Bellevue Gold Limited

BGL Details

Updates & Accelerating Project Development in Q3FY22: Belleuve Gold Limited (ASX: BGL) is engaged in the exploration and production of gold and undertakes the development of the Bellevue, Yandal, and Kathleen Valley projects. On 22 April 2022, BGL issued ~10,000 shares at ~$0.99 per share under an employee incentive scheme for nil consideration.

• BGL reported that the development work on the Bellevue gold project is progressing as per the plan. The ongoing optimisation studies indicate positive productivity and cost results.
• In Q3FY22, BGL undertook drilling of ~48 holes focusing on the Deacon North and Main areas and reported robust drilling results with a possibility to continue at the Deacon North Lode.
• BGL announced the appointment of Guy Moore as the CFO in Q3FY22 (ended 31 March 2022).

Comparative Liquidity Position; (Analysis by Kalkine Group)

Key Risks: The company faces the exploration risk, sufficient funding for exploration work, regulatory delays, and changes in gold prices.

Outlook: BGL focuses drilling extensions on the Deacon North and Main areas and plans to incorporate the current drilling results in the updated resource estimate, which is expected to be released in the June 2022 quarter. Besides submitting a revised resource/reserve estimate, it intends to provide an overall project development update.

Valuation Methodology: Price to Book Value Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of BGL gave a negative return of ~7.5% in the past nine months and a positive return of ~9.46% in the past six months. The stock is currently trading slightly above its 52-weeks’ average price level band of $0.710 - $1.130. The stock has been valued using the P/BV-multiple-based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight discount than its peers’ mean P/BV multiple, considering nil core revenue, mounting losses, and continuing negative ROE.  For this purpose of valuation, a few peers like Gold Road Resources Ltd (ASX: GOR), Red 5 Ltd (ASX: RED), Evolution Mining Ltd (ASX: EVN) have been considered. Considering the current trading levels, positive drilling results, favourable cost outcomes indicated from the ongoing project studies, continuing drilling for resource expansion, an indicative upside in valuation, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.925, up by ~1.092%, as of 28 April 2022. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

BGL Daily Technical Chart, Data Source: REFINITIV  

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above. 

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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