Investment View
Recent changes to the Board structure and Company strategy have started to bring in strong investor attention. However, in comparison to their peers group (EV / resource oz – Av. $115/oz vs. PGO $34/oz) Primary is still trading at a significant discount, despite what we see as having a quality portfolio of assets, which forms the platform for a potential future production target of +150koz pa.
We see upcoming exploration activities as one of the long term drivers for Primary’s share price. Exploration success is particularly relevant given numerous historical drill results have encountered gold mineralisation, however they are outside of the current resource base, which could result in a resource upgrade in the near term with some infill drilling. Whilst more exciting is the significant number of greenfield targets (60 gold occurrences) that have never been drill tested, despite this including a number of gold outcropping from surface.
Valuation
We see significant upside in the current share price ($0.10 / share) as we value Primary at $0.30 / share. This valuation could increase further through exploration success, as our expanded mine life scenario has a valuation of 0.47 / share.
