Saturn Metals Ltd (ASX: STN) is an aspiring gold producer that the team at Canaccord Genuity has just started covering, and which they like the look of.
So what's piqued their interest?
Image source: Getty Images
Derisking underway
Let's look at Saturn Metals' most recent ASX release for a start.
The company said on March 26 that it had appointed engineering and consulting firm Ausenco to conduct a definitive feasibility study (DFS) for its flagship Apollo Hill gold project in Western Australia.
The DFS will be based on a new mineral resource estimate, which the company said was due for completion in the second quarter of this calendar year.
The DFS would also refine the mining, metallurgy, and engineering designs included in Saturn's prefeasibility study, which it put out in December.
The DFS is scheduled for completion during the fourth quarter of this calendar year, the company said.
Saturn Managing Director Ian Bamborough said last weeK:
We are pleased to award the contract for the Apollo Hill DFS to a company of Ausenco's calibre and capability. Importantly, Ausenco has a strong track record of success in developing first-class heap leach projects across the globe, which will be a real asset for Saturn. A solid grounding in the Australian engineering and construction environment makes Ausenco an ideal business partner as we take the next important step in advancing the development of a large-scale, long-life gold project at Apollo Hill.
Shares looking cheap
Canaccord said in its research note to clients this week that since listing in 2018, Saturn had scaled and derisked the Apollo Hill project, "defining a bulk-tonnage, low-strip, single open pit enabled by heap leach, its key differentiator among Australian developers''.
Canaccord added:
Heap leaching is re-emerging in Australia as a disciplined, mainstream development pathway rather than a low-cost fallback, driven by three key shifts: decades of global operating experience have de-risked design, agglomeration, stacking and monitoring; WA offers ideal conditions with low seismicity, flat terrain, arid climate, strong regulation and deep technical capability; and modern workflows assess heap leach viability early, using detailed mineralogy, large-scale column test work and improved geosynthetics to define realistic recoveries and performance.
Canaccord has modelled a mine with a 14-year mine life, mining 10 million tonnes of ore per year, using the mineral resource estimate in the prefeasibility study.
They also note that the company is undertaking an aggressive drilling campaign both across the main deposit and more broadly.
Canaccord has a $1 price target on Saturn shares compared with 44 cents currently.
Saturn Metals is currently valued at $221.5 million.
