ASX:CYL) covers production and exploration at the Hermes and Hermes South assets located nearby to the Plutonic Gold Operations.
“That’s a lot to be working with but we’re working them up, talking to a lot of people, and so do we have one or two main projects? Not quite – it’s multi-pronged,” Wilson explains to this news service.
“We said it at Noosa (mining conference) earlier this year as well. Karonie is gold and lithium in Kalgoorlie and that’s great – it’s advanced exploration. We’re set, we can fly out there and go and do our thing in 24 hours with an established camp and infrastructure.
“New South Wales has been the main near-term target for the company and now that land access and state government permitting has been obtained, we can get down to do some really good work on some high grade copper and gold targets.”
Earlier this year, Alchemy signed a Land Access Agreement executed with the Ngemba, Ngiyampaa, Wangaaypuwan and Wayilwan People. The deal includes access into key targets including Yellow Mountain and Overflow prospects – and has emerged as a major focus.
Now Alchemy has been granted access, the main focus for a short term is directly and squarely on the Cobar region – “looking at those very, very high-grade copper and the high-grade gold intercepts of those two projects”, says Wilson.
“And in the meantime, then we’re ticking over all the others in the background with the Bryah Basin and also gold exploration in Kalgoorlie, with lithium exploration to kick off in early 2025.”
In January this year, Alchemy secured Sandfire Resources’ (ASX:SFR) 80% interest in the Bryah JV in Western Australia through its wholly owned subsidiary Three Rivers, as reported by Mining.com.au.
“And now we’ve identified there’s an iron ore occurrence there and it’s big. It’s 2km outcropping mapped hematite, located on an existing mining lease adjacent to main road highway infrastructure. The prospectivity of it is exceptional and I haven’t seen a junior holding ground with high grade +64% Fe rock chips in a long time,” says Wilson.
If that wasn’t enough, in late September Alchemy entered into a farm-in and JV agreement with the Japan Organization for Metals and Energy Security (JOGMEC) for its Roe Hills tenure located in Western Australia.
The Tokyo-headquartered agency can earn up to a 51% interest in Roe Hills, covering 248km2 of Alchemy’s Karonie Lithium and Gold Project, by spending up to $6 million on exploration by the end of March 2029.
JOGMEC is a Japanese government incorporated administrative agency tasked with securing stable resource supplies for Japan. It has an annual budget for 2024 of ¥2.38 billion ($24.06 billion) and equity capital of ¥1.49 billion as of July 2024.
Loading bases not overloading choices
“So of all those projects, which one do we spend all our money on when we’ve got $3 million in the bank? What do we spend our money on to generate the most amount of bang for our buck to attract investors to Alchemy?” Wilson ponders.
The glint in his eye and conviction of what he says next is clear – Alchemy is brewing the right concoction and is far from a cauldron of choices about to ‘Overflow’.
“Some juniors have just one focused key project and that’s relatively straightforward,” Wilson explains.
“We’ve logistically got three projects in three different parts of Australia, and they’re all equally prospective. So what do we spend our money on? So the next thing is, okay, so where would you spend your money now to build value and attract your resources investor.
“Okay, well, I’m trying to progress the Iron ore which needs ~25 RC holes into it to give us a potential resource. In the meantime, the focus is squarely on New South Wales. I mean, the Lachlan Fold Belt has just gone nuts.”
The CEO breaks down a clear growth pathway ahead – a three-pronged approach. Bryah gold and lithium in Kalgoorlie, projects in New South Wales where permitting has now been received, and the Bryah JV in Western Australia.
“It’s not grassroots exploration – it’s bangers of grades there”
“At the Lachlan Project area there’s historic holes back from the 70s and 80s including 24 metres at 1% copper, so we know it’s in the ground. Then we went back and did rock chip samples and we got 28.4% copper, 7% lead, and 1.6 grams per tonne of gold in sampling. There’s definitely high-grade metal there,” Wilson adds.
“That’s one of the two projects that are 20km apart. The other project already has 340,000 ounces of gold equivalent resource metal on it, so it’s advanced. So the plan is to get into Yellow Mountain and get some holes into that and then to come back and follow up with additional work to expand the resource at Overflow.
“It’s not grassroots exploration – it’s bangers of grades there. There’s some serious grades and in the case of Yellow Mountain, there hasn’t been any on ground exploration for around 20 years, and no drilling since 1986. It presents an exceptional opportunity to bring modern technology to bear on a project that lay dormant for the best part of 38 years.”
Information Overflow
As mentioned, at the Overflow prospect samples have returned grades as high as 22.7g/t of gold, 0.89%g/t copper, and 0.89% lead. Yellow Mountain returned high grades including 18.2% lead, 20.4% zinc, and 28.4% copper.
“It’s amazing and no one’s touched this stuff since the ’80s. So that’s going to be our focus near-term. But in the background, we’re going to be ticking over our WA gold programs in Kalgoorlie, where we’re permitted to do so and then we’ll be ticking over programs in the Bryah as well.” Wilson explains.
“It is juggling three balls at the same time, but there’s three very advanced assets, and we can’t just sit them in the background and just stack the portfolio with stuff. The iron ore is just begging to be drilled – it’s hematite sticking out of the ground, going 64% iron, Overflow is 340,000 ounces, 50 kilometres from an existing mine, it’s all low hanging fruit.”
In Kalgoorlie, Alchemy’s assets are close to the main road and within close proximity to Global Lithium (ASX:GL1), which Wilson notes is on track to develop a mine in the next two years.
Adamant the company is not a grassroots explorer by any stretch, Alchemy tends to think like one due to its prudent and measured approach deploying capital.
“We aim to think smartly, with any one of these assets that could be a near-term development opportunity”
“We aim to think smartly, with any one of these assets that could be a near-term development opportunity. Then we can go and talk to any one of the players in the region in New South Wales, and hopefully maybe there’s a funding option there,” the former Argonaut Securities analyst adds.
“Similarly in the Bryah, there’s an advanced iron ore asset there that could be worked on as well. And then it could be, let’s truck it to Port Hedland or to Geraldton, and there’s players around there to talk to as well that have existing infrastructure. Then Kalgoorlie, we have ounces right on the doorstep of Vault Minerals (formerly Red 5).
“In the current market, it’s almost a necessity for a company the size of Alchemy to engage in a joint venture so that you don’t have one asset that’s prospective sitting in the background while you just work on one so you can juggle the three balls at once.
“If I put my investor hat on for a second, they often say, ‘Which one’s your main project?’ And you go, ‘Well, all three of them are the main project’. And they go, ‘But which one’s the focus?’ And you go, ‘Well, at the moment, it has to be Yellow Mountain because Yellow Mountain has got 28% of copper sitting near surface’, it’s an easy win to explore it with modern tech.”
It’s an “absolute banger” that hasn’t been drilled in 38 years and as such Yellow Mountain is a near-term target. Wilson notes it’s a hard one to aggressively explore everywhere with $3 million in the bank so we have to be targeted with high impact programs.
“Because that’s what they cost. We’re doing a $130,000 drill program for gold along strike of Silver Lake and then we’ll probably do a $300,000 drill program at Yellow Mountain. So it’s still half a million bucks put into the ground during the quarter,” according to the CEO.
Questions and quest for quality
Removing his cap while wiping sweat from his brow, Wilson simultaneously gently ushers his playful son out of his office and succinctly states: “Not trying to be too cute, but there’s too many good things to test in our portfolio.”
Could the Choice Overload Effect be taking hold of this seasoned geologist and mining analyst? Far from it.
“There’s too many really good assets to have a crack at all at once,” he says with contemplative sincerity.
And existing shareholders do not shy away from voicing their preferred pathway towards production. Rightly so, each investor has their own view on where they want to see their capital invested.
“There’s gold-focused investors and then others interested in base metals. So then you ask – what are you as a company? You’re always asking yourself this question – what company are you? Are you a gold explorer? Are you a gold developer? Or are you a base metals explorer? Or are you a bulk commodities iron ore company? What about all three?” says Wilson.
“That’s unavoidable with the assets we have. We’ve discovered lithium on our ground and we’ve done a lithium joint venture, so we’ve managed to strike a deal with JOGMEC, which is a great agency to deal with – $6 million dollars over five years.”
The definitive answer to those questions may be years off, however, the choices ahead may be plentiful but they are clear. Capturing the potential to monetise more of its ground through joint ventures or other agreements is the most likely option to be pursued.
It’s a strategy to incentivise deals in which third parties outlay their invested capital into an Alchemy project while the latter relinquishes an equity stake in return. Under this approach, choices aren’t limited but instead provide opportunities to advance assets on multiple fronts and timeframes.
The JOGMEC agreement still needs Foreign Investment Review Board (FIRB) approval but Wilson refuses to sit idly by.
“We’re itching to do it. We’ve already presented budgets to people and we’re probably going to spend close to $2 million on that in the area within 12 months. It’s going to be crazy busy for us. But we want to do that because we have the internal IP to be able to go and do it,” the CEO notes.
At the end of the day it’s not about a choice overload but rather being proactive in making sound decisions to one day pay dividends – figuratively and literally. For Alchemy, it comes down to adapting to commodity price fluctuations and pivoting in an ever-changing market.
“You have to recognise your strengths as well as your weaknesses. If you’ve got a 110,000 ounce gold asset sitting next to an existing gold miner, it makes sense to…unless you find a million ounces in the same region, then you’re never going to be building your own deposit around Kalgoorlie,” Wilson adds.
“Similarly, until you actually find something of scale, then the simplest course of action is to go and deal it off to someone else down the road and do another deal. So with the iron ore, there’s many different ways to spin the wheel in that area. You could do it yourself but there’s people nearby to possibly JV with.
“We’re pretty nimble. We’re a low-cost explorer, we put most of the money into the ground, and everybody can’t say that. We spend little money on corporate overheads and we keep everything in-house as much as we can. And all of our projects are located next to existing operations. So we’re not a greenfields explorer.”
Indeed the company is not a greenfields exploration play. So, what is it?
Alchemy Resources is an active and nimble explorer proactively pursuing multiple growth pathways with a portfolio of in-demand commodities with significant upside potential. Now that’s choice.
Write to Adam Orlando at Mining.com.au
Images: Alchemy Resources & Rochelle Padua
