Being in NZ, Santana doesn’t get as much attention as its peers with projects in Australia, but the market is increasingly taking notice.

Both Euroz Hartleys and Bell Potter Securities initiated on the stock in early 2023 with Euroz describing Bendigo-Ophir as “the 3Moz world-class gold discovery you’ve never heard of”.

Bendigo-Ophir is just 90km from OceanaGold Corporation’s Macraes mine, an 8Moz project, in the Otago Goldfields.

The historical Bendigo underground mine produced 180,000oz of gold at more than 1oz per tonne during the 1860s gold rush.

Santana acquired the then-202,000oz low-grade project in September 2020 for 38 million shares and a 1.5% net smelter royalty.

The game-changer for Santana came in 2021 when drilling hit 40.3m at 2.05g/t gold at the Rise & Shine (RAS) shear zone.

As the deposit was discovered under cover, it was missed by the old-timers.

By February 2023, Bendigo-Ophir had a resource of 3Moz at 1.9g/t, including 2.68Moz at RAS, using a cut-off grade of 0.25g/t.

The most recent resource estimate for the project, reported last month, is 2.46Moz at 2.1g/t gold, including 2.2Moz at 2.3g/t at RAS, calculated at a 0.5g/t cut-off.

Of the RAS resource, 1.45Moz or 65%, sits in the indicated category.

Early economics

In April, Santana published a scoping study for RAS, outlining an initial 10-year open pit and underground development to recover 1.12Moz of gold at cash operating costs of A$816/oz.

The free-milling ore would feed a conventional 1.5 million tonne per annum carbon-in-leach plant.

Capital costs were forecast at A$233 million.

Based on a gold price of A$3545/oz and exchange rate of US66c, the project would generate life-of-mine revenue of just under A$4 billion and EBITDA of more than A$3 billion.

The project has an internal rate of return of 75% and a payback period of just one year.

Santana moved straight into a prefeasibility study. The company raised A$31.2 million at A$1.15 per share to fund the study and further exploration.

Project upside

The PFS is due to be released early in the December quarter and Santana is continuing exploration alongside it.

On Monday, Santana reported two holes from RAS which further validated the high-grade core of the deposit.

New results included 41.8m (true width 38.5m) at 5.8g/t gold from 167.3m and 39.5m (TW 35.9m) at 5.1g/t from 167.5m.

Bell Potter analyst Bradley Watson said the announcement was a good reminder that the high-grade and near-surface core was higher grade than the resource.

“In the scoping study, the high-grade core is evident in the second full year of ore processing, when the grade processed is 4.35g/t and gold produced is circa 200,000oz (versus the normal rate of 100,000-105,000oz),” he said.

“EBITDA in the first two years of processing is over A$700 million (more than A$500 million of which relates to the high-grade core).

“The current capital cost estimate is A$233 million. Accordingly, we expect this first two years of mining to rapidly return project capital and build a substantial cash balance.”

RAS is open down-plunge and there also remains the opportunity to bring Bendigo-Ophir’s other less-explored deposits into the mine plan.

‘Open for business’

NZ’s resources minister Shane Jones is actively promoting the country’s mining sector, visiting Perth and Melbourne last week to meet with governments, miners and investors.

He released a draft minerals strategy in May with an aim to increase export earnings from NZ$1 billion a year to NZ$2 billion by 2035 and increase direct jobs by 2000 to 7000.

“My message to Australia is that New Zealand is once again open for business to responsible operators that want to join us in realising the potential of our minerals and petroleum estate while enhancing prosperity for New Zealanders,” Jones said.

Jones is aiming to slash permitting times for new projects.

Santana has estimated permitting for RAS may take just six months.

The project already has access to power, water and a main highway, shortening the timeline to production.

The 8000-strong town of Cromwell is minutes away and the project is only an hour from Queenstown’s international airport.

Making moves

Santana is chaired by Western Australian gold mining veteran Peter Cook and NZ-based CEO Damian Spring will present at Diggers & Dealers in Kalgoorlie next month, the first on-stage appearance for the company.

Cook joined Santana late last year, shortly after selling Breaker Resources to Ramelius Resources. Former Breaker CEO Sam Smith is executive director of Santana.

As the gold price trades at new record highs, Santana shares have risen by almost 20% so far this month to over A$1.20 but are still trading well short of the all-time high of A$1.56 reached in April.

Bell Potter sees further upside for the stock and has a current price target of A$2.15.

Santana announced yesterday it would list on NZ’s stock exchange next week.