What the Analysts Say
WHAT THE ANALYSTS SAY: Interesting news and views from across the Resource Analyst universe.
Website: www.beerandco.com.au
Company: Diatreme Resources (ASX: DRX)
In March 2012, Diatreme announced the results of its Pre‐Feasibility Study on the Cyclone mineral sands deposit, with a pay‐back period of 2.1years.
While DRX had announced, in August 2010, a MoU with the largest end user of zircon in China, there were four key assurances required, and three have now been delivered, with the final, environmental clearance for an access road, now in train.
Diatreme is now re‐engaging with potential off‐take partners and financiers.
A formal commitment to project construction can be expected late in 2015, with first product in early 2017.
Three of the four required assurances now delivered
In 2013, DRX advised that to execute the Memorandum of Understanding into a binding Heads of Agreement, four key issues needed to be resolved:
Water supply was located in November 2013, with the successful drilling of a water bore within the area of the Exploration Lease;
The signing of a Native Title Agreement was announced on 17 November 2014;
A Mining Licence, which was announced on 24 November 2014; and
Approval for a road transport corridor from Cyclone to the rail line at Forrest, for which the Public Environmental review documents have been lodged.
In short, DRX is now making real progress on the Cyclone project.
Cyclone Valuation
On 9 January 2014, DRX announced a Heads of Agreement with Perpetual Mining Holdings Limited (PMHL), a Hong Kong-based company with sound business connections within China including in iron ore mining and steel products processing, for PMHL to acquire a 6 per cent stake in the Cyclone project for $2 million.
Beer & Co expects zircon prices to firm to US$1,500 per tonne, and rutile to US$1,250 per tonne by 2017, when Cyclone begins production.
Our resulting, after‐tax valuation of Cyclone is $125 million.
Financing
Estimated capital to get into production is $146 million.
Beer & Co expects that DRX’s current discussions with potential investors and off‐take partners results in a party buying a project stake at a value related to NPV, and the new party facilitates the required capital.
Website: www.breakawayresearch.com
Company: Thundelarra Limited (ASX: THX)
Recent drilling at the Red Bore prospect has intersected exceptionally high grade primary copper, confirming the potential of the prospect.
Ongoing work, including a reinterpretation of the mineralisation, ground magnetics and drill results has resulted in a number of other copper-gold targets being identified within the Red Bore and Curara Well leases, which now require further drill testing, which is expected to commence soon.
Ongoing work at the Pine Creek project has delineated a number of prospects that are now being drilled.
Previous work has resulted in a number of very encouraging drill intersections for a range of metals, including copper, gold, uranium and tungsten.
Thundelarra Limited (ASX: THX) has a portfolio of advanced exploration properties, with the flagship being the Doolgunna project, located adjacent to Sandfire’s (ASX: SFR) DeGrussa volcanic-hosted massive sulphide (VHMS) copper-gold operation, which has a current resource of 13.4 million tonnes at 4.7 per cent copper and 1.9 grams per tonne gold.
Recent work by the company has been concentrated at Doolgunna, and in particular the Red Bore prospect, with shallow high grade copper being intersected in diamond and reverse circulation drilling, which will potentially expand the current modest resource of 48,000 tonnes at 3.6 per cent copper and 0.4g/t gold.
The company is also actively exploring its Pine Creek project, with this area, located over the Pine Creek Orogen in the Northern Territory, being prospective for a range of base and precious metals, as well as uranium, for which a resource of 1.4 million tonnes at 304ppm uranium has been defined, and which is still open.
Lower priority holdings include the uranium prospective Ngalia Basin project and a number of tenements in the East Kimberley region of Western Australia.
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