HARTLEYS:
June 2018 Valuation $0.12
Spot Valuation $0.15
EXU (Explaurum Ltd, -1.2% to 8.4cps, m.cap A$40m, Gold: Explorer / Developer): John Macdonald
EXU has intersected mineralisation in its prospects 6km north of the Tampia resource
Results from 13 holes were announced from the northern prospects, including anomaly 8; a 3x1km regional feature.
Best result is in A8RC009 3m at 3.6 g/t from 16m.
Holes A8RC005,A8RC006 and A8RC008, in the southern end of the prospect returned 1m at 2.4g/t (from 76m) , 2m at 1g/t (22m) and 2m at 3 .1g/t (92m to end of hole, finishing in 5g/t mineralisation).
These are significant results, given the distribution of the holes. Mineralisation coincides with non-magnetic mafic gneiss, as seen at Tampia.
There is too little drilling to say it will or will not lead to a mine there, but a repeat of the Tampia style system cannot be ruled out.
Weathering is deep here and relationships between geophysics/surface geochem and underlying mineralisation are not certain.
The company is diamond drilling now to help orientate more RC holes in the area. Thinking at the moment is that the dips are about 70deg to the east.
Pattern RC drilling will begin in a week or so, weather dependent. Rain has restricted rig movement in the paddocks.
This a belated but highly encouraging start to regional RC drilling at Tampia.
ARGONAUT
June 2018 Explaurum (EXU)
Analyst: James Wilson, Argonaut Securities
Recommendation: Speculative buy Price target: 19c (previously 21c)
Thursday's close: 8.5c
Reason: Tampia feasibility
Comments: EXU has released a positive result for their Tampia gold project feasibility study (FS), outlining a low cost and high margin operation with all-in sustaining cost (AISC) of $998/oz for the life of mine (LOM) and AISC of $886/oz over the first two years. The capital cost of $119 million (+/- 15%) includes a contingency of $10.8 million. EXU envisages a 1.5Mtpa processing plant (hard rock capacity) with an initial mine life of six years and 534,000oz mined. Production will peak at 104,000oz in the first two years, with LOM average production of 92,000ozpa. The project will generate average EBITDA of $62 million per annum over the LOM with a pre-tax NPV8% of $125 million, an IRR of 47% and a payback of 1.5 years. EXU will now move to complete the bankable feasibility study by October 2018 with board approvals for finance and development options expected by December 2018. EXU trades at a fully funded EV/reserve ounce of roughly $290/oz versus its peer group of emerging producers including GCY ($416/oz), DCN ($555/oz) and GOR ($342/oz) which are either under construction (GOR) or have recently poured first gold (DCN, GCY). On a forward-looking EV/production basis (fully funded) EXU trades on an undemanding $1749/oz vs GCY ($2200/oz), DCN ($3062/oz) and GOR ($3100/oz).mce-anchor Our valuation drops to 19c per share (prior 21c per share) after modifying our modelled capex and cost assumptions in-line with the revised feasibility study. Maintain speculative buy and target price 19cps.
