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Analyst Deems Brightstar Resources an Active Agitator Amid “Waiting Game” in WA Gold Fields

Description:

Far East Capital analyst Warwick Grigor breaks down a compelling narrative of why Brightstar Resources ‘stands out from the pack.’

While most operators in the Western Australian goldfields wait patiently by filling up their plants with their own ore, and getting it relegated to the back of the queue, Brightstar Resources (ASX:BTR) refused to be part of the waiting game.

According to a report by Warwick Grigor of Far East Capital, Brightstar stands out from the pack of smaller companies benefitting from consolidation by being an agitator.

The company started its consolidation story in December 2022 with a merger with Kingwest Resources, allowing it to commence mining 30,000 tons of ore at 6 grams/ton from the Selkirk open pit mine at the Menzies gold project.

In 2024, Brightstar made a takeover offer of Linden Gold Alliance, a company that operates the underground Second Fortune gold mine, which currently produces 13,000 ounces.

ROM loader placing Second Fortune gold ore into road train in April 2024.

“It is always more complicated when a company is operating multiple mines and mills, which is what Brightstar is planning; more complicated but possible if you have good operational management. Share price performance is going to depend upon how completely the company delivers on its plans,” Warwick wrote.

Highlights of the report:

  1. Brightstar announced a merger with Linden Gold Alliance Limited, a private company operating the underground Second Fortune gold mine, which has produced 13,000 oz FY24 YTD. The bid values Linden at $23.7 million.
  2. The company’s latest game plan involves the development of two mining hubs, Laverton and Menzies, with the sequential development of three open pits and four underground gold mines. The total pre-production cost will be $34 million. Peak gold production will be 91,000 oz in 2026 and 98,000 oz in 2027. The Laverton mill can be refurbished to a 500,000 tpa capacity for just under $20 million, but with some softer rock blending it could get up to 600,000 to 700,000 tpa. Once the mill is up and running again it will be in a good position to accept third-party ore, but more likely it will prefer to acquire ore positions of 50,000 to 100,000 oz that may become available.
  3. With Brightstar, the share price will move less on speculation and more on delivery. The share price is still at modest levels now, and firmly in an uptrend. Brightstar stands out from the pack of smaller companies talking about being beneficiaries of consolidation by being the agitator. Initially, it is already having its ore being toll treated in the Gwalia mill. The next step will be the recommissioning of its Laverton mill.


For the full analyst report, click here.

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