Company Overview: Bellevue Gold Limited (ASX: BGL), formerly known as Draig Resources Limited, is an Australian-based gold exploration company. Its principal projects include the Bellevue Gold Project, located around 157 kilometers north west of Laverton in Western Australia. The project covers an area of around 27 square kilometers over one exploration license and three granted mining leases. The company holds interest in the Tribune lode high grade discovery and the South Yandal Gold project.
 

BGL Details
 
Performance of BGL May Improve over Increase in its Total Resources: Bellevue Gold Limited (ASX: BGL) operates Bellevue gold project, located in the northern part of the Norseman-Wiluna Greenstone belt in the Yilgarn Craton, Western Australia, covering a land area of around 1,930 square kilometers. The site can be geographically mapped as around 40 kilometers north by sealed highway from the regional centre of Leinster.

In FY19, the company achieved outstanding success via continued resource growth and new discoveries, delivering valuable returns to its shareholders. Moreover, BGL won ‘Best Emerging Company’ at Diggers and Dealers Mining Forum and Mining News ‘explorer of the year’. Responding to the positives in FY19, BGL’s stock reported a whopping gain of 312%. With the gold prices on rise over macro-economic concern particularly novel coronavirus (COVID-19), BGL is likely to see a rise in margins in the coming times, supported by recent gold discoveries at its sites under the expansion program and growth in the production levels.

It has recently reported an increase in its total resources by around 23%, highlighting a genuine scale and further possibility of increase in resources as the site lies in the backyard of Western Australia. BGL now has eight rigs drilling on site to both increase and upgrade the resource. Other important developments include dewatering underground, resources upgrades and step-out resource growth. With this, the company’s aggressive program comprising technical and economic mining studies is expected to take it to a position to become a substantial Australian gold producer.


BGL’s Historical Performance (Source: Company Reports)

December’19 Quarter Key Highlights: During the period, the company appointed highly experienced underground gold mining executive Mr. Craig Jones as the new Chief Operating Officer (COO).
Under operational highlights, a total of 29 kilometer of 80-kilometer diamond core drilling was completed on infill drilling to convert to the higher indicated category as well as step-out drilling to grow the current global inferred resource. 

At Tribune Lode, infill drilling in the top 200 metres on 40 m x 20 m spacings has intercepted numerous high-grade results as expected, reinforcing the current inferred resource model. The results include 9.6 m @ 14.1 g/t gold from 107.9 m in DRDD257; 3.0 m @ 33.0 g/t gold from 162.0 m in DRDD247; and 0.6 m @ 273.5 g/t gold from 155.0 m in DRDD220.

At Viago Lode, infill drilling commenced ready for conversion to a higher resource confidence level in mid-2020. The results include 0.7 m @ 74.8 g/t gold from 590.4 m in DRDD227 5.0; m @ 11.1 g/t gold from 606.0 m in DRDD222; and 3.0 m @ 19.8 g/t gold from 580.5 m in DRDD233.

At Deacon Lode, pre-resource discovery drilling has confirmed high-grade mineralization along 1.8 kilometer of strike with new step out drilling confirming the Lode is open in all directions. The results include 2.3 m @ 39.0 g/t from 819m in DRDD273; 3.0 m @ 10.4 g/t from 587.5 m in DRDD295; and 3.5 m @ 12.0 g/t from 571 m in DRDD313.

At Bellevue Lode, high grade drill results confirm extensions of the historic Bellevue underground mine Lode. The results include 3.5m @ 11.9 g/t from 99.4 m in DRDD287; 2.8 m @ 46.9 g/t from 175 m in DRDD242; and 3.0 m @ 19.8 g/t from 580.5 m in DRDD233.


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

Cash Position as on December 31, 2019 Stood at $20.71 Mn: Net cash outflow from operating activities for the period was reported at $11.68 million. Net cash outflow from investing activities for the period was reported at $0.17 million. Net cash outflow from financing activities for the period was reported at $2K. Cash and cash equivalents at end of period was reported at $20.71 million.


Operating Cash Flow Statement (Source: Company Reports)

FY19 Key Highlights for the period ended June 30, 2019: On the balance sheet, the group’s net assets for the period was reported at $50.851 million, as compared to $19.848 million in the previous year. Trade and other receivables for the period were reported at $1.17 million, as compared to $0.48 million in the previous year. Trade and other payables for the period were reported at $5.55 million, as compared to $2.40 million in the previous year.

Group’s cash position at the end of the period was reported at $19.8 million. Its consolidated net loss for the period was reported at $7.146 million as compared to a loss of $5.90 million in the previous year.


FY19 Balance Sheet (Source: Company Reports)

Recent Updates:

(a) On February 24, 2020, the company informed the market that the total Resources at the Bellevue Gold Project in Western Australia have been reported at 6.1 million tonnes at 11.3 g/t for 2.2 million ounces, which is an increase of 23%, attributing to the declaration of the maiden Resource of 1.0 Mt at 12.3 g/t for 400,000oz at the Deacon Lode.

(b) The company on February 18, 2020, informed the market that it has appointed highly experienced resources analyst and investor relations executive Luke Gleeson as Head of Corporate Development. Mr. Gleeson has handled important position of Head of Investor Relations and a Business Development Officer with gold producer Northern Star Resources (ASX: NST) for five years. His skills and experience would be crucial as the company embarks on the next phase of its strategy to become a significant WA gold producer.

Top 10 Shareholders: The top 10 shareholders have been highlighted in the table, which together form around 46.04% of the total shareholding. 1832 Asset Management L.P. and Kitara Investments Pty. Ltd. hold maximum interests in the company at 14.91% 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 1.70x, implying a decent liquidity position for the company. Its Debt to Equity ratio and % long-term debt to total capital for FY19 stood at zero levels, implying that the company utilizes its funds to fuel 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: As per the release, the company’s eight drill rigs are focusing on the conversion to indicated category for Q2FY2020. BGL has commenced dewatering of the Bellevue underground mine, and the benefits include 28K plus metres of existing underground mine development; lower cost drilling for M&I category resources; lower cost and more rapid drilling of Deacon and Mavis Lode discoveries; access for drilling resource extensions to the south under a lake; and development ready for future mining options. The company is continuously identifying early cash positive production situations from mineralization beneath existing open pits and resources adjacent to the Bellevue decline. Moreover, by regional exploration on the 20-kilometer Bellevue mineralized corridor, the company would be targeting parallel and new lodes in close proximity to a future Bellevue processing plant.

Gold Outlook: At the time of writing, Gold Spot (XAU/USD) traded at ~US$1663.18 (18:22 (UTC+11)). Recent macro-economic concern is rising due to novel-coronavirus (COVID-19), and is expected to further slow the momentum of the global growth, leading to shift in global investment exposure to safe asset classes such as gold, US dollars, Japanese Yen, etc. On technical analysis front, on monthly chart the gold price is on uptrend and is expected to continue till the appearance of any strong bearish candlestick pattern.


Monthly Chart of Gold Spot (XAU/USD) (Source: Thomson Reuters)
 

Key Valuation Metrics (Source: Thomson Reuters)

Technical Analysis:
Monthly Chart:

(Source: Thomson Reuters)

Weekly Chart:

(Source: Thomson Reuters)

On monthly chart, the stock is trading above 50 EMA and close to 20 EMA which is also a strong support line, where the probability for the bounce-back can not be ignored. On weekly chart, the stock appears to be above 200 EMA, indicating bullishness of the stock. Any bounce back of the stock can lead it to test the resistance level at ~$0.573 (Fibonacci Projection level at 23.6%) and breaking-on the next test can be expected at ~$0.662 (Fibonacci Projection level at 38.2%).

Note: EMA – Exponential Moving Average
Stock Recommendation: BGL’s stock posted a negative one-year return of 23.58%, and in the last six months, it posted a negative return of 21.01%. Currently, the stock is trading below the average range of 52-week high and low levels at $0.735 - $0.430. The company reported increase in its total Resources which strengthens its outlook for maiden Indicated Resource, highlighting immense scope for ongoing growth in the inventory at Bellevue. Considering the company’s December quarter results, cash balance, exploration outcomes, gold outlook, and current trading levels, we recommend a “Buy” rating on the stock at the current price of $0.480, up 2.128% on March 10, 2020.

 
 
BGL Daily Technical Chart (Source: Thomson Reuters)

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