Anchor Resources Limited - Tayrona Financial 2019-03-12: Gearing Up For Underground Mining


Anchor Resources Limited - Gearing Up For Underground Mining

  • Anchor Resources Limited (SGX:43E) is principally engaged in the exploration, mining and production of gold in Malaysia. In August 2017, Anchor Resources also diversified into the granite mining and interior fit-out businesses.
  • Anchor Resources' key gold asset is the Lubuk Mandi Mine in Malaysia with tailings containing 30,200 ounces (oz) of resources from 1.3m tonnes (t) of ore at a grade of 0.73 grams per tonne (g/t) and in-situ gold comprising of 79,100oz of resources from 1.8m t of ore at a grade of 1.39g/t as at 31 December 2017.

Mine construction probably completed in 2018.

  • Anchor Resources stopped open pit mining at Lubuk Mandi in May 2017 and contracted with a third-party company - Great Aims Resources Sdn. Bhd (GAR) to undertake underground mining under a revenue and cost sharing arrangement.
  • According to a business update by Anchor Resources in August 2018 and a March 2019 press release (see Anchor Resources' announcements), Great Aims Resources had upgraded the processing plant, constructed approximately 210m of tunnels of up to 90m in vertical depth and was constructing a horizontal working and storage area that when completed would allow hard rock production to commence in 2Q 2019.

Targeting significant jump in gold production.

  • Following the upgrading of its capacity, Anchor Resources/Great Aims Resources will be able to process 22,000t of tailings or 12,000t of hard rock per month. Since March 2018, Anchor Resources had started exporting semi-processed gold concentrate ore. As at end of July 2018, Anchor Resources had exported 74t of concentrate ore with average grade of 34g/t. This is equivalent to approximately 81oz of gold.
  • In 2017, Anchor Resources only recovered 150oz of gold from 19,881t of ore processed. We reckon that gold production should improve in 2019 with the upgraded equipment and the commencement of underground mining.

Securing contracts for granite aggregates.

  • Anchor Resources’ granite mines comprise of the Bukit Chetai Mine and the Bukit Machang Property, in Terengganu, Malaysia, with production focused at Bukit Chetai. As at 31 December 2017, Anchor Resources has 64.39m cubic metres (m3) of granite reserves and 99.06m m3 of granite resources.
  • On 15 August 2018, Anchor Resources entered into an agreement with a buyer to supply 3.6m t of granite aggregates in the next four years at 21 Bruneian Dollars per t for a total contract value of S$75m.

No rating and no valuation.

Liu Jinshu Tayrona Financial Research | http://www.tayronafinancial.com/ 2019-03-12
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