From a local view to a money market view:Santana Minerals...

From a local view to a money market view:

Santana Minerals (ASX:SMI):

New Zealand has never been a friendly place for miners looking to get a project into production. It has been doable but tough, a bit like Australia has become.

But that has changed with the rise to power of the National Party-led coalition, which wants to double the size of the resources industry in quick fashion to help pay the bills.

Fast-tracking approvals for projects of national significance is the main tool to get things moving, much to the delight of a company like Santana Minerals (ASX:SMI) with its Bendigo-Ophir gold project in the South Island.

It is said to be the most significant gold discovery in NZ in 40 years. And as Santana executive director Sam Smith put it at the RRS conference, it is “so significant the new coalition government has declared it is a project of national significance”.

He said the expectation is that the project will be formally added to the fast track process after it becomes law early in the new year and given the mandated six month

timeframe for permitting to occur, Bendigo-Ophir could have the all-clear by July.

First gold from the end of 2026 at an annual average rate of 125,000oz at a potentially best in- class all-in sustaining cost of $1,416/oz after capex of $340m is the plan. Assume $4000/oz gold prices and the simple payback would be under one year.

“Companies that have assets like these that already have processing plants and mining permits have market caps between $1.5 and $2 billion,” Smith told the RRS crowd.

“Our market cap is $350m (48c a share) and we are closing that value gap, very, very quickly. Put us on your watchlist.”

Brokers following the stock are supportive. Penning research notes on the stock after the November 15 release of the prefeasibility study into the project, Blue Ocean Equities was at the high end with a price target of $1.25.

Shaw & Partners sat in the middle with a $1.14 price target while Euroz Hartleys was at the low end at 85c, down from $1 a share in response to the higher capex and operational costs in the PFS. Buy the dip was its message.

The Bendigo-Ophir discovery sits about 90km north-west of OceanaGold’s (TSX:OCG) Macraes operation. It is NZ’s biggest gold mine (135,000ozs annually), with OCG also owning the Waihi mine (60,000oz annually) in the North Island.

Those mines, and operations in the US and Philippines, underpin OCG’s $3.1billion market cap. Time will tell if OCG wants to capture the suggested upside in Santana for itself by adding another NZ gold mine to its portfolio now that the government is open for business.

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