Company Overview: Bellevue Gold Limited, formerly Draig Resources Limited, is an Australia-based gold exploration company. The Company’s principal project is the Bellevue Gold Project, which is located approximately 157 kilometers north west of Laverton in Western Australia. The Bellevue Gold Project covers an area of approximately 27 square kilometers over three granted mining leases and one exploration license. The Company also holds interests in the Tribune Lode high grade discovery and the South Yandal Gold project.
 

BGL Details

Promising Infill Drill Result at Bellevue mineralized gold system: Bellevue Gold Limited (ASX: BGL) is involved in the exploration in relation to the Bellevue Gold Project, which is located in the northern part of the Norseman-Wiluna Greenstone belt in the Yilgarn Craton, Western Australia. The project is around 40 km north by sealed highway from the regional centre of Leinster and covers around 1,930 km square of the area. The total exploration tenement package, including applications covers in excess of 3,600 km square of the site.

The company recognizes the revenue as per AASB 15, which establishes a five-step model. Revenue arising from contracts with customers would be recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. For trade and other receivables, the group follows a credit loss model prescribed by AASB 9 Financial Instruments. Trade receivables and other receivables, which generally have 30-90 days terms, are recognised initially at fair value and subsequently at amortised cost, less provisions for expected credit losses. The balance under trade payables is recognised as a current liability with the amount being normally paid within 30 days to 45 days or recognition of the liability.

BGL won ‘Best Emerging Company’ at Diggers and Dealers mining forum and mining news ‘Explorer of the Year’ in the financial year 2019. Net cash position at the end of the financial year 2019, with no debt, indicates the company’s confidence in its operational management.

Recently, around 35% of the exploration work at Bellevue Gold Project, Western Australia, has been completed and is expected to make significant progress by the end of the first quarter of FY20. The results from the infill drill are promising and demonstrate high-grade of the Bellevue mineralized gold system.


Company Overview (Source: Company Reports)

Key Highlights of September’19 Quarter: The company delineated 1.8 Moz gold in less than 18 months from discovery, making it one of the fastest & highest-grade gold discoveries globally. Its cash position as on September 30, 2019, was reported at $32.8 Mn as compared to $19.8 Mn as on June 30, 2019. During the period, BGL raised A$18.5 Mn at A$0.57 per share via a fully underwritten institutional placement, strengthening company’s balance sheet enabling the company to undertake significant infill drilling to further define its existing resource base, in addition to expanding its step-out exploration drilling program over the next 12 months.

In addition to the above development, BGL was added to the S&P/ASX 300 index and Mr. Kevin Tomlinson was appointed the new Non-Executive Chairman of the company. Mr Tomlinson possesses over 35 years of experience in mining and finance with the Toronto, Australian and London stock markets. He has also held an important position at Investment Bank, Westwind Partners and Stifel Nicolaus, raising equity and providing corporate advice. He has extensive experience in the development and financing of significant mining projects internationally. He is also the Non-Executive Chairman of ASX/TSX listed Cardinal Resources Ltd and ASX listed Infinity Lithium Corporation.


Bellevue global Inferred category resources domains reported at the 3.5 g/t cut (Source: Company Reports)

Cash Position of $7.67 Mn as on September 30, 2019: Net cash outflows from operating and investing activities for the September’19 quarter were reported at $7,976,000 and $417,000, respectively.  Net cash inflow from financing activities for the period stood at $21,188,000. Cash and cash equivalents at the end of the quarter came in at $32,564,000. Under operating activities, payments for exploration & evaluation were reported at $7,666,000.


September’19 Quarter Operating Cash Flow Statement (Source: Company Reports)

FY19 Key Highlights for the period ended June 30, 2019: Group’s net assets increased from $19,848,796 in FY18 to $50,851,991 in FY19. Its cash position as on June 30, 2019 was reported at $19.8 Mn. Its consolidated net loss increased from $5,900,323 in FY18 to $7,146,369 in FY19. This loss included non-cash items such as share based payment expense of $3.6 Mn in FY19 as compared to $4.2 Mn in FY18.

Important development subsequent to the financial period 2019 included upgradation in the high-grade resources at the Bellevue Gold Project growth to 1.8 Moz at 11.1 g/t gold in the inferred category. In August 2019, the company made a significant new high-grade gold discovery at Deacon & Mavis Lodes beneath the Bellevue Gold Mine with Visible Gold, including 4.4 meters at 62.4 g/t gold, 3.6 meters at 18.3 g/t gold and 2.2 meters at 38.0 g/t gold.
 

FY19 Income Statement (Source: Company Reports)

Recent Updates:
On November 19, 2019, the company informed the market about the exploration update from recent work completed at Bellevue Gold Project, Western Australia. Around 35% of the infill drill programme has now been completed, and the company is expected to make significant progress by the end of the first quarter of FY20. The infill drill result continues to demonstrate the quality and high-grade of the Bellevue mineralized gold system.

The company has also sourced two additional diamond core drill rigs, which in combination with the existing six drill rigs, will operate through until the end of 2019 to allow the assessment of a very large and significant target at the Deacon and Mavis Lodes discovery (1.8 kilometers of the strike). Drilling is targeting exploration step out at the new Deacon & Mavis Discoveries and to infill areas to upgrade the resource category at the other target areas, which currently form the current resource of 1.8 Mn oz at 11.1 g/t gold of Inferred category resources.


Bellevue Gold Project Resource Growth from first discovery hole (Source: Company Reports)

Top 10 Shareholders: The top 10 shareholders have been highlighted in the table, which together form around 41.15% of the total shareholding. 1832 Asset Management L.P. and Kitara Investments Pty. Ltd. hold maximum interests in the company at 12.35% and 5.22%, respectively.


Top 10 Shareholders (Source: Thomson Reuters)

A Quick Look at Key Metrics: Its current ratio for FY19 stood at 3.71x, better than the industry median of 1.81x, which implies that the company is in a better position to address its short-term obligations than its peer group. Its Debt to Equity ratio and % long-term debt to total capital for FY19 at zero levels imply that the company utilizes its own funds to fuel its operations.


Key Metrics (Source: Thomson Reuters)

Key Risks: The company is susceptible to certain risks such as credit risk, liquidity risk, and market risk, which includes currency risk, interest rate risk, etc.

What to Expect: The company so far defined a 4 km long mineralised area that contains the current 1.8 Moz resources of which is a larger 20 km gold corridor. The resource area is very much open along strike, and the company has identified multiple high-grade gold targets that it plans to drill test before the end of the calendar year 2019. The company is fully funded to continue its exploration success and expects to make further gold discoveries across its large strategic landholding, which can be underpinned from company delineating 1.8 Moz gold at 11.1 g/t of Inferred resources in less than 18 months from discovery; significant new extensions of the Tribune and Viago Lode discoveries were made extending both mineralisation systems to 1,400 meter of strike; new gold discovery at the Deacon & Mavis Lodes located below the Bellevue underground mine; expansion of the Bellevue Exploration camp to 36 beds to cover continuing 24/7 exploration and early development works; etc.


Key Valuation Metrics (Source: Thomson Reuters)

Stock Recommendation: BGL’s stock generated a positive YTD return of 6.90%, while in the span of one year, it has generated a negative return of 3.12%. Currently, the stock is trading below the average of 52-week high and low levels of $0.735 and $0.350, respectively. On the technical analysis front, on the daily chart, the default values have been used for Relative Strength Index.  The 14-day RSI measures at 32.9919, which indicates that the stock of the company currently trades in the oversold region and therefore, it might reverse its trend to upside in the coming times. Moreover, the company is net cash positive along with no debt, which is an indication that the company is utilizing its own funds to fuel its operations. With continued resource growth, new discoveries, important recognition as “Best Emerging Company” at the Diggers and Dealers Mining Forum, and Mining News “Explorer of the Year”, etc., place the company into a position to deliver sustainable value to its shareholders in the coming times. Hence, considering the aforesaid facts and current trading levels, we give a “Buy” recommendation on the stock at the current market price of A$0.460, down 1.075% as on 19 November 2019, and expect a single-digit growth in the next twelve months.
 

BGL Daily Technical Chart (Source: Thomson Reuters)

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