Leading Sydney-based resource analyst values gold developer Kingston at 52c, sees “strong upside”
A respected Sydney-based resource analyst believes gold developer Kingston Resources (ASX: KSN) has a “head start to low-cost gold production” at its advanced Misima gold project in PNG
7th May 2021
Resources Rising Stars
A respected Sydney-based resource analyst believes gold developer Kingston Resources (ASX: KSN) has a “head start to low-cost gold production” at its advanced Misima gold project in PNG, where it is aiming to restart one of the most prolific gold mines of the region.
In a lengthy initiation report, Michael Bentley from MST Access says Kingston is an early-stage investment opportunity that captures the benefit of what is effectively a “brownfield” project at its 3.6Moz Misima project.
Misima was previously operated by gold giant Placer Dome between 1989 and 2004, producing 3.7Moz over a 15-year life at a time of significantly lower gold prices.
“The key advantages of existing infrastructure and historical operating knowledge provide significant offsets to the key risks of delays to the Definitive Feasibility Study and to approvals and funding,” Bentley wrote in the MST Access initiation report.
Bentley is a respected analyst and portfolio manager who has held senior positions with large and boutique fund managers, focused on mining and energy stocks. He was previously with Morgan Stanley Equity Research, working in mining and energy corporate access.
MST Access’ risked NPV valuation for Kingston is 52c per share, a hefty premium to its current share price of 19-20c, although it says that alternative gold-resource based comparable valuations imply 57-63c per share, “demonstrating significant upside to the current share price”.
The MST Access initiation report comes as Kingston prepares to embark on a full-scale DFS on the 3.6Moz Misima project, building on a highly successful PFS completed last year which forecast production of 130kozpa over 17 years with an estimated $283 million capital cost.
“Misima’s existing infrastructure such as ports, airstrip and power and original development sites such as pit, plant and camp provide a significant head start for the project and reduce construction time and capital cost,” the report said.
“Acquired knowledge of ore handling, plant operation, geotechnical and metallurgical properties from 15 years of historical production markedly reduce technical risk and, along with a substantial silver resource by- product credit, reduce operating costs.”
Bentley is also positive on Kingston’s management team, noting that they have multiple decades of experience and are highly skilled in mining, project development and exploration.
“Chairman Mick Wilkes’ involvement with multiple successful mine constructions and profound knowledge of PNG provides a vital benefit to Kingston,” he says.
Other key elements to the investment proposition include the substantial exploration upside at the project, with the current resource remaining open at depth and having a “high probability” of increasing, according to Bentley.
“Five other outstanding exploration options are present including 4km of untested strike at Misima North,” he said. “The exploration focus is on near-surface, easily mineable gold mineralisation.”
To view a full copy of the MST Access initiation report, click here.
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