Bellevue Gold (ASX:BGL)The pursuit of the dual exploration and...

Bellevue Gold (ASX:BGL)

The pursuit of the dual exploration and development strategy in these best of times for high-grade gold developers is exactly the reason behind Bellevue Gold’s (ASX:BGL) $120 million equity raising, split in to a $100m placement at $1 a share and a $20m SPP at the same price.

Bellevue MD Steve Parsons said as much.

“By implementing our dual exploration and development strategy (at its namesake project in WA), we will seek to maximise our ability to create value for shareholders through both resource growth and project development,” Parsons said.

Bellevue will not have a feasibility study into a development ready for release until the first quarter next year. Rather than sit around while that eventuates, to then go into a debt/equity financing phase, it is now going to keep up the momentum across both exploration and development.

It is something the market whole-heartedly endorses, judging by the rush for shares in the placement, prompting it to be upsized from $80m to $100m. It helps that Bellevue remains a compelling exploration story as much as it is now a development story.

Early this week, the maiden indicated resource for the project was released. It came in above expectations at 860,000oz at 11.6g/t gold from the previously announced 2.3Moz resource estimate.

An upgraded indicated resource estimate is planned for the December quarter and drilling to grow the resource base continues.

Importantly, the maiden indicated resource estimate included a high-grade core of 480,000oz at 15.5g/t. It remains open in all directions and is within easy striking distance of the historic underground development from when the “original” Bellevue was a high-grade producer.

Expect the high-grade core to become the focus of an early mine plan for the new Bellevue.

It is why Macquarie’s equities desk (Macquarie Capital is one of the underwriters to the placement) has Bellevue producing 190,000oz of gold in each of FY23 and FY24 at an AISC of $A710 and $742/oz respectively.

Multiply 190,000oz by what, at current Aussie gold prices, is an AISC margin of $A1,850/oz and you end up with a very big number. Macquarie, in arriving at its $1.30 target price, was more conservative with its gold price and exchange rate assumptions.

Still, its forecast EBITDA of $272m in FY23 and $259m in FY24 continues to demonstrate just why investors can’t get enough of high-grade WA gold.