• Conquest Mining has 100% interest in the Mt Carlton Project (with Goldfields retaining a 3% gross royalty payment), with current resources of over 1.6m ounces of gold equivalent, and still growing.
• The project is at an advanced stage, with scoping study already completed and BFS expected to be completed during 2008.
• Based on current criteria, we forecast annual production peaking at over 200k ounces of gold equivalent, with further growth a possibility should the current regional exploration program prove successful.
• We anticipate production should commence in late 2009, or early 2010 based on the current development schedule.
• Given the low strip ratio and high gold equivalent grades, we forecast the operating costs will fall within the lowest quartile of Australian gold producers. As there is a high grade core to Silver Hill, we also are assuming significant high-grading can occur during the early years of the project, resulting in exceptionally low forecast operating costs during the early years of the project.
• We still see further significant greenfields exploration upside, with minimal spend required by Conquest due to the Joint Venture agreement with Goldfields Australia.
• We have Conquest trading at a significant discount to our discounted cash flow valuation. This compares to our current sector average premium to valuation of 83%, with only 6 out of the 18 companies analysed trading at a discount to valuation.
• We are initiating Coverage with an ACCUMULATE recommendation for the short and long term with a Price Target of $1.00.
CQT Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
