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By Team Ace Investors
COMPANY OVERVIEW
Spartan Resources Limited (“SPR” or the “Company”) is an ASX-listed gold company which is pursuing a focused high-grade gold exploration and development strategy centred on the 100%-owned Dalgaranga Gold Project, located 65km north-west of Mt Magnet in the Murchison Region of Western Australia. Spartan has overseen a remarkable turnaround of the Dalgaranga Project – which produced over 70,000oz of gold in FY2022 prior to an operational reset in November 2022.
The discovery of the high-grade 721,200oz Never Never Gold Deposit, less than 1km from the existing 2.5Mtpa CIL processing plant and infrastructure, has been instrumental in this turnaround – underpinning a fresh vision and new approach based on the delineation of high-grade ounces close to existing infrastructure.
On 14th December 2023, the Company announced the Updated Mineral Resource Estimate (“MRE”) for its 100%-owned Dalgaranga Gold Project “DGP”, located in the Murchison region of Western Australia. This latest MRE update comprises an update for the high-grade Never Never Gold Deposit as well as an update for the Gilbey’s Complex, which comprises the higher-grade Four Pillars and West Winds Gold Prospects.
Source – Company’s Report
To be able to post a high-grade Resource for the Never Never discovery of just under 1 million ounces at an average grade of 5.74g/t less than a year after emerging from a 10c recapitalisation is an incredible outcome. The centrepiece of this MRE update is once again the Never Never discovery, which has grown remarkably within short order from a resource of 303,000oz at the start of 2023, through to 721,000oz in July, and now, less than 12 months later, reaching 952,900oz – 74% of which is now classified as Indicated.
Importantly, Never Never continues to emerge as an exciting growth story at depth, with recent visible gold intercepts having been logged below the current MRE boundary and awaiting assay. The deposit remains open and appears to be shallowing and flattening slightly to the south due to the flexure zone. This presents as a tantalising target for a fan of directional drilling from a parent hole that it plans to drill early in the New Year to systematically understand the potential of Never Never Deeps.
TECHNICAL CHART
The stock crossed above its 20 day moving average, improving its long-term outlook by crossing above that critical trendline. Based on Pocket Pivot, Upper Bollinger Band Touch and Bullish Swing Set Up, the stock is indicating a buy case.
INVESTMENT RATIONALE:
- Spartan has moved to rapidly unlock the potential of this significant discovery, which comprises a current JORC Mineral Resource of 721,200oz at an average grade of 5.85g/t, plus a substantial Exploration Target. The Company secured a landmark $50 million funding package in February 2023 to underpin an 18-month exploration and strategic plan (the “365” strategy) targeting: • A +300koz Reserve at a grade exceeding 4.0g/t Au at Never Never; • A +600koz Resource at a grade exceeding 5.0g/t Au at Never Never; • The development of a 5-year mine plan aimed at delivering gold production of 130-150koz per annum. This updated strategy is centred around an aggressive exploration program at Never Never designed to target Resource expansion, Reserve definition and near-mine exploration drilling targeting Never Never “lookalikes”. In addition to its near-mine exploration at Dalgaranga, Spartan is actively exploring more than 500km2 of surrounding exploration tenements and also owns the advanced 244koz Yalgoo Gold Project, where permitting activities are well advanced to establish a potential satellite mining operation at the Melville deposit. In addition to Dalgaranga and Yalgoo, the Company’s 527koz advanced exploration and development project at Glenburgh–Mt Egerton, located ~300km north of Dalgaranga, has the potential to be a second production hub.
- Updated Mineral Resource Estimate (MRE) completed for the high-grade Never Never Gold Deposit – Drilling from the August to December 2023 campaign focused on extending the high confidence underground portion of the resource and testing depth extensions of known mineralisation. Results continue to demonstrate consistency of thickness and grade, with the depth from surface to the current vertical limit which has extended from 500m to 600m. Mineralisation remaining open at depth. The December 2023 Never Never MRE (“2312 MRE”) includes data from 28 additional DD / RCDD holes completed in the August to December campaign. Mineralised domains were informed by RC, DD and RCDD only, of which 386 drill holes generated 5,655 sample composites for estimation within the interpreted mineralised envelope. Samples were predominantly from RC drilling (82%), with diamond drilling contributing 18%. Compared to the previous 2023 mid-year MRE (“2306 MRE”), the 2312 Never Never MRE has increased by 32% overall, with the dominant Never Never HG01 domain increasing by circa 27%.
- $25 million Institutional Placement to Accelerate High Grade Growth Strategy – The proceeds of this Placement, combined with existing cash reserves, will put Spartan in an outstanding position to capitalise on what has been an exceptional year for the Company in 2023 and significantly upscale our exploration and resource drilling efforts in the first half of 2024. The funds raised have earmarked to delivering resource growth, targeting the next leg of resource growth at Dalgaranga and ensuring it can maintain its current exploration momentum.
ACE's RECOMMENDATION:
The Company now has 739,800 ounces at an average grade of 1.45g/t in resource at Gilbey’s as a starting point for the future. That grade is more than 50 per cent above the average resource grade at which the Company was mining last year. The identification and focus on the higher-grade aspects of the Gilbey’s sequence bodes extremely well for the potential to add bulk tonnage open pit ore feed at very attractive grades into the high-grade ore feed that it expects will come from the Never Never underground mining complex. The Company’s mining strategy for these deposits located within the floor of the current Gilbey’s open pit is likely to be somewhat different from what was contemplated and mined before.
Another key takeaway for investors is that this is just an interim update at Dalgaranga, the Company has more drill assays to come and many more high-grade targets sitting along-strike from Never Never, Four Pillars and West Winds. The Company has a full target set and it has shown that it is capable of with its drilling strategies. The Company is well positioned and set to continue to deliver more high-grade ounces at very attractive gold grades. The Company has identified a number of compelling targets that offer the potential to deliver new high-grade discoveries. We recommend the stock as SPECULATIVE BUY at the closing price of $0.48.
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