new valuation of .94 for carrick

Event
CRK have reported a 1H06 loss of $0.23M, as expected, because the company continues exploration at Carrick
Vale in Western Australia. As CRK only listed in January 2005, there is no prior period for comparison purposes.
The drilling program conducted in the December quarter has resulted in the company increasing the total
resource at Carrick Vale by 20% to 2.01Moz of gold. The new resource calculation includes 38koz in the
Measured category, 577koz Indicated and 1.40Moz Inferred. We have updated our valuation on the latest
resources position and the potential for further additions over the next 12 months.
Implications
CRK's main activity is to conduct exploration on its tenements at Carrick Vale and as a result we expect limited
earnings until such time as a decision is made to develop any of the projects. Our valuation for CRK has
increased 54% from $54M to $83M, equating to 94 cps, fully diluted. This is based on the increase in total
resource to 2.01Moz, along with the potential for near-term resource additions. The valuation consists of $80.4M
for the Lindsay's Gold Project, Kalpini Project and Halfway Hill Nickel Project, along with $2.3M net cash. We
have assumed a 12 month target for the total resource at Carrick Vale of 2.5Moz and a value of $31/resource
ounce, which we believe is achievable. For the Kalpini and Halfway Hill projects we have continued using a
Multiple of Exploration Expenditure technique, which provides a conservative value of $1.0M.
Investment Opinion
The research on this company has been commissioned and as such Aegis has received a fee for its initiation and
ongoing research coverage.
We believe it is inappropriate and misleading to provide a recommendation, investment opinion and/or share price
target. However, we provide a valuation and earnings forecasts, as well as other relevant information to assist
investors to form a view on the investment prospects of this company.
Carrick Gold Limited
ASX: CRK Bloomberg: CRK AU Reuters: CRK.AX 31 March 2006
$0.88
1H06 Result: resource upgrade increases valuation
54%
# of Shares: 92M Market Cap: $81M Current Price $0.88
% All Ords: 0.0% % Sector: 0.0% Valuation ($): n/a
FIGURE 1: SHAREPRICE CHART TABLE 1: EARNINGS SUMMARY
Yr to Jun 2002A 2003A 2004A 2005A
NPAT Rep ($M) 0.0 0.0 (0.2) (0.3)
NPAT1 Adj ($M) 0.0 0.0 (0.2) (0.3)
EPS (c) 0.0 0.0 (0.8) (0.0)
DPS (c) 0.0 0.0 0.0 0.0
P/E (x) 0.0 0.0 (<99) (<99)
Yield (%) 0.0 0.0 0.0 0.0
Franking (%) 0 0 0 0
EPS growth (%) n/a n/a n/a n/a
1 Profit & EPS adjusted for options, goodwill, notional earnings
and non recurring items.
Carrick Gold Ltd
Year end Jun. All figures in A$M
Notes: 2. The risk ratings are on a 12 month perspective, where five stars denotes low risk and one star denotes high risk. Company risk takes into account expected
financial, strategic and execution risks associated with the company. Share price risk is a measure of the expected volatility of the price and other trading factors.
3. The Ethical rating rates a company on an ethical investment basis where five stars denote very good and one star a poor rating. The score is based on four key factors:
areas of operating, environmental, corporate governance and social factors. For more information see www.aer.com.au
Valuation ($): n/a Company risk2: Share Price risk2: Ethical rating3:
Profit & loss summary 2002A 2003A 2004A 2005A
Operating revenue 0.0 0.0 3.9 (0.4)
Invest & other income 0.0 0.0 0.0 0.0
EBITDA 0.0 0.0 (0.2) (0.4)
Depreciation/Amort 0.0 0.0 0.0 (0.0)
EBIT 0.0 0.0 (0.2) (0.4)
Net Interest 0.0 0.0 0.0 0.1
Pre-tax profit 0.0 0.0 (0.2) (0.3)
Tax expense 0.0 0.0 0.0 0.0
Minorities/Assoc./Prefs 0.0 0.0 0.0 0.0
NPAT 0.0 0.0 (0.2) (0.3)
Non recurring items 0.0 0.0 0.0 0.0
Reported profit 0.0 0.0 (0.2) (0.3)
NPAT add Goodwill & Pref 0.0 0.0 0.0 0.0
Adjusted profit 0.0 0.0 (0.2) (0.3)
Cashflow summary 2002A 2003A 2004A 2005A
EBITDA 0.0 0.0 (0.2) (0.4)
Working capital changes 0.0 0.0 0.0 (0.0)
Interest and tax 0.0 0.0 0.0 0.0
Other operating items 0.0 0.0 0.0 0.0
Operating cashflow 0.0 0.0 (0.2) (0.4)
Required capex 0.0 0.0 0.0 (0.0)
Maintainable cashflow 0.0 0.0 (0.2) (0.4)
Dividends 0.0 0.0 0.0 0.0
Acq/Disp 0.0 0.0 0.0 (1.4)
Other investing items 0.0 0.0 0.0 0.0
Free cashflow 0.0 0.0 (0.2) (1.8)
Equity 0.0 0.0 5.6 3.9
Debt inc/(red'n) 0.0 0.0 0.0 0.0
Balance sheet 2002A 2003A 2004A 2005A
Cash & deposits 0.0 0.0 3.6 2.2
Inventories 0.0 0.0 0.0 0.0
Trade debtors 0.0 0.0 0.0 0.1
Other curr assets 0.0 0.0 0.0 0.0
Total current assets 0.0 0.0 3.6 2.2
Prop., plant & equip. 0.0 0.0 0.0 0.0
Non-curr intangibles 0.0 0.0 2.3 3.7
Non-curr investments 0.0 0.0 0.0 0.0
Other non-curr assets 0.0 0.0 0.0 0.0
Total assets 0.0 0.0 5.9 5.9
Trade creditors 0.0 0.0 0.0 0.1
Curr borrowings 0.0 0.0 0.1 0.0
Other curr liabilities 0.0 0.0 0.0 0.0
Total current liab. 0.0 0.0 0.1 0.1
Borrowings 0.0 0.0 0.0 0.0
Other non-curr liabilities 0.0 0.0 0.0 0.0
Total liabilities 0.0 0.0 0.1 0.1
Minorities/Convertibles 0.0 0.0 0.0 0.0
Shareholders equity 0.0 0.0 5.8 5.8
Ratio analysis 2002A 2003A 2004A 2005A
Revenue growth (%) 0.0 0.0 0.0 (109.1)
EBITDA growth (%) n/a n/a n/a n/a
EPS growth (%) n/a n/a n/a n/a
EBITDA/Sales margin (%) 0.0 0.0 (6.0) 100.0
EBIT/Sales margin (%) 0.0 0.0 (6.0) 100.2
Tax rate (%) 0.0 0.0 0.0 0.0
Net debt/equity (%) 0.0 0.0 (60.5) (37.0)
Net debt/net debt + equity (%) 0.0 0.0 (153.3) (58.8)
Net interest cover (x) n/a n/a n/a n/a
Payout ratio (%) 0.0 0.0 0.0 0.0
Capex to deprec'n (%) 0.0 0.0 0.0 482.7
NTA per share ($) 0.00 0.00 0.06 0.04
ROA (%) 0.0 0.0 (16.0) (4.5)
ROE (%) n/a n/a (16.1) (4.8)
Multiple analysis 2002A 2003A 2004A 2005A
Market cap (M) 81
Net debt ($M) (2.2)
Peripheral assets ($M) n/a
Enterprise value ($M) 78.4
EV/EBIT (x) 0.0 0.0 (<99) (<99)
EV/EBITDA (x) 0.0 0.0 (<99) (<99)
EV/EBITDA All Ind (x) 12.0 10.5 10.0 8.7
EV/EBITDA rel All Ind (x) 0.0 0.0 (33.6) (25.4)
P/E (x) 0.0 0.0 (<99) (<99)
P/E rel All Ind (x) 0.0 0.0 (5.4) (<99)
P/E rel All Ind ex banks (x) 0.0 0.0 (5.3) (<99)
P/E sector (x) 45.0 >99 27.0 17.8
P/E rel sector (x) 0.0 0.0 (4.2) (<99)
Assumptions 2002A 2003A 2004A 2005A
GDP growth (%) n/a n/a 4.02 1.83
Interest Rates (%) n/a n/a 5.35 5.58
Inflation (%) n/a n/a 2.36 2.41
Copyright (c) 2006 by Aegis Equities Holdings Pty Limited. All Rights Reserved.
This information must be read in conjunction with the Legal Notice which can be located at http://www.aer.com.au/disclaimer.asp
Carrick Gold Ltd
TABLE 2: CARRICK VALE GOLD RESOURCES
Source: Company/Aegis Equities
Result Highlights
Lindsay's Project
Total resources have been increased 20% to 2.01Moz contained in 25.7Mt at a higher grade of 2.4g/t gold. The largest
increase has been in the Measured category (+153% to 38koz), although the Indicated category has also
increased dramatically (+112% to 577koz).
The resource upgrade is a result of 3,556 metres of diamond and RC drilling, at depths of 100-300 metres, conducted
during the December quarter. This exploration drilling has significantly increased the measured resource at the Parrot
Feathers deposit.
Sampling of ore stockpiles (totaling 20kt) at Lindsay's Trial Pit returned results of ~1.6g/t gold.
Kalpini Project
The drilling program conducted during 1H06 consisted of six reverse circulation drill holes targeting the main ore
structures of the historic Kalpini mine (7,806oz production at an average grade of 16.5g/t). Drill holes were designed to
depths of 70-100m and have revealed the presence of high grade gold structures.
Follow up drilling is planned to explore for structural repetitions to the north of the Kalpini mine and to define a resource
along this structure.
Halfway Hill Nickel Prospect
The Nickel Prospect is located immediately south of the Carrick Vale tenements and 5 km directly south east of the
Lionore Black Swan/Silver Swan nickel mines. During the December quarter CRK undertook a diamond drill hole to a
depth of 544 metres. The purpose of the hole was to test for the presence of a komatiite in contact with felsic volcanics,
interpreted as a location for massive nickel sulphides. Drilling has indicated that a komatiite with elevated chromium and
magnesium geochemistry is present, although further exploration is needed to test this contact for massive nickel
sulphide intersections.
Tonnes Grade Contained Gold
Mt g/t koz % total
Old
Measured 0.16 3.0 15 1%
Indicated 3.70 2.3 272 16%
Inferred 19.70 2.2 1,389 83%
Total 23.56 2.2 1,676 100%
New
Measured 0.35 3.4 38 2%
Indicated 6.84 2.6 577 29%
Inferred 18.54 2.4 1,396 69%
Total 25.73 2.4 2,011 100%
% Change
Measured 118% 13% 153%
Indicated 85% 13% 112%
Inferred -6% 7% 1%
Total 9% 11% 20%
Copyright (c) 2006 by Aegis Equities Holdings Pty Limited. All Rights Reserved.
This information must be read in conjunction with the Legal Notice which can be located at http://www.aer.com.au/disclaimer.asp
Carrick Gold Ltd
Summary and Outlook
CRK is progressing rapidly with the delineation of resources at the Carrick Vale. Total resources have increased by 80% since
we commenced coverage of the company in June 2005 and we expect further increases over the next 12 months. CRK is
planning further exploration at the Parrot Feathers Prospect and south of Lindsay's Trial Pit in the immediate future, which is
expected to increase the indicated resource, but also convert indicated to measured resources.
At Kalpini the company is continuing to define the resource along the current known structure and also explore for repetitions.
Recent results from this project indicate the upside potential for the area, with further exploration a priority. CRK is currently in
the process of releasing an initial ore resource statement, which we expect in the near-term.
Overall we are encouraged by the amount of work done over the past two quarters by CRK and expect that further resource
upgrades will be announced over the next 12 months. The company has indicated that Placer Dome was very interested in the
project potential at Carrick Vale and with the recent takeover of Placer Dome by Barrick Ltd now complete (to form the world's
biggest gold company) we expect that these discussions will resume, particularly with the gold price now trading at US$586
(A$820).
Following the increase in the total resource at Carrick Vale and exploration results from the Kalpini and Halfway Hill
project, we have calculated an increased valuation for CRK at 94cps, fully diluted.
Copyright (c) 2006 by Aegis Equities Holdings Pty Limited. All Rights Reserved.
This information must be read in conjunction with the Legal Notice which can be located at http://www.aer.com.au/disclaimer.asp
Peter Leodaritsis
Managing Director
Phone: 61 2 8296 1100
[email protected]
Tony Baddour
Finance and Administration
Phone: 61 2 8296 1113
[email protected]
Ehab Dimitri
Corporate Counsel
Phone: 61 2 8296 1155
[email protected]
David Heather
Sales & Implemented Research
Phone: 61 2 8296 1108
[email protected]
Peter Rae
Head of Equities
Phone: 61 2 8296 1151
[email protected]
Damien Klassen
Head of Structured Products
Phone: 61 2 8296 1104
[email protected]
Dinesh Pillutla
Head of Property
Phone: 61 2 8296 1163
[email protected]
John Kessell
Head of Corporate Research
Phone: 61 2 8296 1152
[email protected]
RESEARCH
RESOURCES
Brendan Fitzpatrick
Phone: 61 2 8296 1157
[email protected]
David Cotterell
Phone: 61 2 8296 1159
[email protected]
INDUSTRIALS
Robert Gregory
Phone: 61 2 8296 1119
[email protected]
Anthony Farnham
Phone: 61 2 8296 1150
[email protected]
John Deniz
Phone: 61 2 8296 1123
[email protected]
Sandeep Gupta
Phone: 61 2 8296 1133
[email protected]
FINANCIALS
Peter Rae
Phone: 61 2 8296 1151
[email protected]
Peter Leodaritsis
Phone: 61 2 8296 1101
[email protected]
Ravi Reddy
Phone: 61 2 8296 1165
[email protected]
David Ellis
Phone: 61 2 8296 1115
[email protected]
TELECOMMUNICATIONS,
MEDIA & TECHNOLOGY
Rodney Lay
Phone: 61 2 8296 1106
[email protected]
HEALTHCARE
John Kessell
Phone: 61 2 8296 1152
[email protected]
STRUCTURED PRODUCTS
Matthew Bullock
Phone: 61 2 8296 1105
[email protected]
Andrew Wong
Phone: 61 2 8296 1138
[email protected]
Rodney Lay
Phone: 61 2 8296 1106
[email protected]
PROPERTY TRUSTS
Dinesh Pillutla
Phone: 61 2 8296 1163
[email protected]
Hon Lee
Phone: 61 2 8296 1162
[email protected]
EMERGING COMPANIES
Nathan Lim
Phone: 61 2 8296 1137
[email protected]
Sharon Loaiza
Phone: 61 2 8296 1131
[email protected]
Joe Zeleny
Phone: 61 2 8296 1127
[email protected]
DATA SERVICES
Radek Zeleny
Phone: 61 2 8296 1168
[email protected]
Disclaimer & Disclosure of Interest
This publication has been prepared by Aegis Equities Research Pty Limited (ACN 085 293 910, AFSL no. 225072) (“Aegis”) an Australian
Financial Services Licensee. Whilst the information contained in this publication has been prepared with all reasonable care from sources,
which Aegis believes are reliable, no responsibility or liability is accepted by Aegis for any errors or omissions or misstatements however
caused. Any opinions, forecasts or recommendations reflects the judgement and assumptions of Aegis as at the date of publication and
may change without notice. Aegis and its officers, agents, employees, consultants and its related bodies corporate, exclude all liability
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