Argonaut ‘awaiting feasibility study’ from Genesis as it lifts price target to 12c

Perth-based broker Argonaut Securities has maintained its Speculative Buy recommendation at a revised valuation of 12c per share
22nd January 2021
Resources Rising Stars

Perth-based broker Argonaut Securities has maintained its Speculative Buy recommendation at a revised valuation of 12c per share (previously 10c) for gold developer Genesis Minerals (ASX: GMD).

The stock is currently trading around 8c.

In an updated research note, Argonaut analyst Royce Haese has compiled an “updated development scenario” for the company’s flagship Ulysses gold project in WA, factoring in recent exploration results and with an updated mineral resource estimate and feasibility study imminent.

“Since the acquisition of Kookynie in July 2020, Gensis has sought to replicate the previous exploration success at Ulysses at the new project,” he wrote.

“At Admiral and Clark, the predominantly in-fill drilling has shown grade continuity which provides an increase in resource confidence. At Butterfly and Orient Well, Genesis has expanded the scale of mineralisation.”

Argonaut’s development scenario has been updated to factor in recent exploration success, with the broker assuming a total mining inventory of 8.9Mt at 2.45g/t for 700,000oz of gold.

“This feed supports a 6.5-year mine life processing 1.4Mtpa through a newly-built mill,” it says.

“Due to the scale of the project, Argonaut maintains that a standalone developer scenario remains the likely outcome for Genesis.

“Based on our model, we value Genesis at $234 million or 12c per share.

“Genesis Minerals continues to demonstrate exploration upside at the Ulysses Project.  

“The resource base in its current state has the potential to generate strong cash flows when developed and still has room to grow.”

To view a full copy of the Argonaut research note, click here.

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