viewBellevue Gold Ltd

Bellevue Gold has more than 3 million ounces hiding in the shadows: Patersons Securities

The company recently confirmed the discovery of two new lodes at the Bellevue Gold Project.

project area
Conservative twelve months target price: $1.01 per share

Bellevue Gold Ltd (ASX:BGL) is continuing to advance its flagship Bellevue Gold Project in WA, which is one of the world’s highest-grade gold projects.
Last week, the company raised $18.5 million after receiving strong support from investors for a fully underwritten institutional placement.

Patersons Securities has assigned a conservative twelve months target price of $1.01 per share for Bellevue.

Following is an extract from Patersons’ research note:

From 0 to 1.8 moz in 20 months – 2.4 moz in the christmas stocking?

BGL released its resource upgrade for the Bellevue Gold Project: 5Mt at 11.1g/t for 1.8Moz Au (3.5g/t cut-off)

• Todays DCF valuation for BGL: $0.77/sh

Considering 80% conversion resource to reserve, 25% mining dilution, $100m capex made of $30m equity and $70m debt, mining 500ktpa and producing 140kozpa for 10 years, and using a 10% discount rate on NPV we value BGL at $0.77/sh in its current form.

• Our conservative twelve months Target Price: $1.01/sh

We used the same metrics and considered an average finding rate of 90koz per month based on the discovery of 1.8Moz Au in resource over twenty months (the first drill hole by BGL, then DRG, was collared September 2017 and the current resource estimate is based on drilling conducted to the end of May 2019). At this rate, BGL would have 2.4Moz in resource by the end of December. Building a DCF valuation based on 2.4Moz at 10g/t Au returns a target price of $1.01/sh. We add “conservative” to this price as it only considers that the resource will grow for six months out of the coming twelve.

• The whole story is getting bigger by the drill hole.

After discovering the Tribune lode west of the Highway Shear in early 2018, and the Viago high grade lode in July of the same year, BGL has now confirmed the discovery of two new lodes at the Bellevue Gold Project. The Deacon lode, now pierced by four drill holes sits in the footwall of the old Bellevue Mine and displays very similar characteristics to the historical high grade Bellevue lode. The second discovery is a sub horizontal lode, similar to Viago in nature and orientation and sits in the hangingwall of Tribune. Just looking at the geology it is not difficult to see more than 3Moz hiding in the shadows at the Bellevue project.

• Gold trading over A$2,000/oz.

Bull or Bear? A$1,500/oz. or A$2,500/oz.? Does it really matter? Well… Yes of course, the higher the gold price the more profitable the gold mine but with an average resource grade of 11.1g/t, Bellevue is well protected against gold price variations. All our scenarios return estimated AISC under the A$1000 mark leaving comfortable margins in any case.

Quick facts: Bellevue Gold Ltd

Price: 0.59 AUD

Market: ASX
Market Cap: $336.25 m

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