Lodge Partners has compared TechGen Metals Ltd (ASX:TG1) to 14 other gold companies who all have pre-JORC gold assets in Australia and has concluded that the company is currently trading at least 350% below the average EV of $14-$20 million.
The broker believes that it would not take much for a large re-rate in the stock as TechGen may be able to announce a maiden resource toward the end of this year at its flagship John Bull Project in New South Wales.
Lodge has placed a speculative buy on TechGen with a 12-month price range of $0.06-$0.20 (current price: $0.012).
The following is an extract from Lodge’s research report on Techgen:
Investment Summary
TG1’s recent gold discovery that intercepted both high grade gold and exceptionally broad intercepts of gold from its maiden RC drilling program is its flagship John Bull project in the New England Orogen in northern NSW. An impressive 68m intercept showed 1g/t from surface also included high grade intercepts of 23m at 2.02g/t and 1m at 13.8g/t. Another intercept found 68m @ 1.12g/t in a step out drill hole. In total TG1 drilled 7 holes in its maiden drilling program for 887m. Recently completed extension systematic surface soil sampling included a sample grading up to 10g/t Au and extended the total area of gold mineralisation to the north of previous RC drilling by 500m with a total strike length of 950m and open of greater than 100ppb Au. Looking at other similarly staged gold companies we found the average enterprise value to be $14m. TG1 is currently trading 350% to 500% below comparable average EV.
Key Points
Interests with Majors; Farm-In: Rio Tinto (ASX:RIO) and IGO have taken an interest in the Company’s Paterson Orogen projects located in WA. RIO may earn an 80% interest in the Harbutt Range project by spending $3m on exploration within 5 years. IGO may earn an 80% interest in the North Nifty project by spending $500,000 on exploration within 4 years with TG1 free carried to completion of a feasibility study. The Paterson Orogen area contains several world class mines and deposits including Newcrest’s Telfer mine, the Havieron Au-Cu deposit and Winu Cu-Au deposit.
Additional Projects: TG1 has access to a portfolio of additional base and precious metals projects in Western Australia. Recently completed drilling was conducted at Station Creek where TG1 intercepted 7m @ 1.23% Cu from 20m downdip, with work scheduled to commence here in the up-and-coming quarter. At the Mt Boggola project, copper rock samples re assayed showed rare earth potential with peak TREO of 1,885ppm located approximately 8km from a recently identified thorium anomaly. The Cyclops Project (nickel-copper-PGE) located in the highly sought after Pilbara Province has modeled three discrete EM targets within ultramafics that remain untested by drilling. Additionally, there’s base metals projects in Earaheedy and the Narryer Projects that are being advanced to drilling stages later in 2023.
Key Issues: All TG1’s projects are at a relatively early stage with the John Bull project more advanced having seen the most recent drilling with a maiden gold discovery, size and scale, time will tell with another phase of drilling planned in a couple of weeks (mid-May). Cash on hand currently sits at $1.5m.
Recommendation
TG1 currently trades below a basket of peers on an EV basis. We have compared TG1 to 14 other gold companies who all have pre-JORC gold assets in Australia. TG1 is currently trading at least 350% below the average EV of $14m to $20m. At the John Bull project the company may be able to announce a maiden JORC mineral resource toward the end of this year. It would not take much for a large re-rate in the stock and we place a speculative buy on TG1.