Given the significant by-product credit revenues (copper sulphate & pyrite), we believe that when production commences at Mount Morgan next year, the operation will be one of the lowest cost gold projects in Australia (LOM AISC - A$522 / oz - TSI estimate). At today's gold price the operating margin would be more than $1,200 / oz.
Analyst Comment: Since announcing key management changes earlier this year, Carbine has continued to work quietly behind the scenes, however are now on the verge of releasing the DFS for their Mount Morgan project next month. The recently announced resource upgrade, which will be central to the DFS, saw an improvement in terms of the size (extended mine life) as well as head grade, which should result in improved economic outputs for the DFS in comparison to the PFS.
Carbine also recently completed a heavily over-subscribed capital raising ($7m), which ensures the company has sufficient funds to complete the DFS, as well as introducing a number of prominent Australian financial institutions to strengthen Carbine's share register.
Valuation: We have increased our valuation for Carbine to $0.50 / share (previously $0.40 / share). The key driver for the change to our valuation was an extension to our mine life (10yrs) along with a slight change to our head grade assumption. Both assumptions are in-line with the resource upgrade.
However given the upside exploration target (40Mt at 0.97g/t - 1.2Moz) as well as the change in the market's appetite for gold equities since the release of the PFS, we also examined an increased throughput scenario (1.5Mtpa) which saw our valuation increase to $0.68 / share.
Further information regarding the key assumptions in our base case valuation as well as analysis on a number of different scenario can be viewed by clicking the full investment analysis.
This information 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 not 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 Carbine Resources Limited
Carbine Resources (ASX:CRB) is an Australian public company based in Perth, Western Australia. The strategic objective of the Company is the advancement of shareholder's interests through exploration and evaluation of its current projects and acquisition of additional projects on favourable terms.
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Carbine Resources Limited