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Echo Resources (ASX:EAR)

Exploration potential continues to grow

1 Video - Mar 18

Echo Resources (ASX:EAR) has identified a new, highly-prospective exploration area within its 1,600 km2 landholding in the Yandal gold belt of Western Australia. The area is close to the recently announced Ramone gold discovery of Northern Star Resources (ASX:NST), which is located midway between Julius and Jundee and less than 10 km from Echo’s tenement boundary.

Northern Star highlighted in its exploration announcement that Ramone has the potential to be an open-pit mine with mineralisation outlined over 400 metres of strike so far; results include: 14 m @ 8.0g/t Au, 13 m @ 8.5 g/t Au and 18.5 m @ 6.2 g/t Au (true width).

Analyst comment: when Northern Star acquired a 19% interest in Echo last year, we felt this was due mainly to the potential of the existing reserve and infrastructure at Echo’s Yandal project, which supports a 100,000-ounce gold operation at an all-in sustaining operating cost of AU$1,034/oz. While this is relatively modest for a company of Northern Star’s stature, we believe it would likely add considerable value as a ‘bolt on’ asset to the company’s production portfolio. 

However, following Northern Star’s recent exploration update with respect to the discovery of the Ramone deposit less than 10 km from Echo’s tenement boundary, it appears the near-term producing asset was not the only reason Northern Star took a stake in Echo – as they are also likely keen to test Echo’s northern exploration tenement package, on which little if any exploration work has been completed to date.  

While Echo will accelerate early-stage exploration work at this northern region later in the year, in the interim we eagerly await results from its deep exploration drill programme around the Lotus-Orelia mineralised system that commenced in January. Collectively, Lotus and Orelia have produced 775,000 ounces of gold and both deposits remain open at depth. 

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 maintain our valuation for Echo to $0.60/share (share price $0.34 / share). 

Yandal Gold Project – virtual site trip

1 Video - Dec 17
  • Updated virtual site trip for Echo Resources Yandal Gold Project
  • Updated – December 2017.

Valuation Update – Yandal reserve increases to 856,000oz Au

1 Video - Nov 17
  • Echo has increase the gold reserve at their Yandal Gold Project to 856,000oz Au.
  • We review this result and provide an updated valuation.

Orelia resource increases to 1.1Moz Au – Management update

1 Video - Sep 17

Interview with Simon Coxhell, Managing Director of Echo Resources to discuss the recent resource upgrade at the Orelia deposit and the on-going exploration strategy.

Resource upgrade at Orelia surpasses expectations – Valuation update

1 Video - Sep 17

Echo Resources (ASX:EAR)  has increased the resource at their Orelia gold deposit to 15.9Mt at 2.1g/t for 1.1Moz Au (1g/t cut-off). This upgrade is the result of an aggressive and on-going exploration program across the company’s holdings in the highly prospective Yandal greenstone belt in Western Australia.  Highlights of the resource upgrade include: 

  • Orelia resource – 15.9Mt at 2.1g/t for 1.1Moz Au (previously 5.6Mt at 1.9g/t for 349koz);
  • 90% of the resource is in the Indicated category;
  • Remains open at depth and along strike with further drilling currently underway; and
  • Global Resource increases to 1.7Moz Au. 

Echo also owns the 2Mtpa Bronzewing processing facility and associated infrastructure.  This infrastructure will allow for a significant reduction in capital expenditure when a decision to commence production is made in the future.  

Analyst Comment:   This was an excellent achievement for Echo as the resource upgrade surpassed our expectations.  What makes this all the more impressive is that Echo only took ownership of the Orelia deposit less than one year ago.  

Importantly, not only did resource nearly triple in size (previously 349koz Au at 1.9g/t Au), but the grade also increased to 2.1g/t Au.  This is important as Echo’s strategy is to only target ore that exceeds 2g/t Au when production commences in the future.  

And whilst the company has stated they will not fall into the trap of commencing production without a sufficient mine life to support an on-going and sustainable operation (TSI estimate – 8Mt of ore / 4yrs reserves minimum), given Orelia will provide the base load feed for the Bronzewing facility, this resource upgrade highlights production will be likely to commence much sooner than we previously estimated (TSI estimate – 2020 first gold production).  

Catalysts -  Work on the reserve estimate for Orelia is underway, which we expect to be released in the near term (TSI estimate – 4th qtr).  Whilst additional resource and reserve upgrades on the company’s other deposits are likely before the end of the year.  We believe this should see the global resource soon exceed 2Moz Au.

Valuation:  We have increased our valuation for Echo to $0.44 / share (previously $0.34/ share).  The major driver for this was increasing our mine life assumption at the Orelia deposit (Current – 310koz at 2.1g/t Au vs. previous – 147koz Au at 1.8g/t Au).  

However we note our mine life and grade assumptions are relatively conservative given that nearly 1Moz of the Orelia resource is classified in the indicated category.  We will reassess our mine life assumption post the reserve announcement for Orelia.  

Announcement Long Section

Exploration update

1 Video - Jul 17

Update from management regarding the latest exploration results from the Oreila, Julius and Wimbledon deposits.

Initiation Report

9 Videos - Jun 17

Echo Resources is an ASX listed gold exploration and development company that has commenced an aggressive exploration program across their holdings in the highly prospective Yandal greenstone belt in Western Australia. Echo also owns the Bronzewing facility, including a 2 Mtpa processing facility, enabling a significant reduction in future capital expenditure when a decision to commence production is made.  This analysis includes:

  • Valuation, investment & risk assessment;
  • Virtual site trip - Bronzewing project; and
  • Exploration analysis.

Virtual Site Trip

1 Video - Jun 17

Echo is the dominant tenement holder in the highly prospective Yandal greenstone belt in Western Australia, as well as owner of the Bronzewing 2Mtpa processing facility and associated infrastructure. This video examines: 

  • The advanced deposits in the Echo portfolio of gold asset; 
  • The three pronged exploration strategy; and
  • The Bronzewing processing facility and associated infrastructure at site.

Julius deposit – History, geology & exploration strategy

1 Video - Jun 17

Interview with Echo to discuss the geology, exploration strategy & highlight recent drill results:

  • The Julius deposit is located 80km from the Bronzewing facility and has a reserve and resource of 68,000 and 335,000oz Au respectively.
  • The project is a shallow, high grade deposit and will form part of Echo’s initial production strategy.

Orelia deposit – History, geology & exp strategy

1 Video - Jun 17

Interview with Echo to discuss the geology, exploration strategy & highlight recent results:

  • The Orelia deposit is located 8km from the Bronzewing facility and has historical operation produced just under 400,000oz Au.
  • The deposit has a current resource of 349,000 oz Au.
  • Also discuss the potential change in strategy for mining the deposit compared to the historical operation.

Empire District – History, geology & exp strategy

1 Video - Jun 17

Interview with Echo to discuss the geology, exploration strategy & highlight recent results

  • The Empire district is 30km South of the Julius deposits.
  • The region was originally identified by Newmont before 2004, however no limited follow up work has been completed since.

Bronzewing – History & strategy towards production

1 Video - Jun 17
  • The Bronzewing project is a historical gold operation.
  • Management provided us with reasons why the operation closed and how Echo’s strategy towards gold production is different.

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