My research summary: Approved a decision to mine the Teal Gold Project (shallow conventional oxide mine with mine like 9 months for 17,723 ounces...looking to extend mine life). First gold production in March. AIC = A$905. FCF end of mine life = $8.6 million @A$1,600. After cofunding arrangement with RM Funds.. say $4 million FCF overall net to IRC from the small-scale production. New high-grade mineralisation discovered south of the Teal project (looks good) at the Jacques Find prospect - great width and grades. Resource grew by 120% at Teal, where production is commencing. But resource is still relatively small and low grade, hence no value applied at this gold price. There's a few other attractive projects.
Would I buy it?
Probably not...
Gold is extremely volatile and the production/ mining potential isn't massive. Margins could be stretched if gold falls this year at Teal (i.e. AU$1,600 per ounce is pretty close to the current gold price...it could easily fall lower). Most of their mines are also relatively thin margin and small in tonnage. For example, Goongarrie Lady scoping study shows a $7-8 million FCF potential at AU$1,600 gold price. Their mines are also vertical in structure, which is more expensive to mine. Jacques Find, for example, is vertical dipping.
So, with regards to all their projects, the company really needs a few decent gold hits to drive the share price higher. That hasn't happened. I'd say the EV is a bit expensive at this stage of the game, given the current gold price environment. The total resource is roughly 355,000 ounces across all projects. So, adding it up, the company is probably a bit too expensive. For it to be taken seriously, the grade needs to improve and so does this resource. That doesn't look like happening any time soon. But the company is exploring a few projects so it may deliver.
I wouldn't back them with my money. I'd much prefer to buy BGH. A company that's -2 million EV, with plenty of blue sky potential. I am trying to buy more at 3 cents. But someone front stepped me on the close and bought at 3.1. I'm sure some fool will sell to me! Please sell! This is a no brainer.
BGH Price at posting:
3.1¢ Sentiment: None Disclosure: Held
