Wishbone Gold PLC Align Research initiation of coverage
September 26 2017 - 2:15AM
RNS Non-Regulatory
TIDMWSBN
Wishbone Gold PLC
26 September 2017
Wishbone Gold - Initiation of Coverage. Conviction Buy - Price
Target 1.97p
Unique gold play providing artisanal miners with processing
equipment to gain attractive gold off-take agreements
Wishbone Gold joined AIM in July 2012 as a gold exploration
vehicle. The 2015/16 recession in the resources sector led the
management to sensibly mastermind the acquisition of the gold
trading business Black Sand in 2016, seeking to grow cash
flow/profits via a different gold strategy.
Rapid growth in gold trading using the Marc Rich/Glencore
model
Wishbone is financing equipment to dramatically improve gold
production for artisanal miners in countries in Central America and
Africa: the model is first being implemented in Honduras. In this
way, the company can negotiate long term gold off-take contracts
with attractive margins as Marc Rich + Co AG pioneered, which was
the basis of Glencore.
First mill in production shortly with three more to follow in
2018
Artisanal miners provide 20% of world gold production. In
Honduras, Wishbone has a pipeline of 4 projects and is teaming up
with its US mining equipment supplier, Scotia International and the
Honduran government. Rapid growth is expected by rolling out this
strategy in S. America & Africa.
Proven management led by Sirius Minerals' ex-CEO/Chairman
Aligning interest with shareholders, Wishbone management own the
majority of the shares. CEO/Chairman Richard Poulden held the same
roles at Sirius Minerals where he oversaw its transformation into a
substantial potash company, with the share price rising from under
2p to 40p.
DCF analysis suggests upside of over 180%
Investors have enjoyed a near 200% increase in the share price
in the last 18 months. Discounting forecast cash flows of the gold
trading arm and using a peer comparison of the gold exploration
projects gives a target price of 1.97p. With the shares currently
trading at 0.70p we see material upside & initiate coverage of
Wishbone Gold with a Conviction buy stance.
To download the full note visit
http://www.alignresearch.co.uk/cpt-company/wishbone-gold/
This information is provided by RNS
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