Breaker a screaming buy, says Patersons
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Special Report: A fresh research report suggests Breaker Resources is on the up and up.
The note from analyst Xavier Braud says Breaker (ASX:BRB) shares, which are currently trading at around 33c, could go “anywhere between 80c and $1.10” on the back of the next resource upgrade at its Bombora gold deposit in WA.
Braud’s note followed the release by Breaker of another batch of drilling results which extended the known length of the Bombora deposit by 200m to 2.5km.
It also expanded the know width and depth of the deposit.
The results included 4m at 20.3g/t from 84m, 5m at 8.88g/t from 185m, 5.3m at 6.31g/t and 3.3m at 6.36g/t from 226m.
Breaker said it would update the 1.1Moz resource early next quarter, followed by the release of a pre-feasibility study.
“The latest round of drilling is expanding the footprint of Bombora and we can clearly see 1.5Moz to 2Moz in the resource upgrade expected in the June quarter,” Braud said in his note.
“We view Breaker as currently undervalued and therefore a great speculative buying opportunity.”
Braud said Bombora was “a typical goldfields story”.
“We can clearly see the project turning into a mine starting with a large open pit followed up, many years down the track, by underground mining of high grade lodes,” he said.
“We believe the new resource estimate has the potential to deliver 1.5moz to 2Moz.
“Breaker’s current share price at 35c a share for a market capitalisation of $63m and an estimated EV of $55m represents a value of approximately $48/oz.
“With 1.5Moz to 2Moz in sight at Bombora, assuming a fair value of $100EV/oz, there is room for Breaker’s EV to grow anywhere between $150m and $200m.
“This would represent a share price anywhere between 80c and $1.10.”
Breaker Executive Chairman Tom Sanders said Bombora continued to grow with every round of drilling.
“We are continuing to expand the known mineralisation in every direction and it remains open in every direction,” Mr Sanders said.
“We are seeking to define the outer limits of an open pit, which will in turn enable us to update the Resource followed by completion of the Pre-feasibility Study.
“In light of the outstanding results we are achieving with deeper drilling, we will also move to assess the potential for high-grade underground mining.”