Canaccord says its view is supported by an expected increase in news flow and resource growth potential at Bellevue’s namesake gold project in WA.
The broker has maintained a target price of A$1.00/sh for BGL and retained its speculative buy recommendation.
Bellevue Gold is trading at 63.5 cents after reaching a 12-month high of 73.5 cents in late June.
Canaccord has based its valuation on a DCF analysis (NPV10%) for the Bellevue Gold Project, plus nominal exploration value, diluted for future equity raisings and net of corporate adjustments.
It states, “Importantly, the recently announced drilling is outside of the current resource envelope highlighting good scope for a meaningful upgrade as part of the next estimate.”
Following is an extract from this week’s Canaccord report:
Deacon growing and Mavis emerging
High-grade intercepts at Deacon and Mavis discovery confirmed: Recently announced drill results indicate the presence of high-grade shoots at the newly discovered Deacon Lode and confirm a new parallel lode called Mavis.
Headline results include:
- • Deacon Lode - 4.4m at 62.4g/t (one of the highest gold intercepts to date). This intercept is 100m along strike from the previously announced (5 Aug'19) intercept of 3.6m at 18.3g/t.
- • Mavis Lode - 2.2m at 38g/t, confirming the additional new discovery offset from the Deacon Lode.
Strike growth of 40% at Deacon and grade increasing: As outlined in Developer/Explorer Wrap - JunQ'19, the strike of the Deacon Lode was previously interpreted to be 1,000m. A step out hole drilled to the north confirmed continuation of the shear zone returning 9.5m at 0.5g/t, now delineating mineralisation over a 1,400m strike.
Importantly, compared to previous Deacon drilling, the recent intercept has returned a significantly higher grade with the nearby hit of 18.3g/t being the highest from the first round of results.
New discovery confirmed, Mavis Lode: Drilling confirmed the discovery of a new parallel lode called Mavis, an encouraging sign for the project. Located only 60m into the Deacon footwall, the close proximity of these two lodes can conceptually reduce upfront capex in a development scenario (shared U/G development and infrastructure). The target is early stage but could potentially improve scale of mineralisation at depth increasing the likelihood of converting resource to economic reserves.
Proximity and ore body orientation: The interpreted lodes are located ~400m east and to depth of the historic mine which houses existing infrastructure (mine development, ventilation shaft). While further drilling is required, initial interpretation indicates that the lode is dipping at ~65o, lending to the application of conventional U/G mining methods.
Outlook, results pending
Further drilling has been completed (4 holes) targeting the high-grade zone of the Deacon Lode, assays are pending.
As previously stated, we expect an increased level of news flow with six drill rigs currently on site. Three drill rigs are targeting Deacon and Mavis Lodes, with the additional three rigs completing shallow infill and step-out drilling of the existing resource.
The company is well funded to continue its current strategy with approximately A$35 million cash in the bank (as of August 2019).