Beadell Resources Ltd

BDR Details

Expecting a better production: Beadell Resources Ltd (ASX: BDR) reported a Gold production of 23,703 ounces for the June 2017 quarter and expecting a better production in the second half of the year driven by better grades at depth in the Tap AB pit complex.  Beadell maintained their annual production forecast of 140,000 to 150,000 ounces in 2017, and aiming to exceed 170,000 ounces in fiscal year of 2018. Cash costs reached US$1,492 per ounce for the June 2017 quarter while All-in Sustaining Costs (AISC) reached US$1,558 per ounce. AISC per ounce was hurt by ongoing mining fleet availability issues and decrease in material movements and June quarter costs were higher as the pre-strip of Monkey Hill is finished. Moreover, ongoing Brazilian Real strength would continue to hurt the group’s AISC. Therefore, BDR focused on cost reduction via mobilization of a prominent Brazilian mining contractor in early July to complement the existing contractor and expects a better mining performance in the second half of 2017.

Corporate highlights:  The group’s cash decreased to A$38.3 million as of 30 June 2017 from A$55.7 million in March 2017 in prior corresponding period. They restructured their Santander Itaú Facility to better align with the Tucano Plant Upgrade capital commitments. BDR finalized the acquisition of the former joint venture partners’ 30% interest in 576 km2 of tenure surrounding the Tucano gold mine and made an early payment of US$300,000. Moreover, three payments of US$500,000 each would be made in the coming 12 months. Beadell is currently controlling entire 2,500 km2 of highly prospective and under explored greenstone. They expect a major rise in production in the coming months with the rising grade with depth in the Tap AB complex. Head grade consistency and production would lead to the plant upgrade scheduled for commissioning in mid-2018.

Exploration highlights: For the June 2017 quarter, Beadell reported new results from extension and confirmation drilling which comprise 5 m @ 7.18 g/t gold from 26 m (Central Lode) and 10 m @ 3.91 g/t gold from 102 m and 40 m @ 4.10 g/t gold from 121 m (Tap AB1 Trough Lode) and F02292 of 18 m @ 1.75 g/t gold from 166 m, 12 m @ 4.02 g/t gold from 198 m and 7 m @ 1.78 g/t gold from 218 m to bottom of hole. Northern extension of the Tap AB3 Trough Lode showed 16 m @ 5.23 g/t gold from 135 m in hole F02368 is in the same zone of deep weathering zone that hosts the very high-grade Tap AB1 and Tap AB2 Trough Lodes, extending the strike of this zone outside of the reserve open pit. North plunge showed wide and high-grade gold intercepts in diamond drilling of 18 m @ 7.55 g/t gold from 56 m including 7 m @ 14.65 g/t gold from 62 m and 27 m @ 5.96 g/t gold from 80 m including 7 m @ 18.84 g/t gold from 97 m. The Carbonate Lode remains a major priority to the group which has an objective to enhance the Tap AB resource and open pit reserve. Torres corridor showed new results at the northern end which comprise 24 m @ 3.00 g/t gold from 72 m. Systematic drill out started on 80 m spaced drill traverses over a 1km strike length at the Torres structure. At Tucano Regional, exploration programs finished which comprise first pass wide spaced reconnaissance soil sampling of many high priority targets at Mutum, T3 and T4.


Exploration results (Source: Company reports)
 
Stock performance: BDR stock declined over 35.7% in the last six months (as of August 14^th, 2017) hurt by volatile gold prices. We believe Beadell is lucrative investment opportunity with a high potential Tucano Gold Mine at hand. Tucano Plant is getting upgraded post Feasibility Study finishing. This also includes further 6MW ball mill, a high-rate pre-leach thickener, another leach tank and an oxygen sparging system at Tucano. Beadell enhanced their production from July 2017 enabling them to offset gold prices volatility to a certain extent.  Going forward, BDR would be enhancing their free cash flow while their ongoing exploration success would generate value for shareholders. Accordingly, we recommend a “Buy” on the stock at the current market price of $0.225


BDR Daily Chart (Source: Thomson Reuters)

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