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Consensus community valuation
$0.460
Average Intrinsic Value
47.7%
Undervalued by
Active Member Straws
#Financials
Added 5 months ago

December quarter 4C

In the December quarter TGM continued to advance its Theta Project closer towards production as well as strengthening its social licence in the area.

Various permitting activities continue to progress and the company reafirmed it's commitment to becoming a gold producer of more than 100,000 ounces per annum.

The Environmental Impact Study (EIS) for Mining Right 83 - 'Starter Theta Open-pit Project - will be submitted in the  March Quarter for approval by the Department of Mines Resources and Energy (DMRE) with a decision expected by the middle of the June quarter of 2020.

Mining contract discussions

During the quarter, TGM progressed discussions to develop the basis of a mining contract based on a schedule of rates basis as well as lump sum quotes for mining development activities.

Work continues this quarter to complete this process and TGM is confident that a workable mining contract can be concluded with mining costs in line with the feasibility study.

At the end of December 2019, the company had US$1.8 million in cash.

 

As mentioned in my recent Bull Case, given they need $25 MUSD to build the mine I assume they will do another cap raise before the end of the year to fund this. Hopefully they won't try and raise all the funds this way as it would be extremely dillutive given their current market cap of only ~$100 MAUD.

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#ASX Announcements
Added 5 months ago

RESULTS OF THE INDEPENDENT PLANT DESIGN OPTIMISATION STUDY
(20% increase to 600 ktpa)

TGM confirms that a study into increasing the annual throughput at the TGME gold plant in South Africa by 20% to 600,000 tonnes can be achieved with a less than 1% increase in the proposed capex.

The independent study, which incorporates the 2.5MW ball mill purchased for the Theta Gold Plant in October 2019 into a revised plant design, was carried out by METS Engineering SA. 

The 20% improvement in capacity is primarily the result of the new ball mill, and is expected to increase the CAPEX by only 1% more than the original US$24.84 million cost outlined in the May 2019 feasibility study for the Theta project. ($24.84 MUSD to $24.98 MUSD)

The mill purchase and the ensuing increase in capacity also mitigates potential future capital cost risks for increasing plant throughput capacity.

Recent work has also included improving the current throughput constraint of the tailings dam, specifically the annual deposition rate.

This annual deposition rate has now been confirmed at 600,000 tonnes, which matches the increased plant throughput capacity.

TGM also announced that Tender documents are ready for plant construction on an engineering, procurement, construction (EPC) and lump-sum turnkey (LSTK) basis.

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#Bull Case
Last edited 6 months ago

Theta Gold Mines is a prospective gold miner with a tenement of 620 square kilometres in the Sabie-Pilgrims Rest gold field in South Africa.

It has proven gold resources at it's main Theta Hill site and the potential for much more in adjacent areas which have yet to be fully explored. Overall resources ring in at six million ounces of gold, including 1.3mln open-pittable ounces

Based on the attractvie drilling results a mine feasbility study was completed in May 2019 with positive results. The company is now proceeding to refurbish the existing plant at the site with the aim of commencing commercial operations in 2021.

Their plan is to mine about 200,000 ounces in the first five years, at an all-in sustaining cost of US$764 per ounce. That should generate EBITDA of around $100 MUSD, assuming a gold price of US$1,257 per ounce.
Longer-term, open pit production will expand before a third phase takes the company into its underground ore. At that point production is likely to move to over 150,000 ounces per year.

Mining stocks aren't usually my thing but TGM is one I have been following for a couple of years now becuase it aims to do things a bit differently. Rather than exploring for and developing greenfield sites, it aims to develop historical underground mining fields that have untapped open cut resources. By utilising the existing infrastructure (roads, water, processing plants, etc) and the cheaper shallow open cut mining technique they can relativley quickly and cheaply set up an operational mine.

It's probably still too early to invest as I expect them to do another cap raise in 2020 to fund the estimated $34 MUSD that’s required to get the starter operations going.

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