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.
 

*ROE for 1H19
BGL Details

New Gold Discovery at Deacon & Mavis Lodes: 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 includes application covers in excess of 3,600 km square of the site.

During the financial year 2019, the company has delineated 1.8 Moz gold at 11.1 g/t of Inferred resources in less than 18 months from discovery, making it one of the fastest & highest-grade gold discoveries globally. Significant new extensions of the Tribune and Viago Lode discoveries were made extending both mineralization systems to 1,400 m of strike. Moreover, New gold discovery at the Deacon & Mavis Lodes (located below the Bellevue underground mine) is all set to underpin further exploration success wherein the first drill results from this discovery have included 4.4 m at 62.4 g/t gold, 3.6 m at 18.3 g/t gold & 2.2 m at 38 g/t gold. Additionally, the Bellevue exploration camp has been expanded to 36 beds to cover continuing 24/7 exploration and early development works. Investment has also been made to upgrade the core handling facilities and core racks for resource drilling activities.

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


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

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

Under the contingent liabilities, Bellevue through its subsidiary Golden Spur Resources Pty Ltd, has obligations to pay royalties- (a) in respect of minerals mined from M36/24, with 2% net smelter royalty plus GST in respect of any gold and 1.5% net smelter return plus GST in respect of any nickel or other minerals; (b) in respect of minerals mined from M36/25, M36/299 and E36/535 (including any tenements granted from or over the area of E36/535), a 2% net smelter royalty; and (c) in respect of minerals mined from M36/24, M36/25, M36/299 and E36/535 a $25 per ounce royalty from all future gold sales on these tenements, with a maximum aggregate royalty amount of $2,500,000.
In July 2019, the company completed a fully underwritten share placement to raise $18.5 Mn through the issuance of 32.4 Mn shares at an issue price of $0.57 per share.

In September 2019, the company appointed Mr. Kevin Tomlinson as Non-Executive Chairman. Before him, the position was handled by Mr Raymond Sharrocks who resigned from the post in September 2019.


FY19 Income Statement (Source: Company Reports)

June’19 Quarter’s Key Highlights: As per Joint Ore Reserves Committee (JORC) resource estimates, the gold inferred category was upgraded to 1.8 Moz at 11.1 g/t of gold. The exploration update anticipated this quarter on new discovery drilling included visible gold in extensions below the historic underground at Deacon; Viago ‘look-a-like’ Lode with more than 100 g/t gold rock chips in West Tribune; and multiple near mine targets with high priority untested down-hole electromagnetics (DHEM) conductors. Regional target at Bellevue included three extensive gold trends identified with walk up drill targets along strike of Bellevue Mine; recent rock chip results of 102 g/t gold, 87.6 g/t gold & 40 g/t gold; and EOH drilling along with the untested 1km-plus gold-in-soil anomaly adjacent to the Bellevue Mine & Resource area.


Bellevue global Inferred category resources July 2019 update (Source: Company Reports)

Cash and Cash Equivalent of ~$19.77 Mn Reported at the end of June’19 Quarter: Net cash outflow from the operating activities for the period was reported at $9.13 Mn. Net cash outflow from the investing activities for the period was reported at $303K. Net cash inflow from the investing activities for the period was reported at $532K. Cash and Cash Equivalent at the end of the period was reported at ~$19.77 Mn.


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

Top 10 Shareholders: The top 10 shareholders have been highlighted in the table, which together form around 41.09% 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.

Recently, Bank of Nova Scotia and each of its associates/affiliates increased stake in the company from 11.23% to 12.35%, effective from October 2, 2019.


Top 10 Shareholders (Source: Thomson Reuters)

A Quick Look at Key Metrics: Its current ratio for H1FY19 stood at 4.54x, better than the industry median of 1.82x, 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 H1FY19 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: As per the release, in addition to the continued expansion of current high-grade gold resources, the company has made significant progress in early permitting and development works to de-risk the recommencement of mining at the Bellevue Gold Project.

The company is also advancing on its strategy directed at completing early feasibility and permitting works while simultaneously growing the resource base into new areas and adding confidence to the existing resources. It intends to build on step-out expansion drilling with its present deployed 6 x diamond drill rigs, to target beneath the old Bellevue Mine and commence first pass infill drilling over the current resource areas.

There have been significant work over the early permitting tasks, reducing the time required to recommence a mining operation at the site such as – (a) 5c license for the historic underground dewatering and water disposal from the Bellevue underground and pits have been received and are now fully permitted; (b) 5C license and test bore field for fresh water supply for a future mining camp at the project have now been received and is fully permitted; (c) Flora and Fauna surveys at the property by an independent consultancy (RPS) is expected to be completed in the next quarter ready for lodgment with mining approvals; (d) Exploration camp has been expanded and fully permitted to 40 beds to accommodate accelerated exploration and resource drilling and any further early development requirements; (e) Weather and dust monitoring station set up and in place for baseline studies at the project; and (f) a Project Director and Site Resident Manager have been added to the team at Bellevue Gold to supervise early works and required studies in advance of feasibility and development.

Over the remainder of 2019 and early 2020, it is expected that metallurgical testwork over the lodes in preparation for process design will be completed. Geotechnical assessment and core logging in preparation for underground design will be finished over the same period. Processing water supply to the location, test borefield and licensing are expected to be completed along with the de-risking of resource areas through infill drilling and refinement of the geological model.


Key Valuation Metrics (Source: Thomson Reuters)

Stock Recommendation: BGL’s stock generated a positive YTD return of 35.63%, while in the span of one year, it has generated a whopping return of 126.92%. 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. Its recent new discovery at the Deacon & Mavis Lodesalong with its undergoing permitting and development works are expected to help the company in delivering a sustainable return for its customers and shareholders in the coming times. Currently, the stock is trading above the 52-week high and low levels of $0.735 and $0.255, respectively. On technical analysis front, the stock’s movement in 2018 was likely consolidated but in the September’18 it broke an important resistance zone of $0.209-$0.223, and since then the stock has continued to move in the uptrend. Currently, the stock is above 200 DMA (Daily Moving Average), which indicates continuation of upward trend. Hence, considering the aforesaid facts and current trading levels, we give a “Buy” recommendation on the stock at the current market price of A$0.595, up 0.847% as on 08 October 2019.

 
BGL Daily Technical Chart (Source: Thomson Reuters)

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