Barry FitzGerald: Euroz analyst takes a liking to WA explorer Benz

“Garimpeiro” columnist Barry FitzGerald has covered the resources industry for 35 years. Now he’s sharing the benefits of his experience with Stockhead readers.

Euroz Hartleys resources analyst Kyle De Souza has shown he has a dab hand at writing headlines for his research reports.

His recent tome on the dual-listed gold explorer Benz Mining Corp (ASX:BNZ) was titled “BNZ: Spartan had a baby. Named it Benz.”

It was a neat way of highlighting that Spartan Resources (ASX:SPR) of Dalgranaga/Never Never/Pepper fame in WA – and now the subject of a friendly takeover by Ramelius Resources (ASX:RMS) – sold Benz its non-core but advanced Glenburgh and Mt Egerton gold projects in WA’s Gascoyne for shares and some cash, giving Spartan 14.9% of Benz.

Announced in November last year and taking effect in mid-January, the acquisition has led to Benz motoring from 26c a CDI (Toronto is its home market) in November to 34c in mid-January, and 53c mid-week for a market cap of $134 million.

Now Benz should have been motoring anyway on the strength of its 1Moz high-grade gold resource at its Eastmain project in Quebec due to gold prices taking off this year. But it is the unfolding potential at Glenburgh – 285km east of Carnarvon – that has fired up interest in the stock.

Glenburgh: A history

Glenburgh was considered a development option back in 2015 for Spartan when it was known as Gascoyne but it was pretty much parked up when Dalgaranga in WA’s Murchison region was developed. Benz picked up Glenburgh with a restated 510,000oz resource grading 1g/t gold.

But it was recognised as being underexplored with the potential for more high-grade shoots, which is what Benz is now pursuing in an aggressive and fully-funded drilling program, with impressive results starting to flow (including 10m at 12.9g/t from 299m).

De Souza is a big wrap for Glenburgh, saying “grades and thicknesses like this continue to demonstrate the capability for this project to exceed expectations.” He has an 81c target price on the stock.

(The firm was lead manager to a Benz equity raising at 40c and has disclosed it has received fees for corporate advice).

When Garimpeiro says De Souza is a big wrap for Glenburgh he wasn’t joking. In his June 30 research note on the stock De Souza mused that it can be hard to differentiate in the junior explorer world between what is a real “discovery” and what is not.

“Whilst some get lucky on ‘one hit wonders’ – most end up with subsequent ‘dusters’ and erosion of wealth,” he said.

“The real value in exploration is picking companies with assets that have the potential to sustain production profiles of more than 100,000ozpa for more than 10 years.”

Price target lift

In De Souza’s eyes, Benz is one of them, saying their discovery “should not be overlooked”, especially in the contest of Glenburgh’s existing 500,000oz resource also providing a solid base.

“We model an average 102,000ozpa and 7-year life of mine based on what we believe the company has in the ground – and thus, a 10 year LOM at more than 100,000ozpa doesn’t seem unreasonable,” he said.

De Souza pointed to Glenburgh’s thick intersections from surface and the high grade underground kickers yet to be tested at depth.

“We maintain our Speculative Buy recommendation but increase our price target from 60c to 81c. The FY2025 is set to be a transformational year for Benz,” De Souza said.

No surprise in knowing that Benz CEO and former new developments specialist for US gold giant Barrick, Mark Lynch-Staunton, is also keen as mustard on Glenburgh’s potential.

Announcing the recent high-grade exploration hits, Lynch-Staunton said Glenburgh has the potential to host a significant gold system, and the latest results strongly supported that view.

He said there was a dual-track approach to advancing the large-scale open pit potential at the Icon-Apollo deposits alongside the high-grade underground opportunities at the adjacent Zone 126 lens.

The views, information, or opinions expressed in this article are solely those of the columnist and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.