Brightstar’s processing plant valued at $60.9m, offers ‘significant advantage’ for restart of Menzies and Laverton gold projects

Brightstar’s existing gold processing plant replacement value estimated at $60.9m
Company currently has a market cap of ~$20.7m
Plant offers a significant time and cost advantage for restart of Menzies and Laverton gold projects

Possessing existing processing infrastructure has always been a “key strategic advantage” for Brightstar and an independent valuation has now assessed its replacement cost at $60.9m, almost three times its market cap.

Brightstar Resources’ (ASX:BTR) ultimate goal is to create a gold company of scale in the Leonora-Laverton district.

Principal to its plans is a processing plant, under care and maintenance, which it will leverage to unlock the development potential of the +1Moz Menzies and Laverton assets.

The 485,000tpa carbon-in-leach processing plant processed some 46k ounces of gold before being production from the mill ceased with Brightstar Managing Director Alex Rovira noting that many components such as the gravity circuit and 450kW ball mill are brand new and have never been used since installation.

While work will be required to bring the plant back into operation, costs (and time) would be a lot less than building a new plant from scratch. As such, it plays a central role in the company’s economically appealing Scoping Study into a restart of its Menzies and Laverton gold projects.

This study outlines a low cost $22m development capable of generating revenue of about $935m with robust operating cashflow of $153m over an initial 8 years.

Post-tax net present value and pre-tax internal rate of return – both measures of a project’s profitability – were estimated at $103m (including ~$53m in accumulated tax losses) and 79% respectively.

This project is fuelled by the four deposits that the company has delineated within the two projects, though exploration is ongoing to extend resources and find new ones.

Brightstar Resources ASX BTR — The Brightstar processing plant. Pic: Supplied (BTR).

Replacement value highlights advantages from owning plant

Brightstar is currently progressing work streams under its PreFeasibility Study to refurbish and expand the Brightstar Plant to support a bigger production profile.

As part of this, it commissioned an independent valuation of the mill and associated site infrastructure to inform the appropriate level of insurance cover to protect these strategic assets while it continues its regional development and assessment of potential options to commence accelerated production operations.

This has valued the Brightstar plant and associated infrastructure at $60.9m on an “as new” replacement value.

“The Brightstar processing plant and related infrastructure represents a significant advantage from a time and cost perspective for Brightstar as we advance towards re-start of mining operations at the Menzies and Laverton gold projects,” managing director Alex Rovira said.

“As outlined in the recently released Scoping Study, the ability to execute a low-cost refurbishment and expansion of the processing infrastructure is a key strategic advantage for the company that differentiates Brightstar from other aspiring WA gold explorers and developers.

“We are actively assessing opportunities to further increase the throughput of the mill to 1Mtpa to support an increased production profile at our Laverton Gold Project.

“The $60 million value on an ‘as new’ basis for the existing processing and associated infrastructure represents a significant cost that we do not have to incur to build our mining operations, which in the context of continued challenging debt and equity capital markets is an important asset for our business.”

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.