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.
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.
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.