‘Under-valued’ Breaker hits the spot with promise of a big gold mine
Plus, strong iron ore price recovery boosts the outlook for Centaurus’ Brazilian iron ore project and Gateway looks to repeat the lucrative strategy of revitalising old WA gold mines
15th February 2019
It was suggested here last week that what Breaker Resources’ executive chairman Tom “Colonel” Sanders had to say at this week’s Resources Rising Stars’ conferences in Sydney and Melbourne could be pivotal.
The argument was that having established a 1.1m oz resource at its February 2016 virgin Bombora discovery, 100km east of Kalgoorlie, the pressure was on Sanders to convince the market it was undervaluing the stock in a major way.
Sanders did not disappoint. That has been reflected in Breaker’s share price moving up from 34c a week ago to 43c, a handy 26% gain. Having said that, Sanders was out at the conferences to convince the punters the price move was just a start.
“This is going to be a mine and it is going to be a big one and it is currently in the hands of an undervalued junior,” Sanders said.
“We have a very rare new gold discovery with obvious scale, high grade mining options, and multi-million ounce growth potential.”
Breaker’s next resource update – the last one came at an industry-best finding cost of $11 an oz – is due to be released early in the June quarter. At the same time, a preliminary feasibility study is underway into an initial open cut development on the 2.5km central zone of the 8km long Bombora trend.
The idea is to get an open cut going to fund exploration along the trend and Bombora’s emerging high-grade underground potential. It fits Sander’s intent to keep Breaker’s issued capital (182.7m shares) nice and tight.
The timing of the PFS release is up in the air because Sanders first wants to find the edge of the initial open pit. Latest drill results suggest that could be some time off, which is a good thing, assuming equity funding for the drill-out is priced at higher levels than today.
Brazil specialist and Centaurus (CTM) managing director Darren Gordon is a decent sort of bloke so he was never going to make much of what Vale’s January 25 tailings dam disaster might mean for those with iron ore interests in the country.
Nowadays, the focus for Centaurus is very much on the big-time potential of its nickel-cobalt and copper-gold prospects in Brazil’s fabled Carajas mineral province.
But Brazil was originally an iron ore play for Centaurus and it still owns the development-ready Jambreiro project in Minas Gerais state, also home to Vale’s tragically deadly Brumadinho operations.
Jambreiro has all been dressed up and ready to go for years. It has its mining licence and environmental approvals in place for a 3mtpa operation from an initial 18 million-tonne reserve of high-grade, low impurity material for supply to the local steel mills.
More to the point is that back in 2013, Jambreiro was the subject of a bankable feasibility study that arrived at a net present value of about $100m. Iron ore prices were in the doldrums at the time and the required financing for a development proved to be a bridge too far.
But it is a different story today. Plug in current domestic iron ore prices and that NPV in the 2013 BFS would probably be 20-25% higher.
Domestic iron ore price strength is due in part to the strong demand for premium product, as well as the hit to supplies flowing from the response of mine closures and suspensions where “upstream’’ dams like that at Brumadinho are put under the microscope.
As mentioned earlier, Gordon is not waving his hands in the air about Jambreiro’s new appeal in the higher iron ore price environment, whatever the cause.
But when it is remembered that Centaurus is a 0.7c stock for a market cap of $16m, the ballooning NPV of Jambreiro is hard to ignore, particularly as any development would employ the much more acceptable “downstream’’ tailings dam model.
From all that, it can be argued that there is nothing in the Centaurus share price for its projects up in the Carajas – the free-carried Itapitanga nickel-cobalt project, and the Salobo West copper-gold project.
The lead partner in Itapitanga, the battery metals specialist Simulus Group, is working on delivering a bankable feasibility study into a development next year while a maiden drilling program at Salobo West (it’s west of Vale’s Salobo mine which is being expanded to 250,000 tpa of copper) is due to kick off next quarter.
Gateway Mining GML
One of the safest strategies to follow when investing in the junior sector is make it all about the people, first, second and third.
That’s why Gateway Mining (GML) is building a following as the Mr Methodical of the exploration game, Gateway managing director Peter Langworthy, works towards establishing the former sleepy explorer as a gold producer at its flagship Gidgee project in WA.
Langworthy came on board as MD in March last year. A 33-year veteran geologist, Langworthy is best known for leading the exploration team that made the nickel discoveries which made Jubilee Mines the $3.3 billion morsel that Xstrata snapped up in 2007.
He has lofty ambitions for little Gateway with its 1.5c share price and $14 million market cap.
“We want to systematically build a resource base that is capable of building a mid-tier gold business. And there is an opportunity in the district for some sensible consolidation and expansion opportunities. We will look at those at the appropriate time,” Langworthy said this week.
Systematically, methodical, call it what you will. It is what Langworthy’s approach to exploration is all about. And here we are almost 12 months into his tenure as MD and the approach is beginning to pay dividends.
A maiden resource estimate for the Whistler project is in the works and will have a focus on mineralisation extensions beneath the old pit, while the high-grade potential in deeper positions is tested in a diamond drilling program.
Across at the Montague project, high-grade mineralised structures have been confirmed down-dip of the old open cut (1.2km south of Whistler). Additional drilling is expected to “substantially” expand the mineralised zone.
More work is also planned at the parallel and high-grade Gordon’s Lode (4m at 24.1g/t) which has raised the potential for the presence of multiple mineralised structures to be present.
About 2Moz of gold had been mined and discovered over time in the Gidgee district but it is virtually untouched by modern exploration techniques, as Gateway’s recent results demonstrate.
“Gidgee is one of those opportunities where we know there is gold there and there has been some shallow oxide pit mining in the past. But exploration at the time was never taken on to that next stage,” Langworthy said.
“WA’s Archean greenstone belts just keep delivering and I think we’ve seen time and time again the opportunity for new discoveries is quite extraordinary.”
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