Bell tips Breaker shares to go on a tear
15 December 2017
Resources Rising Stars
Highly-respected Bell Potter analyst David Coates has thrown his weight behind Breaker Resources (BRB), saying investors stand to make substantial profits on shares in the WA gold explorer.
Coates has tipped the stock to soar from its current level of 52c to $1.30 on the back of ongoing exploration success at its Lake Roe project, 100km east of Kalgoorlie.
He also rejected market talk that Breaker’s decision to delay publication of a maiden resource from this month to March next year was a “risk factor”.
“Infill drilling of the main Bombora discovery zone has further tightened drill hole spacing, continued to return broad, high grade, near surface gold intersections, demonstrate consistency and continuity with RC and diamond drilling, plus shown depth potential with high grade intersections in fresh rock in the deepest holes drilled to date,” Coates said in a fresh research report.
“Initial metallurgical testing has also shown positive signs, with recoveries of +90 per cent in short leach times, with up to 39 per cent gravity recovery and low-to-moderate ore hardness.
“If there has been a factor to disappoint the market it has been the push back of the release of a maiden resource from the December quarter 2017 to the March quarter 2018. However, this is a delay, not a risk factor and we are of the view the last couple of months has seen some key de-risking milestones achieved.”
Coates noted that 70 per cent of the 2.2km-long Bombora zone had been drilled on a 40m x 20m pattern.
This was expected to result in much of the maiden resource being in the higher-confidence indicated category.
“In our examination of cross-sections and long-sections we see continuity along strike, down dip and along plunge, together with good correlations between diamond and RC drilling results,” he said.
“We also note that broad, high grade intersections have been returned at both open-pit and underground cut-off-grades – the implication being the deposit will support both mining scenarios.”
Coates said the latest drilling results were consistent with his investment thesis “of Lake Roe having the potential to host a significant, multi-million ounce, greenfields gold discovery”.
“We anticipate that the maiden resource will show some of this potential while remaining open at depth and along strike,” he said.
“In our view, the ongoing drill program and the preliminary metallurgical test work have given the market more and positive information, also pointing to an attractive development proposition.
“We retain our buy (speculative) recommendation on what we view as a unique and compelling greenfields gold development story.”