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Home / Gold / Gold Road, Cardinal on Macquarie’s 2019 winners watchlist

Gold Road Resources

  • ASX: GOR
    • Au

Gold Road, Cardinal on Macquarie’s 2019 winners watchlist

  • 18 January

If there’s one way to start off the year on a good note, a glowing write-up from a leading investment banking group is it.


If there’s one way to start off the year on a good note, a glowing write-up from a leading investment banking group is it.

Australian multinational investment bank and financial services company Macquarie Group has revealed its Global Gold Developers & Explorers – Picking the Winners 2019 report this week, and it should be no surprise that Perth-based, ASX-listed companies Gold Road Resources (ASX: GOR) and Cardinal Resources (ASX: CDV) are in the spotlight.

Gold Road spent much of 2018 progressing its Gruyere gold project (located 200km east of Laverton in Western Australia) towards first production which is slated for the June quarter this year.

The project is being developed under a 50:50 joint venture with South African miner Gold Fields.

Construction on the Tier 1 gold mine is nearly 90 per cent complete, and Macquarie is expecting Gold Road to receive a positive re-rate over the 12 months ahead as it transitions from a developer to a gold producer.

“With contingencies allowed for over the current wet season we expect Gruyere will remain on track for first gold production in [the early second half of 2019],” Macquarie said in its report.

“Given Gruyere is approaching first gold, we expect a positive re-rate as the operation is progressively ramped-up to its initial run-rate of ~270ktpa before growing to over 300ktpa in 2024.

“We value Gold Road at 80 cents per share-ish on a sum-of-the-parts valuation using a 5 per cent WACC.”

Gold Road’s endorsement from Macquarie came alongside an updated report on the company from Bell Potter Securities, which has left its investment recommendation of “BUY” unchanged.

In its note, Bell Potter said it had updated its valuation on Gold Road after incorporating a number of changes, including the aspiring gold miner’s revised scope and capital cost, and planned start of the higher production rate, along with a revised gold price and currency exchange rate forecasts between Australia and the US, further positive recent exploration results and updated share capital and financials.

“This has resulted in our valuation of this well-funded and largely de-risked gold developer and explorer being raised by 3 per cent to $1.07 per share,” Bell Potter said.

Archie Koimtsidis-lead Cardinal, meanwhile, has been earmarked by Macquarie as a potential M&A target, after coming onto the stage in 2018 with a 270,000oz of gold per annum production profile underpinned by a Pre-Feasibility Study on the company’s Namdini gold project in Ghana, which was released in September last year.

Macquarie said it expects Cardinal to increasingly gain market attention and re-rate throughout the year ahead.

“It controls one of the few potential Tier 1 assets globally [and] our assertion is supported by the exploration land position that has high potential to yield new satellite discoveries that could feed a central mill and for standalone discoveries in the highly prospective Birimian greenstone geology in northern Ghana,” Macquarie said.

“We expect exploration results, a DFS and a construction decision to be the key catalysts in 2019 and believe Cardinal is a prime target amongst the senior and intermediate producers.”

Peter Klinger

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