Canaccord Genuity believes Bellevue has an exciting pipeline of news flow expected to culminate in further resource growth and increased project development merit.
The broker has retained its speculative buy recommendation and $1.00 per share price target for Bellevue.
Following is an extract from Canaccord’s report:
Key project milestones in the JunQ’19 include:
- Resource updated to 1.8Moz at 11.1g/t: As outlined in our note, Resource grows to 1.8Moz at +11g/t, the scale of the upgrade was in line with our expectations and totalled a 25% increase in tonnes and a 17% increase in contained gold (~5% reduction in overall grade). Extensional drilling at Tribune and Viago North accounted for the increase, with Tribune increasing to 300koz at 8.1g/t (+50%) and Viago increasing to 700koz at 16.1g/t (+27%). Importantly, both of the orebodies remain open in most directions and stepout drilling is ongoing with six diamond rigs currently on site.
- Deep drilling hits significant target at depth: An old DD hole was re-entered and extended to a depth of 850m, approximately 150m below the Bellevue mine (~650m from surface), targeting the offset of the Bellevue mineralised system. The hole intersected ‘Bellevue Style’ quartz – pyrrhotite and trace fine grained visible gold, assays are pending. The DHEM survey indicated conductive plates of comparable response and size to the Bellevue and Viago lodes. A second hole is being re-entered targeting 320m to the south to test extensions.
- Regional drilling – potential blue sky: Historical drilling and old workings over the +4km Government Well prospect have been reviewed and a new immediate drill target has been identified ~1.6km along strike from the Tribune Lode. Prior surface sampling that was completed was largely ineffective given the trend is covered by thin, wind-blown sands. The prospect is early stage but has the potential to add scale to what we believe is a likely development case at the project.
- A$18.5m placement completed (post quarter end): BGL completed an institutional placement of 32.4m shares at an offer price of A$0.57/sh to raise A$18.5m. Funds will be used for ongoing step-out Resource exploration drilling, infill drilling, potential pre-development activities and working capital. In conjunction with the placement, the Directors executed a partial sell-down of approximately 12.0m shares in the company at the offer price, the selldown represented 19.79% of the Directors aggregate holdings in the company and 1.97% of the fully diluted share capital of Bellevue prior to the placement.
- High grade Deacon Lode discovered (post quarter end): BGL recently announced results from an 8-hole campaign (240m spacing) drilled below the Viago lode and historic Bellevue gold mine. The results have delineated a new mineralised lode spanning 1,000m of strike which is open in all directions. With two drill rigs (of six in total) assigned to drill testing the new target, we expect delineation of the system to form part of the upcoming news flow.
Key upcoming news flow for BGL includes:
- Multiple exploration updated (six drill rigs onsite)
- Further results from deep (below 500m) drilling testing depth extensions. The new "Deacon" target
- Surface and downhole EM survey results, new targets emerging.
- Commencement of infill drilling and Feasibility Studies
Our valuation is based on a DCF analysis (NPV10%) for the Bellevue gold project, plus nominal exploration value, diluted for future equity raisings and net of corporate adjustments. With an exciting pipeline of news flow expected to culminate in further Resource growth and increased project development merit, we retain a SPECULATIVE BUY recommendation and A$1.00/sh price target.