Warriedar Resources [ASX: WA8]
Metals & Mining
A high-grade gold play with copper exploration potential
We initiate coverage on Warriedar Resources with a 12-month target price of A$0.10 – representing a 142.1% upside from the current share price of A$0.043. Warriedar Resources Limited (ASX: WA8), formerly known as Anova Metals Limited, is an advanced gold and copper exploration company. It has an existing resource base of ~2 million ounces (Moz) of gold in Western Australia (WA) and Nevada. In Feb 2023, the company acquired the Golden Range and Fields Find tenements located in the middle of the highly active Murchison exploration and mining province, which hosts substantial deposits of both gold and base metals. WA8 also owns the Big Springs Gold Project (a one Moz Au resource on a permitted mining lease) in Nevada, USA. It is adjacent to First Majestic Silver's Jerritt Canyon, a 10Moz gold mine complex.
Golden Range and Fields Find Gold Projects hold immense potential
The Golden Range and Fields Find Gold Projects are strategically located in an active mining and exploration region within a Tier 1 jurisdiction. The projects are situated around several operational mines and advanced exploration projects. However, they remain largely unexplored at significant depths, with average drilling depths limited to 42m. There exists an excellent likelihood of new deposits along the 70km goldbearing shear. Additionally, there exists a potential for significant base metal discoveries, which is supported by some notable exploratory drilling results.
Recent drilling programmes have delivered promising results
WA8 excelled in its 2023 exploration programmes at Golden Range and Fields Find, conducting six drilling initiatives totalling 189 holes for over 36,000m. Noteworthy achievements include extensions along several deposits, such as Windinne Well's high-grade shoot extension and Rothschild's lode growth. Ricciardo’s recent assay results of additional RC holes affirmed high-grade shoots, reinforcing substantial potential mineralisation in the area. In Fields Find West, Mopoke drilling revealed gold at the porphyry-greenstone contact, boosting confidence, while Sandpiper confirmed extensive gold mineralisation. WA8's comprehensive exploration underscores substantial potential, validating polymetallic mineralisation across sites.
Valuation range of A$0.09–0.11 per share
Using a Sum Of The Parts-driven asset base comparable valuation methodology and conservative assumptions on resource estimates, we have valued WA8 at A$0.09 per share in the base-case scenario and A$0.11 per share in the bull-case scenario. The target price range represents a Price/NAV of 0.41x, which offers ~150% upside probability for potential investors. Our calculation factors in full share dilution (post the recent capital raising program), including unlisted options and management’s performance rights issuance. The key risks include commodity price risks, exploration risks, and funding risks.