Bellevue Gold (ASX:BGL): One of Australia’s newest gold producers is down >50% from its peak? Is it a takeover target?

Bellevue Gold (ASX:BGL) is one of Australia’s newest gold producer, but one of the few gold stocks to be struggling.

It timed its run to production to near perfection given gold prices have been booming for the last 18 months and it achieved quite a feat in actually getting there given the struggles of small-cap explorers.

Although the company ‘made it’ in that strict sense, times have been tough with shares having more than halved from their peak. This has led to speculation that it could be a takeover target before too long.

 

Bellevue Gold’s story

The current company was a tiny shell company known as Draig Resources back in 2016. It bought its namesake project in WA after it had spent 15 years in the hands of Barrick, which had done little work on the project. It had been an operating mine between 1897 and 1997 and produced nearly 1Moz (million ounces) of gold but had appeared to run out of life.

Bellevue Gold was chaired by Ray Shorrocks who bought onboard Steve Parsons, who founded Gyphon Minerals and made a successful M&A exit after finding a 3Moz resource. Tolga Kumova also came onboard as a key investor. The company began a drilling campaign in the last quarter of 2017 and has never looked back, delivering a return of over 5000% to investors.

 

A monster deposit

It has Total Mineral Resources of 11Mt at 9 g/t for 3.2Moz of gold. 1.7Moz of this is Indicated with the balance inferred.  This makes it one of Australia’s highest-grade gold mines. Production has just begun. The company forecasts a 10 year mine life and for $2.1bn of free cash flow, assuming a gold price of A$2,500/oz. This is the stuff dreams are made of.

The company prides itself not just on its ‘rags to riches’ story but how it is fully funded with A$133m in liquidity and has a solid ESG angle. It is aiming for Net Zero by 2026, to be 70-80% renewable energy powered and it has signed appropriate agreements with local Indigenous landholders.

Production began in late October 2023 with the first gold pour. Again, BGL has never looked back. Not just from produced gold, but from a grade perspective.

 

 

BGL had issued guidance of 165,000-180,000koz production for FY25 with an AISC of A$1,750-1,850/oz. Within 5 years, it aspired to produce over 250,000/oz per annum and have ‘first-quartile cost positioning’. This was planned to be achieved through an increase in underground ore movement and an increase in processing capacity, with low capital cost.

Bellevue has been aspiring to deliver a significant proportion of its energy from renewable sources. IT is building a 90MW hybrid power station on-site – a mix of wind, solar, thermal and Battery Energy Storage.

 

But it has been struggling in recent times

In less than a week into 2025, the company revised its guidance to 150-165,000/oz in light of lower grades encountered.

Despite the company expressing confidence things would improve, it took only 3 months for another downgrade for the same reason (lower grades encountered). The updated guidance was 129-134,000/oz for FY25, and it issued guidance of 150,000/z for FY26 followed by ~190,000/oz for each of FY27-29, and the Resources pinning this outlook at 90% Indicated with just 10% Inferred and 0% measured.

The FY26 figure was a downgrade because the company’s costs had risen so it scaled back its mining fleet and put the processing plant on hold. So it has deferred $75m in capex and issued ASIC guidance of A$2,425-2,525 per share.

On the same day, BGL launched a $156.5m capital raising and it raised that money – with the raise coming 6 months after the last one which was $150m. It said $40m would serve as additional working capital, and the balance was used to close out unfavourable hedging contracts. The gold price is over US$1000 higher than the contracts it entered into.

 

The future?

BGL openly revealed that it had been targeted by unsolicited takeover approaches, without naming anyone. It hired UBS to head a ‘strategic review’ to assess these offers (As well as its performance at the operations generally) and Bill Stirling quit as chief operating officer.

Despite the talk BGL might entertain a takeover offer and consequently get out (or maybe because of it), the company held a site tour for investors. It reported a lift in mined tonnage in March, but a loss in expected grade performance, but largely fixable or localised.

The company claimed >90% of drivers were within its control and had moved into more consistent mining areas. As for the processing plant, it claimed the 1.35Mtpa expansion was almost complete, and the goal of net zero by CY26 would be met.

 

Conclusion

Bellevue appears to have a solid asset, but there is uncertainty as to whether or not it can live up to the company’s expectations. And how can you trust the company given it said things were good just 3 months ago and broke its word?

At $1.3bn, there are few other >100koz producing gold mines available at that price and we wouldn’t be surprised to see the takeover interest lead to formal offers. In such an instance, it is highly likely the board would agree to it.

But it is hard to see a company like Bellevue have such a run of bad luck, at the same time literally all its other peers have had such a great run, in such a strong market for gold.

 

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