General | Feb 04 2006
With gold trading at and around record levels in Australian dollar terms, interest in emerging gold plays on the Australian market remains high. While many smaller companies are trading at or above reasonable estimates of their valuation given the heat in the commodities sector, other companies are continuing to work their way up to what could be regarded as fair value.
One such stock is Carrick Gold (CRK), where a run of good exploration results at its flagship Carrick Vale project in Western Australia have seen the price trade between a range of $0.27-$0.95 in the past 12 months, which covers almost the entire period the company has been listed.
Aegis Equities Research Pty Ltd has completed a review of the company, the result being it has lifted its valuation to $83m from $54m, which represents $0.94/share on a fully diluted basis.
As Aegis notes the lift in its valuation has little to do with current earnings, as the company currently generates no revenues given its focus on exploration.
This focus is delivering results though, with Aegis noting the company has recently increased its resource at the project by about 20% to 2.01moz, of which 38,000oz are measured, slightly less than 600,000oz are indicated and the balance are inferred resources.
Follow-up drilling is planned, with Aegis expecting this will see a portion of the indicated resource converted to a measured resource, while it anticipates an increase in the total resource to in excess of 2.5moz within the next 12 months.
The company is not a single resource operation though, as initial drilling at the Kalpini project has been encouraging. Aegis expects an initial ore resource statement for the project will be released soon. In addition, the company has the Halfway Hill nickel project located near its gold resource, though little detailed work has yet been done on this project.
With the company still in the exploration phase there are obviously risks involved, but as Aegis points out the company still has cash on hand of about $2.3m, which provides some comfort. A further speculative element comes from management indicating global mining company Placer Dome has expressed interest in the potential of the company’s exploration ground.
No brokers or equity researchers in the FN Arena database cover Carrick, which is not surprising given its current focus on exploration.
The last sale price for CRK was $0.89, while its stock also trades on the US market via American Depository Receipts (ADRs).
