Flynn Gold [ASX: FG1]
Metals & Mining
A high potential gold & battery metals play
Flynn Gold Limited (ASX: FG1) is a Victoria-based exploration company primarily focused on exploring gold and battery metals in the world-class mining regions of Tasmania and Western Australia (WA). FG1’s 100%-owned flagship project, the Golden Ridge Project, boasts multiple high-grade gold mineralisation prospects. The company holds a pioneering position in the emerging gold province of Northeast Tasmania. FG1 also possesses 100%-owned tenements in the highly prospective Pilbara and Yilgarn areas of Western Australia, which contain lithium, gold and nickel prospects. With promising metallurgical test results, the company is swiftly progressing towards defining gold resources at its flagship Golden Ridge Project.
IRGS-based resource offers a distinct advantage to FG1
Initial and limited drilling at the Golden Ridge Project has shown promising indications of hosting a significant Intrusive Related Gold System (IRGS). Substantial anomalies observed within the granodiorite and adjacent sediments across an 8km mineralised zone suggest the presence of large-tonnage gold deposits, a typical characteristic of IRGS gold. This trait positions the Golden Ridge Project as a potentially extremely lucrative asset. Lab testing conducted on 26 samples from drilled holes confirmed an average gold recovery rate of 94.7%, with gold grades ranging from 0.43 g/t to 172.74 g/t Au, highlighting the potentially high economic value of the Golden Ridge Project.
Battery metal resources add value to FG1’s economics
FG1 holds 24 tenements in the WA region, advancing a portfolio of lithium prospects within hard-rock fields. The multiple exploration targets, rich in high demand battery metals such as lithium and nickel, offer significant upside potential to FG1. The fully permitted licenses allow an immediate start to exploration and drilling activities in the area. One of the Australian lithium explorers recently attracted an overwhelming response from the investor community during its IPO, owing to its portfolio of emerging and unexplored lithium deposits across WA's Pilbara and Yilgarn areas. This presents an economically lucrative outlook for FG1’s 100%-owned asset base in the same area.
Valuation range of A$0.084–0.097 per share
We have assessed FG1 at A$0.084 per share in the base-case scenario and A$0.097 per share in the bull-case scenario using an asset-based comparable valuation methodology, reflecting a Price/NAV of 0.59x. Our calculations factor in full share dilution, including unlisted options and management’s performance rights issuance. The target price range emphasises the considerable inherent value of the Golden Ridge deposits. Our valuation range does not consider FG1’s unexplored Lithium assets, which possess substantial value, especially considering the recent successes of some peers in the region. This suggests additional potential for long term unlocking of value. Notable risks to our investment thesis include commodity price fluctuations, funding challenges and potential project delays.