Foster Stockbroking initiates coverage on Bardoc Gold with a 16c price target

Sydney-based broking house Foster Stockbroking has initiated research on gold developer Bardoc Gold ASX: BDC) with a BUY recommendation and 12-month price target of 16cps, well above its recent trading price of ~8.5-9c...
29th May 2020
Resources Rising Stars

Sydney-based broking house Foster Stockbroking has initiated research on gold developer Bardoc Gold ASX: BDC) with a BUY recommendation and 12-month price target of 16cps, well above its recent trading price of ~8.5-9c.

In a comprehensive research note, veteran Foster’s resource analyst Mark Fichera describes Bardoc’s development strategy as “unite and conquer” – building scale and efficiency by extracting synergies and scale from the proximity of gold deposits and a former mine to justify a standalone operation at its 3.02Moz Bardoc Gold Project, just north of Kalgoorlie in WA.

Fichera says Bardoc’s global 3Moz resource consists of 2.1Moz of open pittable material and 0.96Moz amenable to underground extraction across three “cornerstone” deposits, Aphrodite, Excelsior and Zoroastrian which together account for 2.5Moz, or 83%, of resources.

Bardoc released a Pre-Feasibility Study showing strong metrics in March this year, with key highlights being a 7.8-year life-of-mine at an average of 135koz of gold production per annum with all-in sustaining costs of A$1,220/oz.

The project was forecast to generate a post-tax NPV using an 8% discount rate of $252 million with a 27 per cent internal rate of return, assuming a A$2,100/oz gold price and A$0.69 exchange rate.

“Pre-production CAPEX is $142 million,” says Fichera, “mostly due to plant and pre-strip. Bardoc is located 35km from Kalgoorlie and straddles the Goldfields Highway, providing ready access to labour, services and supplies.”

He says metallurgy is significantly de-risked by historical mining which demonstrated >90 per cent recoveries at the Excelsior and Zoroastrian deposits, supporting the recoveries estimated in the PFS.

“The key challenge historically has been Aphrodite refractory ore,” he said. “BDC is addressing this by choosing to produce a gold concentrate, therefore reducing operational risk and capital and operating costs. Gold concentrate recoveries of 92% have been achieved by flotation.”

Fosters also likes the exploration upside across the Bardoc Gold Project.

“Only 1/3rd of Bardoc’s global resources were considered in the PFS,” he says. “BDC has ample exploration opportunities both at its cornerstone deposits and satellites to grow resources by size and quality, thereby extending Bardoc’s mine life.

“Mineralisation exists outside resources and many deposits are open at depth and strike.”

Foster’s BUY recommendation is underpinned by a 16cps valuation based on the broker’s risked NPV.

“Key catalysts for the stock include further Resource upgrades, binding off-take for gold concentrate, DFS completion, permitting approvals, final investment decision, project funding and commencement of construction and mining, as well as M&A.”

To view a full copy of the Foster Stockbroking initiation report on Bardoc Gold, click here.

 

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