MINING MARKETS & INVESTMENT NEWS – INVESTMENT COMMENTARY — Bulyanhulu considered one of world’s best

Graeme Currie, mining analyst for Canaccord Capital, has issued a “speculative buy” recommendation for Sutton Resources (STT-V) based on the growing resource at the company’s Bulyanhulu gold deposit in Tanzania.

Last summer, Currie predicted that Bulyanhulu had potential to expand beyond the 5.6 million oz. gold it was estimated to contain at that time.

Since then, drilling has provided new information that was incorporated into the latest resource update by Kilborn Engineering.

Currie reports that Kilborn has now calculated aggregate resources in the measured, indicated and inferred categories for Reef 0, 1 and 2 of 7.4 million oz. gold. “More important, however, is that the average grade of the resource has maintained itself, with the total property reserves averaging 13.14 grams gold per tonne within the total of 17.5 million tonnes.” Based on a draft of the current feasibility study, Currie predicts that construction of a 2,500-tonne-per-day facility at Bulyanhulu will require a capital expenditure of US$185 million. The total cash cost of production, including smelter, refinery, transportation and royalty charges, is expected to average US$173 per oz. gold.

Test stoping is under way at the mine site, and results of additional metallurgical tests are pending.

“Bulyanhulu represents, in our opinion, the best undeveloped gold project held by a junior at present,” Currie writes. “We continue to rate the share of Sutton Resources a speculative buy with a target valuation of $18.50.”