• Evolution Capital believes Brightstar Resources is a ‘speculative buy’ with a target price of 3.2c, 166.67% higher than its current share price
  • This assessment is based on the strength of its Menzies and Laverton projects, low expected capex for a restart of operations and potential for early cashflow
  • Further exploration results and PFS due for completion in 2024 could deliver more upside


Special Report: With gold back in favour with investors, advisory firm Evolution Capital has set a ‘speculative buy’ recommendation with a share price target of 3.2c for Brightstar Resources, based on the strength of the company’s Menzies and Laverton projects.

The ultimate goal for Brightstar Resources (ASX:BTR) is to transform itself into a gold company of scale in Western Australia’s Leonora-Laverton district.

Central to this goal is an existing processing plant, currently on care-and-maintenance, which the company will leverage to unlock the development potential of its Menzies and Laverton assets.

The carbon-in-leach processing plant processed some 46k ounces of gold before production from the mill ceased in 2012, though BTR managing director Alex Rovira has previously noted that many components, such as the gravity circuit and 450kW ball mill, are brand new and have not been touched since installation.

As such, restarting the plant is expected to both take significantly less time and cost a lot less than building a new plant from scratch.

It also plays a starring role in the company’s economically appealing scoping study into the proposed restart of its Menzies and Laverton gold projects, which outlines an easily fundable $22m development capex required in order to generate revenue of about $935m, with robust net operating cashflow of $153m over an initial eight years.

While this is no doubt an attractive prospect, cashflow is expected to come much earlier under a joint venture with BML Ventures to mine the Selkirk deposit within Menzies.

First ore has already been mined, with the stockpiled material expected to be hauled to Genesis Minerals’ (ASX: GMD) Gwalia processing plant later this month for processing.

On the exploration front, BTR has also seen some recent successes, including a shallow gold intersection of 1m @ 54.77g/t from drilling at the Link Zone within the wider Menzies project, where 21 of the 27 holes drilled and assayed have intersected gold.


One of the cheapest and quickest pathways to cash generation

For BTR, potential for early cashflow via the Selkirk JV, along with very attractive scoping study economics on the restart of the Menzies and Laverton gold projects, is music to the ears of Evolution Capital.

It noted that mining operations at Selkirk are progressing ahead of schedule and BTR’s 50% share of cashflow is valued at up to ~$4m.

Evolution also declared the scoping study demonstrated some enviable characteristics that will remain unchanged, even as resources and the mining inventory grows.

These include the low initial development capital, low technical risks and high profitability index of 4X.

To come up with its 3.2c ($95m) valuation, which is 166.67% higher than the current share price, the boutique advisory firm assumed a flat gold price of $3,000/oz throughout its modelling, which offers further price target leverage.

It also assumed a modest capital raising of $12m in FY2026 to assist with exploration and project evaluation, adding that BTR has already received interest from various financial institutions regarding financing for the project.

Risks to this valuation are on the upside due to renewed investor interest in gold, further exploration success, which could be easily and quickly monetise and a potential lithium pegmatite discovery.


Increased catalysts

Evolution Capital also flagged that news flow from BTR over 2024 is likely to be intense and expected it to have a positive impact on its valuation.

This includes cash flow from Selkirk gold production, ongoing results from greenfield exploration as well as infill and extensional drilling, resource updates, completion of the PFS and the potential discovery of lithium-bearing pegmatites at the Menzies project.




This article was developed in collaboration with Brightstar Resources, a Stockhead advertiser at the time of publishing.


This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.