What the Brokers Say
WHAT THE BROKERS SAY: Interesting news and views from across the Resource Analyst universe.
Altlantic Gold NL (ASX: ATV)
Atlantic Gold is an ASX-listed gold developer operating in the Meguma Terrane of Nova Scotia, with a +1 million ounce gold resource.
A key positive is the mineralisation style – unlike most occurrences in the Meguma Terrane which are nuggetty ‘Bendigo’ style mineralisation, Atlantic’s projects, while still containing relatively coarse gold, are disseminated in nature, allowing for more efficient (and low strip ratio) open cut mining whilst still achieving high gravity recoveries.
The key Touquoy project is close to being fully permitted, with funding now being negotiated.
Atlantic Gold continues to work towards development on its Nova Scotian gold projects.
The company has established a resource base of 1.2 million ounces over two deposits – Touquoy and Cochrane Hill.
Atlantic’s strategy is to initially develop Touquoy, which is close to being fully permitted, and then move 80 kilometres to Cochrane Hill once Touquoy is exhausted.
Both proposed operations have a five year mine life, with a combined planned production of 900,000 ounces and should be viable at current gold prices.
Near mine and regional exploration is also planned to expand the resource base, and results to date indicate excellent exploration potential.
Atlantic is currently suffering due to the need to raise capital to fund development of Touquoy in a time of depressed market conditions and a relatively low gold price.
However, given Atlantic’s personnel and the potential of the project, we believe this is a good opportunity at bottom of market valuations for a speculative medium term investment, with the added possibility of short term value increases with the completion of permitting and putting development funding in place.
To date the company has defined mineral resources of 1.21 million ounces at 1.6 grams per tonne of gold at the Touquoy and Cochrane Hill properties, with these including 454,000 ounces at 1.48g/t of reserves at Touquoy.
Atlantic plans a two stage operation – an initial 5 year, 84,000ozpa operation at Touquoy, after which the plant will be relocated 80km to Cochrane Hill, where another five years of operation will extract a further 480,000 ounces of gold.
Nova Scotia is a mining friendly jurisdiction, with a history of gold mining, however with current activities largely confined to quarrying and industrial minerals.
The provincial government has been strongly supportive of Atlantic’s activities, and well developed permitting procedures are in place.
Tax rates are reasonable, with corporate taxes (federal and state) totalling 31 per cent and a one per cent NSR royalty on gold.
Following completion of a positive Definitive Feasibility Study, Atlantic is now close to completing permitting for the Touquoy gold project, with the following milestones being achieved to date:
Environmental Assessment Approval granted;
Mining Licence Granted;
Industrial Approval application lodged 2012, approval expected in March 2014;
Private surface rights obtained, Crown land leases on offer; and
Sourcing funding, based on a standalone Touquoy project.
Once permitting is finalised and funding in place, the Company will be able to commence the 21 month development period, with the possibility of production commencing in late 2015/early 2016.
Website: www.rfcambrian.com
Peninsula Energy (ASX: PEN)
Peninsula Energy is an ASX-listed uranium developer focused on its flagship Lance ISR project in the Powder River Basin of Wyoming.
The company also has an earlier-stage conventional mining project in South Africa.
Peninsula’s flagship Lance project is well advanced.
Construction has commenced and only one permit remains outstanding (and this is expected later this quarter).
The project looks likely to be largely funded by a number of debt instruments, with production anticipated to begin in 4Q14, ramping up to 1.2 million pound per annum by 2017 and 2.3Mlb pa thereafter.
Peninsula’s second development asset is Karoo in South Africa, which hosts a high-grade 50Mlb JORC resource at an average grade of 1,040ppm uranium.
The project also hosts a similar amount of uranium in historical (non-JORC) resources that management is aiming to bring swiftly into JORC resources.
Exploration upside is apparent at both projects.
At Lance, a combined 312 kilometres of prospective strike along roll-fronts needs exploration testing.
At Karoo, the company has 7,800 square kilometres of tenure across prospective Permian sandstones and a 250 to 350Mlb exploration target.
Uranium sales will be managed through a marketing subsidiary.
PEN already has a small quantity of production off-take secured at an average price of US$75.60 per pound.
It plans to sell 45 per cent of sales to strategic off-takers, 35 per cent to US utilities and the remainder on the spot market.
Peninsula has plans to produce 8 to 10 million pounds per annum by 2022.
Management intends to combine organic growth with accretive acquisitions.
Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.