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  • Mutiny Gold: Perth Broker Rates "Speculative Buy", $0.11 Share Price Target 0 comments
    Nov 11, 2013 11:41 PM

    The following is an edited summary of the research by Patersons.

    Mutiny Gold's (ASX:MYG) Deflector deposit is a quality gold-copper asset with the potential to generate significant cash flow.

    With an updated Definitive Feasibility Study (DFS) demonstrating a considerable reduction to start-up capital, the key challenge for MYG is obtaining project financing.

    Robust project economics should underpin a funding outcome in the near term and we highlight mid-2015 as a potential start date for production. With upside to both resource size and production profile we see MYG as a valid investment proposition, well leveraged to any improvement in commodity prices.

    Our base case valuation on MYG is $0.11/sh and we initiate coverage with a SPEC BUY recommendation.

    Funding solution is the key catalyst

    We have modelled funding for the Deflector project on a 70/30 debt equity basis. Despite tight debt markets, we see financing the portion of the $62 million capital requirements as achievable given the robust economics of the project.

    Valuation

    The relatively moderate capital requirement and low operating costs demonstrate the project as a viable development proposition. Our $0.11/sh valuation remains conservative at the this stage, attribuing little value to potential resource growth and expanded production scenarios.

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