DFS Preview

Originally bought into CRB a couple of years back at 3.7c.  I'm just now starting to add further to my initial investment.

See post here for my original thoughts: http://hotcopper.com.au/posts/14320284/single.

While I might have been a bit out in a few areas, looking towards, the DFS, the overall thesis still exists and has become far more attractive since then, via improved economics and significant de-risking. I think we're just about ready for the next stage of re-rating fundamentally, and per below I think the chart is primed.

CURRENT:
Shares on issue: 152,517,394
Options: 27m
Current SP: 21c
Fully diluted Market Cap: 37.7m
Debt: $0
Cash at March qtrly: 2.3m, run rate of 700k per qtr = estimate 1-1.5m remaining (more drilling this qtr)
EV estimate: 36m

DFS ESTIMATE (ULTRA CONSERVATIVE):
Gold price - AUD$1500
AISC (incl by product credits) - $300
Production - 30koz p/a
LOM 8 years (PFS estimate)
CAPEX 70m
8% discount
NPV = 136m
IRR = 49.4%

DFS ESTIMATE (using PFS + current POG + estimated increased LOM):
Gold price - AUD$1757
AISC (incl by-product credits) - $234
Production – 31.2koz p/a
LOM 10 years
CAPEX 63.3m
8% discount
NPV = 256m
IRR= 74.7%

Reality is, DFS should fall somewhere in between. If we take the middle ground on above, then apply a way over the top discount of 50% rather than 8%, then we get NPV of 156m, or a share price of 87c.

I can’t stress how conservative that 50% discount is. Most other developers are currently priced at a far lower discount to NPV. For comparison, CRB priced is similar to BLK at 15-20c pre-DFS and finance.

Main concern right now is cash, which is probably holding the SP back to some extent, however I expect there should be enough to get DFS over the line before raising.

CHART:

Daily:
View attachment 212215

Weekly:

View attachment 212216


TARGETS:

If USD gold holds 1300, and 23c can be taken out (probably on further resource upgrades), then I expect it to close the gap at 32c quickly. DFS should be the catalyst to test 55c then post CAPEX commitment, I’d expect that the 87c valuation is more than realistic. All of which could easily occur before Christmas. Downside is very limited given AISC and by-product offtakes.

It’s clearly one of the better risk/reward goldies on the ASX right now. There are very few left on the ASX, with at least 4-5 bags organic upside, without hitting a major new discovery, and without significantly higher POG. CRB has that potential, simply by meeting targets this year. Further upside exists via proving to the market that the technology works (in production) and slowly growing the resource.