Sign up to TSI  alerts
MENU

primary gold - Excellent exploration results at Mt Bundy

Aug 2017


Stay up to date with The Sophisticated Investor newsletter

Summary - Excellent exploration results at Mt Bundy

Primary Gold (ASX:PGO)  has announced outstanding drill results for their recent drill program at the Mt Bundy Gold Project in the Northern Territory.   Highlights of the announcement include:

  • 117m at 1.5 g/t Au, 52m at 1.5g/t Au and 28m at 1.2g/t;
  • The majority of the intercepts were outside and below the current pit design highlighting the potential to extend pit shell;
  •  Drilling now completed however awaiting final results from Rustlers Roost & Quest 29 deposit; 
  • Resource upgrade – 4Q17 (TSI estimate).

Analyst Comment:   This was the first exploration program at the Rustlers Roost deposit in more than 20 years and it didn’t disappoint.  With the stand out result clearly being 117m at 1.5 g/t Au. 

Usually when results over this strike length are released, investors can be sceptical given the potential for drilling to be down dip.  We believe this is unlikely, given it was a vertical drill hole, 200m from the resource area and down plunge from the current pit shell (image above). 

As the majority of these results were outside and below the current resource area and pit design , it is there will be a substantial resource upgrade later this year, which should also see the mine life increase past its current nine years (Scoping Study).

In addition to Mt Bundy, Coolgardie has been flying under the radar since Primary acquired the project last year.  However management has been working hard behind the scenes, as development and potentially mining will commence later this year, with first gold production by 1H18.

Whilst Coolgardie will be a relatively smaller gold operation (35 koz pa to 45koz pa – TSI assumption), it provides a low capital entry point to enter the ranks of gold producer, and more importantly commence generating cash flow for the future development of the Mt Bundy project. 

The information in this email should not be the only trigger for your investment decision. We strongly recommend you seek professional financial advice whenever making financial investment decisions. 

Valuation:  We have maintained our valuation for Primary to $0.35 / share (price – $0.06/share) . We will review this valuation post the resource upgrade at Mt Bundy.