Warriedar Resources [ASX: WA8] Update
Metals & Mining
Warriedar delivers significant gold resource upgrade
We update WA8 with a revised Target Share Price of $0.18, representing a 248% upside potential from the current share price of $0.051 and an 80% increase from our Target Share Price from our initiation report from May this year. Since May, WA8 has delivered an impressive 471k oz increase in the defined gold resources at its Ricciardo asset, representing a 99% increase in Ricciardo’s resources. This is an impressive result that places WA8 at the top of its gold explorer peer set in terms of the level of organic exploration-based increase in gold resources achieved since the end of 2023. The result validates WA8’s management’s focused strategy as well as the strong prospectivity of its flagship Golden Range asset, which is in the tier 1 Murchison gold mining province of Western Australia.
Strong continued potential for exploration upside at Golden Range
WA8’s management has canvassed a focused, 3-pronged exploration strategy to uncover the full gold potential of the Golden Range Project and, within it, the highly prospective Golden Corridor. As evidenced by the large resource upgrade at Ricciardo and the associated low all-in discovery cost of only $16/oz, the strategy has strong merits. This is because it is premised on exploring areas under the oxide layer of shallow open pits, which have not been subject to historical exploration and are proving to be very prospective. The strategy also involves exploring other brownfield areas within the Golden Corridor, both shallow regions between deposit sites that have also not been intensely explored before and deeper areas below the oxide layers of other open pits apart from Ricciardo. Ricciardo itself remains open at depth and along strike, and WA8 also plans to explore greenfield areas in the wider Golden Range project. Consequently, we are confident that the Golden Range can deliver additional gold resources at the level of what was recently achieved at Ricciardo.
Many other levers for shareholder value creation exist
WA8’s other two assets, the Field Finds Project in WA and the 1M oz high-grade Big Springs project in Nevada, also possess the scope for exploration upside and the unlocking of additional shareholder value. WA8’s plan for the Nevada gold project is to expedite its commercialisation by engaging a strategic partner. Additionally, as we detail and quantify in our report, WA8 has found a high potential for an economically attractive antimony resource at Ricciardo.
Valuation range of A$0.16-$0.29 per share
Our updated valuation rewards WA8 for its impressive result at Ricciardo, which occurred amidst the strong tailwinds associated with gold prices that have also benefited other gold miners. However, as discussed in our valuation section, despite the new higher Target Share Price, our updated valuation also incorporates certain more conservative assumptions. Although not directly reflected in our Target Share price, our valuation also conceptually quantifies the potential high positive impact on WA8’s valuation if the antimony mineralisation is developed into a resource. The key risks include commodity price risks, exploration risks, and funding risks.