Sirius Resources was taken over by Independence Group for A$1.8 billion in September 2015. How was S2 Resources born out of that transaction and what advantages does it enjoy?

We had several exploration projects earmarked as the next point of growth after the success of the Nova project. As part of the deal with Independence Group, we insisted that those assets be spun out from Sirius the day before the takeover, creating S2 Resources. We also structured it so that S2 was spun out with A$20million of funding and its pick of Sirius personnel to join the new company. Unlike most junior companies where the limiting factor for success is the lack of funding to explore, we started life with A$20 million. The other important component of the transaction was that Sirius shareholders received a pro-rata allocation of shares in S2 Resources. As a result we have a very solid top 20 or 30 register of shareholders who have already enjoyed success, and are therefore comfortable with our strategy, which gives us the freedom to pursue our objectives. That confidence combined with having the funding means that we have no need to cater to every commodity fad to curry favour with the market. We have a better chance at being successful because we can pursue a solid long term plan, irrespective of  market conditions.

S2 Resources has prospective projects in Scandinavia at the moment. What is the strategy behind its operations in that region?

Our project in Finland is located next to Europe’s largest gold mine, and few people have explored the surrounding regions. We have been quietly accumulating ground with the view of making that our next active project. A Canadian company recently made a discovery in the area, and suddenly Finland is the flavor of the week in Vancouver. We are well positioned, as we now own about 40% of the surrounding ground. In northern Sweden, we have been actively exploring in the home territory of the Swedish base metal company New Boliden. Although they have mined the area for over 50 years, for various reasons there is still a lot of exploration potential around their mines. We have accumulated a major tenement holding in what is essentially a world class base metal district. We are now the second largest holder of minining tenure in Sweden, and we are using new exploration techniques, which have identified over 100 anomalies, of which we expect to drill about 10 per year.

S2 Resources’ operations are all focused in stable jurisdictions. How does WA compare to its projects in Scandinavia?

Stable jurisdictions all have slightly different risk profiles. WA is by far the optimal state in the Australian context, particularly in comparison to Victoria or New South Wales where the regulatory regimes are much more challenging. Our work on the Nova project exemplifies the ease of the WA framework: it only took us two and half years from the first drill hole to beginning mining. As a mining state, the government apparatus and all its agencies truly understand what needs to done in the permitting process. The disadvantage of WA is the fierce competition. It is much harder to obtain unexplored ground, whereas in a place like Sweden, there is greater exploration opportunity. Scandinavia achieves world standards in every category, but because the mining industry has a less significant presence there, some of the government authorities are less practiced with permitting processes, meaning that it takes longer. Geographically speaking, while in WA sourcing water is an issue, in Sweden lakes and streams are plentiful, so water management is critical to ensure potential pollutants do not enter local water sources. In terms of infrastructure, provisioning of power, 4G network connectivity, and roads, Scandinavia is excellent despite parts of it being north of the arctic circle. Operating on the same latitude in North America would be 5-7 times more expensive, but instead it as inexpensive to operate in Sweden as it is in WA.

How does S2 Resources approach its negotiations in regards to native title rights?

Whoever they may be and wherever they might be located, the simple fact is that we are entering somebody’s backyard and proposing to do things that might be seen as a disturbance. The process becomes better for everyone if you engage with local people early to demonstrate how your actions will not necessarily be disruptive and might actually be beneficial. We did a native title deal in WA in record time because of the way we went about it. In many ways, smaller companies are better positioned to negotiate successfully because interaction is from the top and not via a mid-level manager. Local communities appreciate this approach partly because it is more efficient, but more importantly because it demonstrates a degree of respect, which in turn creates trust. It is much easier to talk and reach an agreement in this manner, whereas big companies that take a more corporate approach encounter greater difficulty.

What message would you convey to investors interested in investing in one the many exploration companies based in WA?

Exploration companies are speculative, high risk investments because statistically exploration fails, so you should only invest in a company if you understand this. Most problems arise when the investor’s expectations do not align with what the company is trying to achieve. The reason S2 Resources does not need to market itself that much is that its investors understand its objectives, and the objectives of the company and the investor are aligned. The Perth junior exploration scene is particularly vibrant  because of a combination of two key elements. Firstly, the Australian superannuation system means there is a massive pool of money that needs to be invested somewhere. Secondly, Australians are risk-takers. The Australian mentality is a gambling mentality: we love having a roll of the dice.