Spartan Resources, page-320

I am relatively new to SPR but have been doing quite a lot of research on the stock so if my comments below are wide of the mark please tell me. I have exclude the low grade SPR resources in my analysis below.

Just to be clear the comments below are very much speculation regarding SPR on my part with a number of facts included.

If SPR finds even just one other NN in the current drill program (which is more than 3 times the size of the last drill program), even if only half the size of NN, the market will realise there is potential for even more NN lookalikes- and NN could get close to or even exceed to 1m Oz in the large current drilling program. We won’t need to wait for the next MRE announcement as the drill results will tell us what is happening and the potential. But they could find more than one NN lookalike in this drill program.

I have been an investor in BGL for sometime and I see parallels to SPR hence my comparison to them.

If the above scenarios transpire, which is I believe what happened at BGL (but I may be wrong) then the SPR SP will increase significantly above current levels in the next 6 months. The big differences I see between BGL and SPR are:

- SPR does not need to build a plant and related infrastructure but needs to rejuvenate it for production which is far cheaper and quicker - big advantage to SPR
- SPR can start production from OP resources which will fund more exploration and development of underground mines and any more open pits . SPR can commence production much sooner and at a much lower cost than it took BGL - big advantage to SPR
- BGL has a significant higher grade than SPR ie 10 vs about 6 g/t for SPR’s NN deposit - should result in lower operating costs for BGL but SPR’s deposit is shallower than BGL - not completely clear to me if BGL will have significantly lower operating costs just from the high grade, but expect BGL’s operating costs to be lower than SPR which are expected to be one of the lowest in the gold sector - BGL advantage but not sure how much of an advantage
- because SPR’s deposits are shallower drilling takes less time and is less costly than BGL at least until BGL drilled from under ground declines - significant advantage to SPR
- SPR does not need to raise as much capital to restart production as BGL. If SPR can drill a resource to get to 130 to 150k Oz pa for 10 years then I wonder if they can solely fund the capital cost of the restart from 100% debt or maybe with only a small amount of equity. - big advantage to SPR.

I think BGL’s resources are 3m Oz and production is expected to be 200kOz pa for 10 years so SPR’s 130k to 150k for 5 years is a good start and hopefully just the start.

SPR may get closer to 1m Oz at NN by end of 2023 plus whatever comes from other high grade deposits - may have 1.0 to 1.2m Oz by end of 2023 - the SPR CEO has commented they are likely to exceed 1m Oz in next MRE upgrade (a figure over 1.2m Oz is big stretch IMO and unlikely but who knows what results SPR will churn out in the next 2 months starting next week - they do have 6 drill rigs). By June next year I see potential for over 1.5m Oz and won’t be surprised to see it go close to 1.75m Oz high grade resources if the current drill program is very successful - they should have at least half of BGL’s 3m Oz by next June and be well on the way to 2m Oz to 3m Oz.

The current drill program results are key to the potential size of high grade resources SPR can discover. SPR’s journey is in the early stages compared to BGL but the potential of SPR is good but will become much clearer in the next 6 months and I expect the journey will be much quicker than BGL.

My conclusion is that SPR’s SP could be in for a major upwards re-rating if the current drilling program is very successful. BGL’s MC is $1.7b and probably may go higher towards $2b or even higher once they get through the initial phase of the market jitters around companies getting to full ramp up and confirm the ASIC costs.

SPR’s MC is $360m so potentially very cheap if the current drill program is very successful like the previous much smaller program. if the current drill program is as successful as the previous one and being more than 3 times as big, is it possible SPR's SP may move much closer to a $1 in the next year?

Interested in others comments or corrections to my comments and above factual information