Upbeat drilling results from Breaker
Recent drilling by Breaker Resources NL (ASX:BRB) has continued to expand the known length, width and depth of the Bombora gold deposit at its Lake Roe Gold Project, 100 kilometres east of Kalgoorlie.
It was only last week that Bell Potter flagged the Lake Roe project as its standout greenfields gold discovery.
With the Australian dollar gold price hovering in the vicinity of $1850 per ounce, companies such as Breaker could find increasing support.
The latest results extend the known strike length of Bombora by 200 metres to 2.5 kilometres and Bombora remains open in all directions.
Imminent share price catalysts
Breaker plans to update the existing 1.1 million ounce resource early in the June 2019 quarter – a potential share price catalyst.
The company is running a dual strategy at Lake Roe, namely ongoing aggressive drilling with four drill rigs targeting rapid resource growth and upgrade, as well as prefeasibility activities targeting an early, large open pit development.
The timing of the prefeasibility study (PFS) will be dictated by the need to establish the overall limits of open pit mining: drilling continues to discover new areas of shallow gold mineralisation thereby increasing the size of a potential open pit.
Consequently, the main priorities of the drilling are the identification of the outer limits of open pit mining, to allow finalisation of the PFS and resource expansion, particularly where open pit mining potential is apparent.
Concurrently, reconnaissance drilling is also underway to assess the long-term, high-grade potential at depth with early results being favourable.
Bell Potter likes the story
Bell Potter analyst, David Coates has a ‘speculative buy’ recommendation on Breaker Resources with a valuation of 87 cents per share, well above the company’s current trading range of approximately 35 cents. Although, as stated, this is speculative and may not come to fruition.
Coates noted that the September update added 500,000 ounces in five months and lowered the discovery cost from $23 per ounce to $18 per ounce.
Coates said, “Since then, BRB has had four drill rigs operating continuously and released three rounds of drilling results from infill and extension drilling.
“In our view, Lake Roe remains the standout greenfields gold discovery in the Australian market, showing the key hallmarks of a major deposit.
“BRB is in a cost-effective discovery phase driven by increasing geological understanding and a well-resourced drilling program.
The deposit remains open in all directions with significant potential for growth.