Blackham Resources Limited (ASX: BLK) Research Update – Moving To Mining

by Alison Sammes

The gold price is beginning to show encouraging signs of beginning the next stage of the long term bull market that will take it to new highs over US$2000/oz.

The demand for gold from India and China already exceeds global mine production and is adding to high investment interest from Europe and North America.  Central banks are also now significant net buyers so the overall gold market is tightening up. We also have to ask `who will be the sellers?’ to meet this demand at today’s prices.

Gold has already been rising in most currencies and the recent weakness in the A$  has pushed up the gold price up above A$1500/oz.

The ASX  Gold Index has responded to the better gold market and is up 60% from its low in November but it is still 69% below the 2011 high when gold was only about A$1400/oz compared to A$1550 today. There is much to catch up.

Some Paradigm gold stock recommendations from the2014 December Dawes Points are up over 100% (NST +117, EVN115%) with others up over 50% (SAR +95%, MLX +83% and DRM +78%).  The recent strong earnings reports from many of these companies and some with increased dividends can only get better in 2015 with a gold price A$150/oz higher.

Blackham Resources is one company that has outstanding prospects from its Wiluna gold mining project that Paradigm considers will provide outstanding short and long term returns as the entire Wiluna Goldfield is revived.   With 4.7moz resources and a 1.3mtpa processing plant the project should have a long term future at gold production rates of over 100,000ozpa generating revenues of over A$150mpa.

Most Paradigm account clients hold BLK and should do very well as long term investors.
Risked milestones are provided to indicate an 18 month share price base target of A$0.90/share with potential of $1.57.

If you don’t have BLK and don’t have account with Paradigm  you might be missing out!

Key Points

  • Engineering studies on mines and mill well advanced
  • Target of >80kozpa by mid 2016 then >100kozpa
  • Mill refurbishment  capital costs set at <A$16m
  • Mine development costs estimated at <A$10m
  • Total funding requirement is estimated at <A$26m
  • Cash flow positive five months after major funding drawdown
  • Initial resources base in excess of 4.7moz and growing
  • Additional potential of up to 3moz in near mine exploration


Blackham Resources’ 1.3mtpa Matilda Gold Project to produce 100-110,000ozpa is coming closer to fruition with progress made on the mill rehabilitation process and the finalising of ore sources from the current 4.7moz resource.   Exploration appraisals are also providing potentially significant new resources.

Higher A$ gold prices and the fall in the cost of mining contractor equipment and fuel costs should give this project even more attractive margins.

Paradigm has determined a Base Case Project NPV8at A$1,500/oz of A$173m   (A$0.90 /share fully diluted) and a Standard Case Project NP V8 at A$1,500/oz ofA$303m (A$1.57 /share fully diluted).  Risked milestones are provided to indicate an 18 month share price base target of A$0.90/share with potential of $1.57.

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