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Gascoyne Resources (GCY) - On The Road To First Gold

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Gascoyne Resources’ (GCY) Dalgaranga project remains on time and budget for completion in May 2018. The majority of the critical path items have been delivered to site or are currently being installed. Mining has commenced at Sly Fox with first ores delivered to the ROM pad. At Golden Wings, dewatering and grade control is underway. Power infrastructure is being installed with first gas delivery expected in the coming weeks and gas generator installation expected in early April. First gold is expected around mid-May 2018. Exploration is ongoing with RC drilling at Greencock and aircore drilling at Seagram’s and other regional targets. GCY trades at an undemanding EV/production (forecast FY19) of $2,100/oz versus its producer peer group of ~$4,500/oz and other emerging developers at ~$3,000/oz. GCY also trades on a forward-looking EV/EBITDA of 4.5x versus the peer group average of ~7.0x. GCY trades at 40% discount to our NAV, and as construction is completed and production commences, the discount to our target price should unwind. We maintain our BUY recommendation and target price of $0.84ps ($0.88 prior) after making minor revisions to our model.  

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