ASX Share Price: BRB
Gold Price: AUD 2,610.60   per Ounce
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Reasons to like Breakers’ Bombora swelling

8 August 2019

If Tom Sanders’ assessment of his company’s Bombora project is as good as he paints, then surely in this market there’d be some expectation this ASX-listed stock hasn’t got long on this earth as an independent gold junior.

Speaking at Diggers & Dealers, the executive chairman effectively outlined a long list of reasons why, when combined, the junior should be in the crosshairs of a booming Australian gold mining sector.  In the  general order of his presentation the positives included: tier one location (100km east of Kalgoorlie); a potential single large open pit up to 2.5km long and about 250m deep; three stacked lode orientations (hence geologically similar to Golden Mile); 5000-6000oz per vertical metre (“great for open pits”); minimal drilling expected for (completing) full feasibility; continuity of mineralisation now proven … and so it went on.

According to Sanders, Breaker has made “at least one lode discovery each quarter for the last three years”, while the metallurgical results to date are said to point to low-cost processing.  There’s even a granted mining lease! 

Bombora lies between Saracen’s Carosue Dam operation and Silver Lake’s Karonie mine. Both of those companies are successful miners who’ve dabbled in M&A.

The first financials for Bombora are due to be revealed in late October when the results of a pre-feasibility study are revealed.  As per any director worth his salt, Sanders’ presentation claimed Breaker is cheaply valued by the market, pointing to unspecified “independent broker research” to back the assertion.  Breaker’s shares have recently been trading around the 40c share mark, though two years ago they spent a six month period in the 60-70c range.  Sanders’ presentation made a comparison between Breaker’s valuation per resource ounce (A$74/oz) versus that of peer Bellevue Resources ($169/oz), though the appropriateness of that comparison is debatable given Bellevue is a future underground play featuring a much higher grade resource.

Perhaps a more appropriate comparison would be with Calidus Resources, which also has resources of just over 1Moz, and which last month completed a PFS for a large open cut (plus underground) mining
operation near Marble Bar processing ore at about 2 million tonnes per annum – versus Breaker’s potential 2.5Mtpa. Calidus’ enterprise value per resource oz: $40/oz. Calidus presented earlier at Diggers & Dealers, and, as per Sanders, MD Dave Reeves believes his company is also undervalued.  New South Wales gold producer Alkane Resources has agreed with that assessment given it invested in Calidus at a then-premium to market earlier this year.

Will anyone be coming knocking at Sanders’ door?