Sydney, July 21, 2016 AEST (ABN Newswire) - Primary Gold (
ASX:PGO) is developing the Mt Bundy Gold Project in the Northern Territory which has an existing resource of more than 1.2Moz of gold spread across three deposits. These include the shallow, low strip ratio Rustlers Roost deposit (795koz at 1.1g/t), the high grade historical Tom's Gully U/G mine (315koz at 8.9g/t) and Quest 29 deposit (148koz at 1.4g/t). All resources are located within 10km of each other, providing the opportunity for a large scale bulk operation targeting >150,000oz per annum production over a minimum 6 year mine life.
Significant opportunity also exists for the Company to grow the existing resource base as the Mt Bundy project also has a substantial exploration package (1,500km2 of tenements). These tenements have had very little exploration in the past 20 years, despite more than 60 gold occurrences being identified to date, which include a number of gold outcroppings at surface.
Analyst Comment:
Primary has until recently flown under the radar of investors and is currently trading at a substantial discount to other Australian gold developers. Recent changes to the Board structure and Company strategy have however started to bring in strong investor attention. In comparison to their peers group (EV / resource oz - Av. $115/oz vs. PGO $34/oz) Primary is still at a significant discount, despite what we see as having a quality portfolio of assets, which forms the platform for their future production target (+150koz pa).
We see increased upcoming exploration activities as the long term drivers for Primary's share price. Exploration success is particularly relevant given numerous historical drill results have encountered gold mineralisation, however they are outside of the current resource base, which could result in a resource upgrade in the near term with some infill drill. Whilst more exciting is the significant number of Greenfield targets (60 gold occurrences) that have never been drill tested, despite this including a number of gold outcropping from surface.
Valuation:
We see significant upside in the current share price ($0.10 / share) as we value Primary at $0.30 / share. This valuation could increase further through exploration success, as our expanded mine life scenario has a valuation of 0.47 / share.
The information in this email should not be the only trigger for your investment decision. We strongly recommend you seek professional financial advice whenever making financial investment decisions.
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This information is general information only. Any advice is general advice only. Neither your personal objectives, financial situation or needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice. Adam Kiley (AR No. 458224) is an authorised representative of Intelligent Financial Markets Pty Ltd (AFSL No. 426359).
About Primary Gold Ltd
Primary Gold Limited (ASX:PGO) is an Australian-listed emerging gold producer and explorer with multiple near-term production and advanced exploration assets located in the Northern Territory and Western Australia.
Primary Gold's flagship asset is the Mount Bundy Gold Project in the NT, which includes the Rustlers Roost open pit project, Toms Gully high grade underground mine and 250ktpa processing facility, the Quest 29 deposit and a large lease holding of approximately 1,500km2 of underexplored tenure across the Pine Creek region. All deposits are located within a 10km radius, providing the opportunity for development of a large scale long life centralised processing facility.
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