ev/resource of $21/oz

This is a broker coverage of GGG, but the interesting bit is the last part which is about our joint asset.


''At an EV/Resource valuation of $21/oz, against the sector on $106/oz and with a gold price well over $1700/oz, we reiterate our Buy.''


Collins Stewart Morning Mining Comment
GGG Resources | GGG LN | MC £28m | More drilling hits

More positive results: GGG has provided another update on the phase II drilling, which has now drilled 57km out of a 70km programme commenced in May, taking the total phase I and II programmes to 94km. The drilling continues to confirm both the resource model and expectations for the large low grade deposit, with 99% of holes intersecting mineralization. The best intersections from the latest assays were 20m at 3.45g/t from 21m, 9m at 3.52g/t from 113m and 13m at 2.45g/t from 92m. The company has undertaken additional geophysical work and is planning exploration programmes to test both regional anomalies and higher grade mineralization to depth. However, the key short term target remains to increase the number of ounces in the indicated category to generate a potential reserve base for the final feasibly.

Time to look again: GGG Resources’ c.50% stake in the Bullabulling gold project is one of few standout growth gold resources in the sector, with the project already having defined 2.6moz. The 61% share price fall since March, tracking JV partner Auzex lower has been overdone, in our view, given the merger terms with Auzex result in no dilution in its ownership stake, no matter the number of shares or size of Auzex. At an EV/Resource valuation of $21/oz, against the sector on $106/oz and with a gold price well over $1700/oz, we reiterate our Buy .