its time

Monday, August 02, 2004
AN ENVIABLE project in Laverton, a recent move into China and an experienced board could make it the perfect time to invest in this undervalued junior.

Crescent Gold has a market capitalisation that does not reflect the size and strength of its project portfolio. Like many junior companies Crescent, which until recently was called Apollo Gold, has been knocked around by the shaky equity markets.

Subsequently its share price has fallen below 15c, giving the Perth-based company a market valuation of just over $10 million.

Yet it has a project portfolio which is the envy of many companies. It has a large tenement holding and significant in-ground resources in the highly desirable Laverton region of Western Australia as well as an existing processing plant which requires only a small injection of capital to put it back in service.

Then there is the company's entry into China, not only one of the most highly sought after investment locations, but a country with a highly undeveloped mineral endowment.

Analysts claim the current share price provides an ideal opportunity to gain entry at a significant discount to the value the shares would normally carry.

This point has not been missed on canny North American investors, who recently provided the lion's share of $2.5 million in additional funding.

Also contributing to the placement was executive director Neil O'Loughlin who joined the Crescent board in November 2003 and recently became a significant shareholder.

"The main driver for my decision to join Crescent as a director was to be a part of putting together the China strategy. Our targets in China would be considered potential company makers for companies many times our size" Mr O'Loughlin said.

"An investment decision in Crescent was made easy given the significantly undervalued assets the company has in Laverton".

The cornerstone of Crescent's growth strategy is its flagship Laverton project, where the company expects to complete a bankable feasibility study in the third quarter of 2004 and plans to start mining early next year.

Bringing together the right team to make the transformation from explorer to producer has been a focus for Crescent. Joining Bruce Morrin, general manager-operations, has been Steve Craig as feasibility manager and Andrew Spinks as manager-geology. Both have extensive experience in feasibility studies and management roles in opencut gold operations.

Laverton was Crescent's key project when it floated last year after raising $5 million.

The project includes a treatment plant located 10km east of the Laverton township and a surrounding tenement package covering 404 square kilometres. The tenements include numerous prospects ranging from shallow oxide gold resources, to untested high-grade shoots. The North Laverton province contains the Laverton Tectonic Zone and is considered one of the most prospective exploration provinces in Australia.

More than 23 million ounces of gold have been discovered in the area including world-class deposits such as Granny Smith, Wallaby and Sunrise.

Crescent has excellent infrastructure in place to start a mining project quickly and cost-effectively, including accommodation and minesite offices, an existing licensed tailings dam, water bores and granted mining leases.

Crescent is currently working on a feasibility study for Laverton, including additional drilling to firm up gold reserves.

The company is targeting a minimum of 200,000oz of gold in mineable reserves, which would give it annual production of at least 50,000oz over a four-year mine life.

Current indications are that the feasibility study is on track to be completed with mining likely to commence in the first quarter of 2005.

The feasibility study is considering not only a mill refurbishment, but also the possibility of expanding the plant by adding a gravity circuit and SAG mill which, by dropping costs, could potentially increase the reserves significantly.

Bringing the resources to a measured reserve status is a key requirement of the feasibility study. To this end the company has conducted close to 20,000m of RC drilling since listing and has recently been enjoying success at its three key projects, Admiral Hill, 9km north of the Laverton mill; Euro-Sterling, 15km south-west of the plant; and Sickle, 5km south-east of the treatment plant.

The exploration success comes as no great surprise given the pedigree of the Laverton region. Indeed earlier this year Hartleys analyst Simon Tonkin said Crescent had excellent potential to discover additional ounces through brownfields exploration at Laverton.

"The Laverton gold project's average depth of drill holes within Crescent's tenements is 45m, with only six per cent of the holes drilled below 100m, thus indicating potential for further discoveries at depth," he said.

Crescent made its first agreement in China purchasing, in a shares only deal, specialist China resources company RAB Projects, complete with its ground holdings in the northwest province of Xinjiang. Principals of Perth-based RAB include the former chairman of WMC's holding companies in China, Jens Balkau. Mr Balkau said,

"China gives Crescent a platform to gain exposure to world-class exploration opportunities. Australian expertise in exploration, mining and development is specifically sought by the Chinese national government."

Crescent followed up the RAB deal with a strategic alliance with Marc Rich & Co Investment, a leading Swiss-based commodities and metals concentrate trading house which has been operating in China since the 1980s.

"The strategic alliance will blend Crescent's expertise in developing and managing gold and base metal ore resources with the China relationship network of MRI," Crescent executive director Mr Andrew Haythorpe said.

"Each party will treat the other as its preferred party for such developments in a commonsense alliance offering solid long-term outcomes for both parties," he added.

With the recent appointments the company has built a first-class team to pursue its dual strategies in WA and China. Not only that, but with 23% of the stock held by directors, there is plenty of incentive for Crescent to make sure its strategies succeed.

* This report, first published in the June/July 2004 edition of RESOURCESTOCKS magazine, was commissioned by Crescent Gold

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Crescent Gold's Laverton project