Disclaimer: IRL I participated in the placement and do work with one of the JLMs on the deal and with research periodically post the deal. The note below was released a week ago as part of this commercial arrangement.
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As stated in the CY26 stock picking comp, here is a thesis update post site trip:
Late last week we attended an institutional site trip to PGO’s White Damn gold project. The trip reaffirmed our positive view on the acquisition and forward strategy at White Dam, which can turn PGO into a cash generative gold producer.
The key takeaways from the trip are:
- The refurb, restart and ramp up of the mine remains on track compared to prior stated targets with the first gold pour due in February 2026
- Step by step, execution to date appears to be mitigating the downside risks associated with Phase 1
- On the lower bench turnover strategy:
- Irrigation of the for first 250kt of turnover ore has commenced with gold bearing leachate flowing
- An additional 250kt is expected be turned over and leaching within this quarter
- It was noted that success here could support evaluation of re-working more of the existing heap which still contains ~+/-45koz
- Such an endeavour would be relatively low cost compared to mining fresh ore so could offer further upside potential
- Turnover and re-crush were noted as common approaches to heap leach management which have never been done at White Dam before
- The above suggests to us that investors should also consider potential upside risks to production from Phase 1, as alluded to in our prior note
- Current drilling remains on track to improve the confidence in the existing resources and support the mine plan for Phase 2 due mid-CY26
- On the longer-term strategy (Phase 3 & 4), we discussed the potential of broader exploration being able to extend life of mine beyond 5yrs, noting:
- PGO has several highly prospective greenfield targets that sit within geology that is like the projects existing resources
- Mary Mine, a brownfield prospect requires follow up drilling to define a resource and test the scale of the prospect
- Progress on the Mana Hill tender is expected within the next few months, reiterating that the project has had an estimated shallow resource of 130koz+
- Several surrounding tenements are held by private groups and could provide opportunities to engage in production JVs (i.e. Portia)
- Supporting the above, PGO reiterated the ability to expand the existing heap leach within the exiting footprint which provides 4-5mt of capacity, sufficient to cover beyond Phase 2.
- More work is required on the copper potential and will be included in workstreams.
- The team vibe check is positive:
- All involved appear to be quite engaged under new ownership and working towards returning the mine to full production
- Discussions around the strategies relating turnover and re-crush is evidence of Matt Boyes’s experience in operating heap leach projects
Our thoughts on the key takeaways
What does the upside in Phase 1 look like?
When we think of upside production risk, we benchmark to the expectations set at the time of the acquisition as follows:
- The gold price has gone up a lot:
- The original modelled price was A$5,500/oz with current prices at ~A$6,800/oz which is ~24% higher.
- This would increase Phase 1 CFs from ~$10.5m to ~$15.9m (+51%).
- Phase 1 production now has expansion potential:
- The original plan was to re-crush the top bench of ~1mt of ore to produce ~+/-4koz but it now includes ~500kt of ore being turned over on the bottom bench
- As we previously noted, the turnover could add between 800-2000oz at 30-70% recoveries
- We observed that this cost is largely an excavator and some cyanide thus would be high margin ounces offering low hurdles to success
- At a recovery of just 30% this could see CFs under Phase 1 exceed $20.0m
We note that under the original plan, PGO may have had to seek further funding to support Phase 2 as the existing open pits would need a cut-back to access the full mining inventory. With a much higher gold price and just some moderate success on the upside production strategies, PGO could be more than fully funded to execute Phase 2 and increase towards production rates of 20-30kozpa and generate sustainable CFs.
The value of the longer-term strategy?
In our experience, there are often two perceptions that drive value around a producer, the size of output and the life of mine. Smaller and/or shorter life assets would experience a lesser valuation from investors. The caveat to the latter is the if there is a history of consistently replenishing resource and reserves through exploration or acquisition then the company would not be punished as much valuation wise.
Life of mine (LOM) remains the key gap in PGO’s potential, however, as we noted above there are plans to fill this gap through exploration, asset acquisition and production JVs. We have view that investors will likely start to see progress on this front from 2H CY26 onwards. In summary, the resource expansion options have the potential to turn White Dam from a ~3yr LOM to a 5-10yr LOM operation.
The sub 50kozpa peer group on the ASX is thin with four relevant names that have Australian mining operations. These are BCN, BTR, KSN & KAU which have current EVs range from $129m to $458m vs PGO at ~$46m. We generalise that those with higher valuation within the peer set have established a production history for a few years and a demonstrated reserve/mining inventory that can drive production for more than a couple of years.
Within these peers, BCN represents the most interesting analogy, being the high case outcome. We acknowledge that BCN has re-rated significantly over the last 6-9mths in part due to the gold price and capital management initiatives but we think a very important driver is BCN demonstrating the potential of its JV (and exploration success) over the Lady Ida project to drive a step change in operational potential and performance (historically ~25kozpa moving towards ~30kozpa) with a significantly extended LOM (<5yrs and declining to >8yrs). This has supported BCN re-rating ~3.5x to an EV of $458m. The takeaway is that if PGO can plug the LOM gap in this gold price environment, alongside demonstrating consistent cash generative production, it has the potential to experience a significant re-rating. It would be remiss to say that if it can’t fill the gap well, then it will continue to be penalised thus capping upside.
What this simple peer analysis entails is that firstly, PGO is cheap to established peers thus has room to re-rate as it executes on Phase 1 & 2. Secondly, it provides a blueprint for PGO whereby if it can perform operationally and strategically like the top peers, then it could experience a much more significant re-rate as it executes on Phase 3 & 4.
The Summary
The immediate forward work plans and catalysts for PGO are:
- Turnover first and second 250kt of ore (1Q26)
- First gold pour (Feb 2026)
- Commence re-crush and turnover of the top bench of the heap leach (1Q26)
- Drilling on existing resource and additional targets (through to May-June 2026)
- MRE update and Phase 2 mining study (mid-26 post drilling)
- Engineering study to commence shortly to assess an expansion of heap leach capacity by 4Mt to support production ramp up under phase 2
Post our site trip and postulations on valuations, we re-iterate that PGO represents an attractive opportunity as the company restarts and grows gold production into a record gold price environment, which also has an underappreciated copper by-product potential (also into record prices).
