| Batavia Mining (BTV.ASX) is an interesting stock drawn attention to me by one of my readers. Actually I have held this stock on occasion, and it remains on my watch list. The company has made several mistakes of late of late I feel. These are: 1. Diversifying into iron ore - I guess not a problem if they float off the project 2. Delaying the Delfector gold project - the problem being the dont understand gold, or where gold was always destined to go. So what do we know about this company? 1. Following an issue it has 114mil shares on issue at 12.5c worth $A14mil 2. It has liquid cash & investments of $8mil 3. It is publicly listed generally worth around $4-5mil, essentially making its gold project worth $2mil 4. It has a 0.8Moz gold deposit in WA 5. It has a 0.3Mtpa gold treatment plant remaining from prior mining at this site. The mine closed prematurely because of low metal prices, though BTV has since increased resources through exploration 6. The gold price has more than doubled since the project was acquired, but so have the costs to establish a mine, though operating costs have increased by less, I suspect more than the 6% they quote. 7. The company is considering a 0.23Mtpa processing capacity, though economies of scale favour 0.4Mtpa, though they might need to find added ore to make that option worthwhile. This all sounds very good. The company is sitting on cash in investments, it has a mine resource. Looking at the plant, it looks worse than the treatment plant (Orroyo - the Mt Gibson plant) that I looked at in WA, so it seems likely that the process water from mining previously had a high salt water content, or the wet season has resulted in surface corrosion. Hard to say if they are understating capital costs without a site visit or independent info. So that is reason for caution. Thats not to say you can't trade them. Afterall a rising gold price (tide) lifts all boats. I think they are a pretty good punt. I do however prefer other stocks for resource upside, in ground gold resources. |
- Andrew Sheldon http://www.sheldonthinks.com/ |
No comments:
Post a Comment