The path of the righteous mining company, according to Ezekiel 25:17, is beset on all sides by the selfish and the inequities of the financial markets. However, Ezekiel goes on to suggest that if we get behind the stock with “great vengeance and furious anger” things could turn around fairly quickly.
So, I am hoping for some divine intervention with Tribune Resources (ASX: TBR) which has fallen victim to declining sentiment towards gold stocks as well as a slowdown in gold production at its 50:50 Joint Venture with Evolution Mining (ASX: EVN) at East Kundana (EKJV). I’ll declare an interest here in TBR Shares.
The EKJV was contributing around 40-70Koz of gold per annum attributable to TBR, however this has fallen to around 20Koz as EVN are undertaking a mining study to optimise production from the JV. While some of the underground areas (e.g. Raleigh) are somewhat “seismic” and need additional ground support, there remains significant potential both along strike and down plunge at Rubicon, Pegasus, and Hornet.
The company also has a gold exploration project in the Philippines (Diwalwal-1Moz gold, Non-JORC) that has slowed down, however the Japa Project (Adiembra Deposit) in Ghana (Inferred and Indicated Resources of 21Mt @ 2.7g/t for 1.81Moz of gold) may be looking to move forward into the development phase late next year (figure 7, 8). As figure 8 demonstrates, there is plenty of resource upside at Adiembra.
An infill diamond core and reverse circulation drilling program has been planned to upgrade the indicated resource to a measured category for future reserve estimation. Metallurgical, sterilisation and hydrological drill holes for plant, infrastructure, water, and tailings dam
are likely to follow this drill out.
From a value perspective, the company is holding around 110,000 ounces of gold bullion (based on the 2022 Annual Report) worth around $5.00 per share (before tax) based assuming a $2,450/oz gold price. So, you can buy stock today at $3.13 which is less than the value of the gold holdings and pick up the EKJV, Adiembra (1.8Moz) and Diwalwal (1Moz Non JORC gold resources) for nothing.
If Adiembra comes online (100Koz gold per annum?) and production ramps back up at the EKJV (+40Koz of gold per annum?) then I believe a significant re-rating is in order. That might turn out to be an understatement!
If someone can show me a better value equation in a listed gold stock I will walk to China (subject of course to fitness, appropriate footwear, visas, the political situation, and availability) …
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