WIA Gold Ltd (ASX: WIA) has recently made progress on several fronts at its Kokoseb gold project in Namibia, where it is planning a mining operation valued at US$475 million.
The progress has piqued the interest of the analysts at Barrenjoey, who have issued a new research report on the company with a bullish share price target, which I'll get to shortly.
First, let's have a look at what the company has been up to.
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Drilling shores up confidence
Most recently, WIA Gold said in a statement to the ASX that recent drilling results from 33 new holes demonstrated strong grade continuity at the underground resource.
The central underground exploration target was also extended by 170m to the northeast and continuity of the mineralisation was confirmed for 300m to the southwest.
Significant assay results included 15.5m at 6.53 grams per tonne of gold from 499.5m.
WIA Managing Director Henk Diederichs said:
Our underground drilling programme continues to deliver both scale and grade, reinforcing the underground opportunity emerging beneath the planned open pit at Kokoseb. Recent drilling has extended the Central Underground Exploration Target by approximately 470 metres, while the Southern Underground Exploration Target remains open at depth and continues to return encouraging widths and grades. Results from the Deep High-Grade Exploration Target continue to highlight the broader underground potential of the Project.
Expansion on the cards
The drilling results follow WIA announcing in September that a review of their definitive feasibility study had found that an increase in processing throughput from 5.25 million tonnes per year to 7 million was viable.
The company added:
Based on a preliminary review, the definitive feasibility study mine schedule could supply a 7Mtpa plant without modification to the underlying mining schedule. No changes to mining costs, Ore Reserves or production schedules have been considered as part of the process plant engineering review.
Barrenjoey said in its new research note on the company that the new drilling results supported its exploration target of 10 to 15 million tonnes of ore at 2 to 2.5 grams per tonne of gold.
They added:
Definition of sufficient high grade material at depth could boost Kokoseb project economics in the future through underground mining.
Barrenjoey has a price target on WIA shares of 80 cents compared to 45 cents currently.
The broker said:
Our valuation is based on an exclusively open pit operation. Underground mining could expand operational mine life and is not included in our current forecasts.
WIA Gold is valued at $898.5 million.
