thanks 123 for pointing it out. Mutiny Gold receives $0.19 price...

thanks 123 for pointing it out.

Mutiny Gold receives $0.19 price target from Hartleys
Friday, July 20, 2012 by Proactive Investors
Mutiny Gold receives $0.19 price target from Hartleys

Mutiny Gold (ASX: MYG) has received a buy recommendation from Hartleys, with a valuation of $0.13 and a twelve month target of $0.19. Mutiny last traded at $0.079.

The following is an extract from the report.


Robust Deflector BFS Confirms Low Cost Operation

Mutiny Gold has completed the Bankable Feasibility Study (BFS) on its 100% owned Deflector Deposit, part of the Gullewa Project, WA.

The Deflector BFS confirms a low cost gold-copper operation, with total production of 382Koz Au Eq (~314Koz Au, 14.4Kt Cu and 344Koz Ag) at average life of mine (LOM) cash operating costs of A$617/oz Au Eq over an initial 7 year mine life.

The project mine life of 7 years (2 years open pit and 5 years underground) is considered to be the base case, with a mine life exceeding 10 years achievable, given the numerous high-grade extensions not included in the updated Deflector resource estimate released in
December 2011.

Two years could potentially be added to the mine life of the open pit alone, providing upside to the project economics. Mutiny expects both mine life extensions and potential production growth as the Deflector Deposit remains open along strike and at depth.


Increased Capex Provides Platform for Growth

Mutiny expects that the Deflector operation will achieve throughput production of 480Ktpa for the oxide and transitional ore from the open pit and up to 360Ktpa for the fresh underground ore.

The project development is estimated to cost A$87m (plant A$66m and mine construction A$21m) which is only slightly above our estimate of A$80m, but includes all costs associated with a new processing plant, refurbishment of the accommodation village and mine construction (including pre-strip development of the Deflector open pit).

Development costs for the underground mine have been included in mining costs. Mutiny expects that using a gold price of A$1700/oz (below the LME gold forward for the next 5 years) that the project can generate cash flows of A$342m for a Net Profit of A$171m. Mutiny already has a gold hedge in place, covering 50Koz over a 3 year period at average gold price A$1847/oz.


Gold Production Now Targeted for Late CY2013

The Company plans to commence project development, following funding for first production in October 2013. The Deflector mine will produce gold bullion via gravity separation (~50% of the gold) and a gold-copper concentrate via a conventional flotation circuit. Bullion will be sold locally with the gold-copper concentrate likely to be sold overseas to an off-take partner.

Off-take discussions are well advanced and are expected be announced around the same time as project financing, which is due to be concluded before the end of Q3 CY2012. The Deflector mine has been previously mined so the Company expects to receive final permitting
approvals in the coming months (viewed as a mine reopening as opposed to a completed new project development).

We have an updated base case valuation for Mutiny Gold of 13 cps, which includes a fully funded and risked NPV12 Deflector valuation (pre-tax NAV) of ~A$101m. We expect a larger operation will be demonstrated following a pending resource upgrade, providing opportunities for both production increases and mine life extensions, which we have incorporated within our 12-month price target of 19cps.

We continue to recommend Mutiny as a Speculative Buy.