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Analyst Report Outlines Brightstar’s ‘Cheapest, Quickest’ Path to Cash Generation

Description:

Corporate finance advisor Evolution Capital affirms Brightstar Resources’ (ASX:BTR) potential to be one of the cheapest and quickest pathways to cash generation.


Evolution Capital has given BTR a valuation of AU$95 million or $0.032 per share, assuming a flat gold price of AU$3,000 per ounce.

“The risks to our valuation are on the upside considering renewed investor interest in gold, further exploration success, which could be easily and quickly monetises … and a potential lithium pegmatite discovery,” the report noted.

BTR’s scoping study combining the development of the Menzies (Lady Shenton + Yunndaga deposits) and Laverton assets (Cork Tree Well + Alpha deposits) “demonstrates to the market some enviable characteristics” entailed with initial development capital AU$22 million, low technical risks, and a high profitability index, the report said.

CTWMET004 diamond holes drilled at Cork Tree Well showing visible gold with $2 coin (20.5mm diameter) for scale


Evolution Capital expects an intense 2024 newsflow, including cash flow from the Selkirk gold production, ongoing results from greenfield exploration, as well as infill and extensional drilling, resource updates, completion of the pre-feasibility study, and the potential discovery of lithium-bearing pegmatites at the Menzies project.

Highlights from the report:

  • The $5 million placement announced by BTR in November 2023 and the expected cash flow from the Selkirk 50/50 profit sharing JV in 2024 will accelerate exploration work and the completion of pre-feasibility study for the restart of the Menzies and Laverton gold projects. Production at the Selkirk JV is expected to generate cash flow for BTR by the first quarter of 2024. Evolution Capital estimates BTR’s profit share at $4 million.
  • The scoping study for the development of the Menzies and Laverton assets demonstrates some enviable characteristics, which Evolution Capital summarized as: low initial development capital of $22 million, low technical risks, and a four-times-higher profitability index.
  • Using a gold price of AU$3,000 per ounce, and a 25 percent risk discount, the analyst firm gave the Laverton and Menzies Projects a valuation of AU$93 million or $0.031 per share.


For the full analyst report, click here.

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