Shares Orinoco Gold (OGX) have been valued at a 60 per cent premium to their current price as the Brazilian-focused gold developer closes in on first production at its high-grade Cascavel Project early next year.
In a new report issued this week by Sydney-based Breakaway Research, Orinoco has been rated as a SPECULATIVE BUY with a revised base case price target of 17c per share (current price 10c).
Orinoco’s Managing Director Mark Papendieck, will be updating investors on the Company’s development progress on Day One of this year’s RRS Gold Coast event.
Breakaway analyst Mark Gordon, who is also one of our keynote presenters, says development of the Company’s Cascavel Project is “well advanced” with activities running on schedule for plant commissioning in January 2016.
The modular plant for Cascavel is being constructed by Australian-based Gekko Systems, which has completed recent metallurgical testwork demonstrating excellent results indicating ~90% recoveries to a high-grade concentrate.
“Recent months have been key developments, including siting the processing plant at Cascavel rather than Sertao as initially planned, a move that has significant logistical and financial benefits,” Gordon says.
Orinoco is developing a small, high-grade 40ktpa operation which Gordon predicts will have C1 cash costs of just A$440/oz.
He says Cascavel will produce at a diluted underground grade of around 20g/t Au, producing strong cash-flows that will be used to fund exploration over its highly prospective tenements, and to further develop Cascavel and potential future mining developments at the nearby Sertao mine (22km away) and beyond.
“The Cascavel site can then be used as a regional processing hub,” Gordon says.
“Short to medium term price movers will include successful development and demonstrated production, exploration success, and we see considerable upside potential to this valuation,” he added.
