Rockstone Research: Equitas Resources – Ready to make money as an incrementally growing gold miner

A recent report by Rockstone Research highlighted Equitas Resources (TSXV:EQT; FSE:T6UN) and their recent announcement of having successfully completed the acquisition of Alta Floresta Gold Ltd., a private British Columbia company with a small-scale mining operation and large land holdings in the Brazilian states of Mato Grosso and Para.
As quoted from the report:

Equitas now effectively owns 100% of 6 gold properties with 4 production licences and over 180,000 hectares of land. The immediate focus will be to increase gold production at its flagship project, Cajueiro (39,000 hectares), as well as explore for additional resources. The current small-scale sluice-box production from mineralized alluvium and saprolite is planned to be supplemented by a gravity processing plant over the next 2-3 months, which is located near the project and ready to be acquired and put into production by Equitas. This will likely put the company in a positive cashflow position, whereafter a cyanide and leach plant is planned to be built later this year, potentially resulting in very strong positive cashflows able to fully finance further exploration and development costs. The 2-3 month exploration program is expected to include bulk sampling, trenching and drilling, in order to prove the oxide potential of the deposit as, until now, only the alluvium has been mined sporadically. The newsflow is set to increase significantly over the next weeks and months.
Equitas is sufficiently funded to acquire the gravity plant and complete the 2-3 month exploration program, whereafter more funding is necessary to acquire and build the CIL plant later this year. Thereafter, no more equity financings may be required.
According to today’s interview between Chris Parry and CEO Chris Harry, Brazil offers tremendous opportunities at the moment, especially for such low-cost, close to surface gold deposits amenable for rapid development and expansion. For example, Equitas’ drilling costs currently stand at less than US$100 per meter (a fraction of the costs a few years ago or when compared to North America), whereas the capital costs for the gravity plant have fallen by more than 50% over the last year. Such cost compressions in Brazil will result in much faster payback periods and higher profitability.
The gravity plant is expected to cost $300,000 and has a general production capacity of roughly 3,000 ounces of gold annually. Hence with gold selling for US$1,200, Equitas could generate US$300,000 monthly as early as July.
The annual production capacity of a CIL plant (~$2 million) is roughly between 10,000 and 12,000 ounces of gold. Potentially, 1 CIL plant and 1-2 gravity plants could be added each year for the next 4 years, resulting in an annual output of >50,000 ounces. This significant growth potential over the next few years is providing shareholders with an exciting opportunity as Equitas is currently valued at $13 million.

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