Quantum and Besra announced that they were in negotitation about...

Quantum and Besra announced that they were in negotitation about the off-take and funding deal on 25/11/2022 when gold price was USD $1800/oz. There is no doubt QM has seen a compelling investment proposition at that time to start entering the negotitation process for such a big off-take and funding deal.

Since then gold price has increased from USD $1800 to today USD $2500/oz. This is a massive increase in the value of the 3mil oz resource. Massive massive growth in resource valuation.

Growth in resource valuation = 3mil oz × (USD $2500 - $1800) ÷ 0.68 AUD/USD = AUD $3.088bil. This is the EXTRA growth in the value of the resource since that first ann about the off-take deal negotitation.

The total in-ground value of the 3mil oz resource = 3mil oz × USD $2500 ÷ 0.68 AUD/USD = AUD $11bil.

Remember the 3mil oz -3.3mil oz JORC compliant resource was incorporated in the PFS 2013. Since then, Besra has had many rounds of drilling and continued to hit gold in every round of drilling but those results have not been added to the MRE.

Management has stated that they are targeting 5mil oz resource in the next upgraded MRE. Apparently they must be looking at those drilling results and feel very confident that they can achieve 5mil oz. In fact, just few weeks ago the new managing director recruited has accepted 5mil oz resource as the condition for him to receive 400k performance shares. He must have done his homework and must feel 5mil oz resource is an easy target for him otherwise he would not have accepted it as condition for him to receive 400k performance shares as part of his total package of 1.2mil performance shares.


So, if 5mil oz resource is to be achieved and I am confident it is an easy target, then this is the numbers:

- In-ground resource valuation = 5mil oz × USD $2500 ÷ 0.68 AUD/USD = AUD $18.4bil.

- Resource valuation growth since the 2 companies announced their off-take and funding negotiation on 25/Nov 2022 = 5mil oz × (USD $2500 - $1800) ÷ 0.68 AUD/USD = AUD $5.15bil.

Those numbers are absolutely amazing. But they won't stop there. By the time the Bau project is in production in 2027 by my estimate, gold price could be USD $4000 and resource valuation growth could be mind-boggling = 5mil oz × (USD $4000 - $1800) ÷ 0.68 AUD/USD = AUD $16bil.


Note: Exploration Target is up to 9.3mil oz and could grow further as more drilling is carried out as part of the DFS process with 3 drill rigs now on site as soon as PP building permit is granted. Apart from Jugan and Bekajiang deposits, the other 6 deposits have been confirmed with gold interception drillings but drilling activities there have been minimal and is just a scratch on the surface with regard to its potential.


Do your own research.