Blue Ocean sees ‘1Moz+’ potential at Anglo’s Mandilla discovery
Blue Ocean Equities senior mining analyst Steuart McIntyre has picked WA gold junior Anglo Australian Resources (ASX: AAR) as having one of the state’s most exciting new gold discoveries
6th August 2020
Resources Rising Stars
Blue Ocean Equities senior mining analyst Steuart McIntyre has picked WA gold junior Anglo Australian Resources (ASX: AAR) as having one of the state’s most exciting new gold discoveries, describing its Mandilla project, 70km south of Kalgoorlie, as having “company-changing” potential.
In a detailed initiation note, McIntyre has put a “Spec Buy” recommendation on the $85 million company, setting a price target of 35c and a “strategic target” of 45c, well north of its recent 17-18c trading price.
He says the explorer has made a significant discovery at Mandilla, reporting a host of impressive gold hits over a strike length of ~1km and still open in several directions. “With three processing plants within ~40-50km, we also see potential corporate appeal,” he adds.
“Our target is based on a combination of EV/oz and our assessment of what Mandilla might be worth to Gold Fields if the company can delineate a ~500koz mineable resource,” he said referring to Gold Fields 4.7Mtpa St Ives gold mine located just 20km away.
St Ives has only ~2 years of open pit reserves remaining, potentially making the emerging discovery story at Mandilla of strategic interest.
Previous exploration at Mandilla was focused on shallow targets at depths of ~30-50m, but last year the company made what appears to be a significant discovery by targeting deeper drilling into the granite bedrock.
“In our view, based on the widths and grades of the drill results reported, AAR has made a company-changing discovery at Mandilla East,” McIntyre says. “The company is completing additional drilling comprising 3,000m of diamond and 10,000m of RC with a resource update to follow.”
Some of the host of results reported by the company to date have included standout intercepts such as 163m at 1.76g/t, 93m at 3.11g/t, 99m at 1.47g/t, 49m at 2.07g/t and 60m at 3.79g/t.
Blue Ocean’s 35c price target is based on a conceptual analysis based on the potential for the company to successfully establish a minimum mining inventory of ~500,000oz at 1.5g/t at Mandilla which McIntyre believes could be of interest to Gold Fields.
“That said, until a resource is established there are a host of additional considerations which could impact valuation, including grade, strip ratio, metallurgy, etc.” he cautions.
“It is also important to note that exploration at Mandilla remains open in a number of directions and if the recent exploration success continues, we believe there could be potential for the resource to grow to 1Moz+.
“Our Strategic Target addresses this possibility.”
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