strong gold trend good news for burnakura

Gold seeing an essentially flat consolidation above $1,700 after strong rally from near 1,500.
A sideways consolidation after that big a rally is very bullish.

The weekly chart shows an upper target of just under $2100 by June and around $2200 a year later.
That’s easily backed up by the fundamentals which suggest we could see a breakout above the current channel.
Not that we need it to see gold stocks rally hard just if gold remains in the current trend.

Burnakura’s first year of production should see an average gold price of around $2,000.
Using FS numbers and assuming $2000 gold gives a cash margin of just under $800/oz just on stage 1.
Stage 1 is not what Burnakura is about. By stage 2 (of 4 expansion stages) cash costs fall with the heap leach circuit and that is when Burnakura looks good.
By then assuming gold continues in the current trend, the gold price would be higher, cash costs significantly lower and gold produced will jump around 80%.
Stage 3 should again see higher gold prices, lower cash costs on the CIP production and more ounces in total.
Stage 4 may see lower cash costs with the higher grade copper/gold ore, and copper production added and again probably higher gold prices.

Some time next year we should see Andash kick in, making Burnakura look small by comparison.
We also should be nearing completion of the Jervois FS and getting close to development of our third project which will also be much larger than Burnakura.
Chances are Jervois will be at least a similar size to Andash.
Grades and recoveries will be much higher than Andash partially offsetting higher labour costs and higher average strip ratios.
The first few years will boost NPV thanks to near zero strip ratio thanks to the majority of the ore body outcropping well above surface.
Regardless of NPV outcomes, Jervois may command a premium multiple over Andash thanks to lower country risk.

The beauty of Andash is the negative cash costs at spot prices.
While Burnakura may need to be temporarily put on hold if gold prices collapsed short term, Andash would continue uninterrupted with strong cash flow.
With the more likely strong gold prices long term, both projects will give strong upside to the current sp.
Jervois gives very strong further upside in Australia.

Good sign;
It may be a bit early to be confident as it may be a false break, but Canada’s’ JV index break out after multi month base is a good sign.
No assistance from other equity markets last night but no doubt thanks to the gold price move.