Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Blackham Resources Receives Speculative Buy, A$1.57 Target From Broker

Blackham Resources (ASX:BLK) has received a Speculative Buy from Sydney broker Paradigm Securities, with a NPV valuation of A$0.90 and an 18 month price target of A$1.57.

Blackham last traded at $0.10.

The following is an extract from the report.

MOVING TO MINING

Blackham Resources' 1.3mtpa Matilda Gold Project to produce 100-110,000ozpa is coming closer to fruition with progress made on the mill rehabilitation process and the finalising of ore sources from the current 4.7moz resource.

Exploration appraisals are also providing potentially significant new resources.

Higher A$ gold prices and the fall in the cost of mining contractor equipment and fuel costs should give this project even more attractive margins.

Paradigm has determined a Base Case Project NPV8 at A$1,500/oz of A$173m (A$0.90 /share fully diluted) and a Standard Case Project NP V8 at A$1,500/oz of A$303m (A$1.57 /share fully diluted).

Risked milestones are provided to indicate an 18 month share price base target of A$0.90/share with potential of $1.57.

KEY POINTS

- Engineering studies on mines and mill well advanced
- Target of >80kozpa by mid 2016 then >100kozpa
- Mill refurbishment capital costs set at - Mine development costs estimated at - Total funding requirement is estimated at - Cash flow positive five months after major funding drawdown
- Initial resources base in excess of 4.7moz and growing
- Additional potential of up to 3moz in near mine exploration

Blackham Resources has developed its Wiluna goldfield plant and resources into a significant intermediate size gold mining project.

The mill site and the mine development in open cut and underground sites have a replacement cost of well over A$100m in even today's depressed market so the company's achievements to date have been substantial.

BLK is well placed after the recent equity and seeks a potential debt funding package that would allow confirmation of mining reserves, development of open cut and u/ground mines and refurbishment of the mill and onsite plant.

Mine development will not only include the Matilda Project open cuts but also high grade free milling ores from nearby low capital cost open pits and underground at the Wiluna site to boost initial output through higher grades and lower unit gold production costs.

Gold production is expected by mid-2016 at a rate of at least 80kozpa with higher numbers possible as grades and tonnes from these newly identified gold-in-quartz ores, such as the additional 120koz @7.4g/t identified at the Golden Age reef at Wiluna, sweeten the mill feed.

BLK has also identified new ore potential of as much as 25 m tonnes @ >3g/t (1.5moz) from 8 drill-ready targets and others that add as much as a further 3moz to the current 4.7moz.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.