SINGAPORE (July 27): Gold ore mining group Wilton Resources Corporation could have “significant upside potential,” according to NRA Capital.
But first, the group needs to successfully execute its production plans and turn cash flow positive, says NRA analyst Liu Jinshu in an “unrated” report on Thursday.
To this end, Wilton is making some progress.
The group on Wednesday announced the completion of the construction of its first leaching pool and associated processing plant under the Pilot Production Programme.
It also completed other infrastructure, including land clearance for mining, hauling roads, the stockpile area, laboratory, gold room, base camp, and electricity power supply.
“Much progress has been made at Wilton’s concession in the two to three years since our last visit,” says Liu. “The completion of these infrastructure is a significant step forward to facilitate efficient and effective site activity, including production.”
Wilton’s first batch of gold is expected to be produced in August. As only half of its leaching pool capacity was utilised, this first batch may produce only 56 ounces of gold dore, which will be worth some US$67,000 ($91,000).
“However, the company has stockpiled 2,000 tonnes of ore since April, which can be processed to yield 225oz of gold dore worth about US$267,000,” Liu says.
“We can expect Wilton to break even in 2018 if it accelerates plans to raise leaching capacity from 1,000 tonnes per cycle to more than 2,000 tonnes per cycle within the next six months, pending the initial trial results,” Liu adds.
Furthermore, Liu says Wilton still has a significant amount of high grade resources waiting to be extracted.
Based on a Qualified Persons Report dated Aug 31, 2016, Wilton’s larger concession area contains some 5.7 million tonnes of ore. This is expected to yield approximately 4.5 million ounces of gold, which has a market value of US$1.8 billion based on current gold prices.
According to Liu, shares of Wilton are trading at a market capitalisation of US$93/oz of gold resource. This is 80% lower compared to fellow gold producer CNMC Goldmine Holdings, currently trades at US$166/oz of resources.
However, the analyst warns that Wilton lacks in economies of scale and track record. It also has a relatively weak balance sheet, and may need to raise funds if it wants to accelerate the main production programme concurrently with the expansion of the pilot programme, Liu adds.
As at 3.43pm, shares of Wilton Resources are trading flat at 7.4 cents.
