Shining A Light On Capricorn
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Last year’s crack down by the regulators on what can be said about the scope of a project based on inferred resources – i.e. pretty much nothing - was frustrating stuff for the industry.
It was always going to lead to the mispricing of stocks, even if that is counter intuitive to what the smarties at ASIC and ASX hoped they were going to achieve.
But there is good news in all that for investors prepared to keep an eagle eye on things. They can move in to mis-priced situations ahead of the pack, with the pack having to take their cues from compliant announcements when they duly arrive on the platform.
Capricorn Metals (ASX:CMM) is an example. It is working towards a development of its Karlawinda gold project in the Pilbara, 65 kms south-east of Newman.
It has an inferred resource of 25.5m tonnes grading 1.1 grams of gold a tonne for 914,000 ounces. According to a recent presentation from the company, a resource upgrade is due any day now, and it won’t surprise stock watchers that growth beyond 1 million ounces of the yellow stuff has been achieved, with plenty of upside yet to be chased down.
The upgraded resource estimate should lead to a maiden ore reserve estimate by the end of April, and a definitive feasibility study by the end of June. Take most of calendar 2017 to secure funding, and project construction would kick off by year end. All those dates are from a recently ASX-lodged company presentation.
What wasn’t in the presentation was the potential scope of Karlawinda. The maiden ore reserve and the DFS will have the answers. But in the meantime it can be said the market expectation is that the project is shaping up as a 100,000 ounce-a-year operation after capex of about $120m.
An initial life of 8.5 years is on the cards with a simple 3mtpa CIL treatment plant likely to pump out the gold at an all-in-sustaining cost of a little more than $A1000 an ounce.
Assuming those sorts of figures are confirmed later this year, it can be said that Capricorn’s share price of 13c for a market cap of $70m is on the mean side of things, but only because the scope of the project is not broadly understood by the market. Read More.
Plus, Goldmans on the majors’ falling gold inventories, pennies to flow for Empire and Macquarie talks up Metals X. Read More.
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