Stock Snapshot: Banyan Gold

I first met Banyan Gold CEO Tara Christie at the New Orleans Investment Conference last October. She immediately struck me as extremely knowledgeable and quite serious about turning Banyan into a winning company. Ms. Christie has over 20 years of experience in the exploration and mining business including a substantial amount of expertise in placer gold mining in the Yukon. After speaking with Ms. Christie for five minutes one quickly realizes that she has a deep understanding of the geology of Banyan’s flagship Hyland Gold Project.

When I first looked at it, Banyan immediately struck me as an attractively priced stock (C$.08 at the time), considering that an upgrading of the resource to the 750,000-1,000,000 ounce area while maintaining the current grade of ~1 gram/tonne Au-equivalent could easily warrant a market cap near C$25 million (roughly C$.32 per BYN share using ~77 million shares outstanding).

After speaking with Ms. Christie again yesterday I have compiled a brief snapshot of the positives and negatives I see right now for Banyan shareholders:

 

Positives

  • Updated resource estimate out within next 1-2 months, should increase resource by more than 200,000 ounces Au from BYN’s current 400,000 ounces.
  • Company is very frugal with finances, currently C$1 million in the bank and first phase of 2018 exploration program will cost about C$600,000.
  • Hyland Main Zone is still open to the north, south and east.
  • Open pit, heap leach mine envisioned for Hyland Main Zone. Company confident that the resource can be upgraded to at least 1 million ounces at ~1 gram/tonne Au.
  • Low development cost due to existing infrastructure including existing camp and equipment on-site.
  • Aurex-McQuesten Gold Project (Banyan’s #2) gives the company blue sky potential in a highly prospective gold/silver district in which Alexco is advancing a project into production right next door.
 
Negatives
  •  Still small enough that not many people care.
  •  Can Banyan reach sufficient scale to justify the capex outlay to build a mine?
  •  Will need to raise capital around mid-year.
  •  Company is not promotional, which can be good (save money and lower expectations) but can also be a negative (story doesn’t  get out to a larger audience).

 

Banyan Gold (BYN.V – 1 Year)

BYN.V_1_Year

Key upside levels for BYN are C$.12 and C$.15 – above C$.15 there isn’t much price memory until the all-time high at C$.245. Support below at C$.08 and C$.05. A breakout above C$.15 could result in a much larger move up towards my price target of C$.30.

Disclosure: Author is long BYN shares at time of publishing and may buy or sell shares at any time without notice.


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