What the Analysts Say
WHAT THE ANALYSTS SAY: This week our team of experts run the ruler over Carnavale Resources (ASX: ADV) and Doray Minerals (ASX: DRM).
Website: www.breakawayresearch.com
Carnavale Resources Limited (ASX: CAV)
Carnavale Resources Limited (ASX: CAV) is an Australian based junior explorer concentrating activities on the Red Hills Project in eastern Nevada.
Red Hills saw small scale mining of the high grade shear hosted poly-metallic mineralisation in the early 1900s.
Since acquiring the project in 2013 the company has made steady progress and has now defined a number of drill targets which will be tested soon.
The project also has Carlin-style potential, which the company is currently assessing.
The second project, Little Butte, for which Carnavale is earning 100 per cent, is located in western Arizona.
Work by the company and previous explorers has defined a low grade copper-gold supergene blanket, with further work now required to determine the primary source of this mineralisation.
Carnavale is commencing drilling on shear hosted poly-metallic targets at their Red Hills project, where they are earning up to 75 per cent through an earn-in agreement.
The project is located in Nevada, a well-known and relatively mining friendly jurisdiction.
Sampling and mapping by Carnavale over historic workings has confirmed the high-grade nature of the mineralisation, and a mid-point exploration target (100% basis) of 12 million tonnes has been estimated over the two targets.
Our calculations indicate a zinc equivalent grade of around 22 per cent based on the recent sampling.
Estimates of mineralisation thickness range between four and 20 metres.
Red Hills is also prospective for Carlin-style mineralisation – soil sampling at Viper has returned a Carlin-style geochemical signature, and is situated in a similar structural and lithological setting as that for both the Kinsey and multi-million ounce Long Canyon deposits located to the north.
Website: www.pcfcapital.com.au
Company: Doray Minerals Limited (ASX: DRM)
With Doray pre-announcing its June Quarter production, there were few surprises.
The record June Quarter of 28,200 ounces of gold resulted in FY15 production of 88,700 ounces, at the upper end of guidance.
The strong production was largely due to the high grades from the Wilbur Stage 2 pit and should flow onto the Suzie pit once Wilbur finishes shortly.
The good production sets Doray up for the next phase which is the development of Deflector with the key catalyst to be the finalisation of the Deflector funding package.
June Quarter production record: As pre-reported by the company, the Andy Well operation had record June Quarter production of 28,180 ounces, up 32 per cent Quarter on Quarter (QoQ), thanks to a sizeable contribution of open pit material.
The FY15 performance was towards the top end of the revised guidance of 85,000 to 90,000 ounces.
Lower Cash Costs: With the strong production, cash costs fell by 7 per cent for C1 to $518 per ounce (PCF estimate $512/oz), and by 15 per cent for AISC to $1,027 per ounce (PCFe $1,025/oz).
The lower costs yielded a robust margin of $493 for the quarter.
QoQ cash up 7.5 per cent: Cash & bullion, including the DSRA, was $32.8 million, up from $30.7 million QoQ.
This follows around $8 million in debt repayments with quarter ending debt of $25.4 million, giving Net Cash of $7.4 million.
Strong production and costs are expected to continue over the next few quarters, boosted by the high grade open pits.
With operations going well, the completion of the Deflector financing should provide an important catalyst on the corporate front.
Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.
The views, opinions or recommendations of this article do not in any way reflect the views, opinions, recommendations, of The Resources Roadhouse.
The Roadhouse makes no representation or warranty with respect to the accuracy, completeness or currency of the content. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian financial services licensee before making investment decisions.