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Stonewall Resources taps market for near-term gold production

Funds raised will be used to drill at the Rietfontein Gold Mine and Project Bentley.

The TGME plant and tailings storage facilities
The TGME plant and tailings storage facilities

Stonewall Resources (ASX:SWJ) has secured $2.5 million through a share placement to sophisticated and institutional investors based in Australia, the U.S, Singapore and Hong Kong.

131.57 million shares priced at $0.019 and 131.57 million attaching listed options exercisable at $0.03 expiring on October 31, 2020 will be issued.

Funds raised will be used to strengthen the balance sheet and accelerate drilling within the flagship TGME gold project in South Africa.

The focus at TGME is growing the high-grade resource base with forecast gold production from fully permitted mines to begin within 12-18 months of project financing.

In May 2017, a scoping study into the combined development of the Rietfontein and Beta gold mines demonstrated that up to 100,000 ounces per annum gold production is achievable.

TGME contains multiple assets

The TGME project overall contains 26.6 million tonnes grading 4.34 g/t gold for 3.7 million ounces of gold.

The project’s assets can be divided as follows:

- Existing CIL plant and facilities;
- Rietfontein gold deposit (905,000 ounces grading 11 g/t gold);
- Beta gold deposit (1.0 million ounces grading 6.6 g/t gold);
- Other gold resources to be further developed (3.7 million ounces of gold); and
- Exploration targets for open-cut mining.

The Theta Hill and Columbia Hill open pit targets are known as Project Bentley and will be the target of resource definition drilling.

Rietfontein is the most advanced asset

At 11 g/t gold grade resource, Rietfontein is a globally comparable high grade gold asset.

A pre-feasibility study has commenced and a reserve definition drilling program is planned for the current December quarter.

The May 2017 scoping study established Rietfontein with a net present value (NPV) of US$166 million.

READ NOW: Stonewall Resources to open SPP for Rietfontein Gold Mine

The study forecast C1 cash cost estimates of <US$500 per ounce and a low capex cost of US$29 million at peak funding requirement.

Exploration upside opportunities

Stonewall’s pipeline within the TGME project offers good opportunities for upside:

- Rietfontein Mine: High-grade gold deposit, PFS underway;
- Beta Mine: Pre-PFS phase 1 million ounce gold deposit, production targeted in 2 years;
- Glynns, TGME Tailings, Theta: Resource expansion and scoping studies on 1.8 million ounces; and
- Rietfontein extended and other open-pit targets: drilling to target maiden resources.

Drilling is planned for the current December quarter at Project Bentley.

READ NOW: Stonewall Resources' shares rally on low cost, open cut gold mining potential

Undervalued compared to its peers

Stonewall Resources is trading at a discount to its ASX listed peers from an enterprise value (EV) per JORC resource valuation.

The company trades at circa A$16 per JORC-compliant gold ounce making it one of the cheapest ASX-listed gold developers using this valuation method.

Comparable peers are trading at circa A$30-$60 per JORC-compliant gold ounce.

WATCH NOW: Stonewall Resources opens a share purchase plan to push ahead with South African gold projects

Quick facts: Theta Gold Mines Ltd

Price: 0.175 AUD

ASX:TGM
Market: ASX
Market Cap: $76.42 m
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Theta Gold Mines successfully enters subscription agreements for $8 million

Theta Gold Mines Ltd (ASX:TGM) chairman Bill Guy updates Proactive Investors on the release of a positive feasibility study for the Theta project to support further exploration on the large historical goldfield in South Africa The company also has completed a capital raising with subscription...

on 12/8/19

3 min read