Owning one of the biggest virgin gold discoveries in the last 15 years in Western Australia does not necessarily deliver a premium market rating. Not immediately anyway.

Just ask Breaker Resources (ASX: BRB) which last traded at 35.5c for a market value of $64 million. It has the lowest market value per oz of gold resource in-the-ground amongst its peer group.

Yet its Bombora discovery at its Lake Roe project, 100km east of Kalgoorlie, comfortably sits amongst the biggest virgin gold discoveries of the last 15 years.

The current 1.08m oz resource estimate was made in September 2018 and was an update from the maiden estimate in April 2018 of 624,000oz.

Its current modest rating compared with its peers is partly due to Breaker recently disappointing the market by delaying another Bombora resource upgrade until July.

What investors thought would be a re-rating event for the stock did not happen on cue, and the market does not like that.

Finger-lickin’ goods?

Breaker has form on delaying resource upgrades.

It was smashed in 2017 when it delayed the release of it maiden resource estimate and its share price has not really recovered since.

Still, there is no getting away from the fact that Bombora is shaping up as a multi-million oz resource that will be developed initially as an open-cut, and later as an underground operation.

Importantly, executive chairman Tom “Colonel’’ Sanders owns 12% of the stock and he makes no apologies for having delayed resource upgrades.

The Colonel is a seasoned geologist with more than 35 years’ experience, much of it in WA’s goldfields and nickel operations.

He insists that Bombora is advanced on a strong technical base, not to an agenda driven by market demands for sugar hits.

So if it is going to take a little longer to come up with a new resource estimate because there is a mass of drilling data to crunch, so be it. And it has to be said that there are plenty of examples of others rushing out resource estimates that have not stood the test of time.

Announcing the delay in the latest resource estimate, the Colonel said it was due to the scale of the deposit, and the volume of data to be crunched.

“After 220,000m of resource and exploratory drilling, the Bombora gold deposit remains open in all directions and the results are consistent with a large new gold camp in the early stages of delineation,’’ he said.

“There are three lode orientations and zones of stockwork mineralisation extending over three kilometres and this necessitates taking additional time to build a robust and flexible resource for the upcoming preliminary feasibility study (PFS).’’

Potential meal deal

Those statements calmed those investors who took the latest delay in the resource upgrade to mean that something was amiss at Bombora.

The PFS is expected to be released two to three months after the July resource update. Both are likely to be re-rating events for the stock in their own right.

The PFS in particular is eagerly awaited, not just by investors but by any one of the existing gold producers that have been following Bombora since its discovery as a possible acquisition target, remembering it is a relatively rare find in the past 15 years.

Bell Potter analyst David Coates has an 84c valuation on the stock (the firm was lead manager to the $10.5m equity raising last September).

“In our view, Lake Roe remains the standout greenfields gold discovery in the Australian market, showing the key hallmarks of a major deposit,’’ Coates said in his May 6 note.

The note followed Breaker’s announcement that it discovered a new steep lode with visible coarse gold some 420m below surface in the southern part of the deposit, and that the same hole had increased the depth potential of the Tura lode.