ASX:BGL
Bellevue Gold Ltd
Investment Summary
The fund managers believe Bellevue Gold Ltd (BGL) represents a compelling investment opportunity due to its recent operational successes and strong free cash flow potential. In their opinion, BGL's high-grade gold mine is performing well, with ore grades exceeding pre-production models and costs aligning with expectations. The fund managers noted a significant disparity between the stock's current valuation and its future potential, indicating shares could trade over 50% higher based on an 8% free cash flow yield by FY25e. While a recent capital raise and revised production targets have temporarily affected investor sentiment, medium to long-term production guidance has improved, with a forecast of 250koz of gold production by FY27. Strong management and positive market sentiment regarding gold prices are seen as key drivers for the stock's performance, leading the fund managers to consider BGL an undervalued asset with substantial upside potential.
Commentary From The Managers
Blackwattle Investment Partners
31 July 2024
$1.37
- Blackwattle Investment Partners notes that Bellevue Gold fell 23.3% following a $150m capital raise.
- The release of a new 5-year mine plan was met with investor disappointment.
- Bellevue’s high-grade, low-cost mine is managed by a well-regarded team and has shown strong production ramp-up.
- Future debt repayments and minimal capex for growth are expected to be funded by free cash flow.
- Production expectations were downgraded for FY25e, from ~200koz to 165-180koz.
- Despite short-term downgrades, medium to long-term production guidance has been upgraded.
- Company projects production of 250koz of gold in FY27.
- Bellevue may take time to win back investor sentiment.
Blackwattle Investment Partners
31 May 2024
$1.96
- Bellevue Gold has benefitted from the higher gold price, rising 11% during the month.
- The company released a positive update regarding the commissioning of the Bellevue gold project.
- The project is ramping up well with sequentially higher gold production and head grade each month.
- Bellevue Gold is on track to generate free cash flow for the half.
Endeavor Asset Management
31 May 2024
$1.96
- Endeavor Asset Management sold their investment in Bellevue Gold (BGL) after a quick 18% gain.
- The initial purchase was driven by positive developments in gold mining operations and a favorable gold price.
- Endeavor rotated into a more compelling opportunity in Westgold Resources (WGX).
- Westgold is supported by a quality management team.
- The company has significant upside due to a recent merger.
- Factors include mine life extensions, increased gold inventories, and operational savings.
- Endeavor’s proforma spot valuation for Westgold is approximately 30% higher than their entry.
Endeavor Asset Management
31 Mar 2024
$1.94
- Bellevue Gold was a top performer in March.
- Endeavor Asset Management added the stock to the portfolio at $1.30 per share.
- Profits were taken after a 40% gain at $1.80 per share.
- The rally was driven by improved gold sentiment.
- Positive developments at the namesake mine included ore grade tracking above pre-production models.
- Costs came in line with expectations.
- This has led to increased confidence in future free cash flow generation.
- The stock remains undervalued relative to its potential.
- Endeavor Asset Management took advantage of the short-term rally to lock in profits.
Endeavor Asset Management
28 Feb 2024
$1.46
- Endeavor Asset Management identified a discrepancy between consensus expectations and reality regarding Bellevue Gold (BGL).
- BGL has recently commenced operations at their high-grade gold mine.
- The company is positioned to generate strong free cash flow.
- The fund manager validated their analysis through a meeting with BGL management and a DCF valuation.
- An initial position was acquired at $1.36 per share.
- For BGL to achieve an 8% free cash flow yield in FY25e, shares would need to rise over 50% from the end of February.
- BGL shares closed the month 13% higher than the acquisition cost.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.