What the Analysts Say
WHAT THE ANALYSTS SAY: The Roadhouse’s friends at Breakaway Research provide some insight to Sumatra Copper and Gold, and Vital Metals.
Website: www.breakawayresearch.com
Company: Sumatra Copper and Gold (ASX: SUM)
Sumatra Copper and Gold (ASX: SUM) continues to make excellent progress on its epithermal gold-silver Tembang project in Indonesia.
In February it announced it had completed practical completion and commissioning eight weeks ahead of schedule and on budget, and with processing at above nameplate capacity.
In addition ongoing resource and near mine drilling has confirmed the upside potential of the project, with this reinforced by positive results from the re-evaluation of historic exploration data, which confirms the longer term potential.
Delays in explosives permitting however have necessitated the raising of an additional US$5 million in working capital.
Sumatra Copper and Gold is an ASX-listed, UK registered company concentrating efforts on epithermal gold and silver mineralisation in the highly prospective Sumatra Island Arc of Indonesia.
Its key project is the epithermal gold-silver Tembang project in southern Sumatra, with the company also holding areas of highly prospective exploration ground.
Tembang has been mined by previous operators from 1997 to 2000, until production was halted due to low gold prices.
The company’s strategy has been to initially fund and develop a relatively small scale, short mine life start-up operation, with plans to then increase resources and mine life through funding drilling and other exploration activities from operational cash flow.
Website: www.breakawayresearch.com
Company: Vital Metals (ASX: VML)
Vital Metals (ASX: VML) is a tungsten development company with its flagship project being the 100per cent-held Watershed scheelite project in North Queensland.
Watershed, which is one of the 10 largest un-exploited tungsten deposits in the world, has a Measured, Indicated and Inferred JORC-compliant resource of 49.3 million tonnes at 0.14 per cent tungsten (WO3) for 70,400 tonnes of contained WO3.
The Aue project in the German state of Saxony has recently been granted.
Aue is within a region that is a historical producer of tungsten, tin and silver, with good potential to host further economic mineralisation.
The company is looking at farming out its 100 per cent-held gold projects in Burkina Faso.
Vital has concentrated activities on capital and operating cost refinements on its 100 per cent-owned development ready Watershed scheelite project, located north of Cairns.
A positive DFS was completed in 2014, however subsequent falls in tungsten prices (somewhat mitigated by a falling exchange rate and which appear now to be improving) have affected the economics hence the current emphasis on cost reduction and resource optimisation.
The cost work is yielding positive results, with the belief that operating costs can be reduced by at least 15 per cent and, importantly, capital costs by at least the same, and potentially significantly more via processing route modifications.
Forecast medium term increases in tungsten prices, combined with ongoing positive results from the optimisation work should deliver the economics required for financing and development.
Given the development ready status of the project we see with the potential for a relatively quick lead time to production of less than two years once financing is secured.
Key share price drivers for Vital will include realisation of implicit value with improvements in the resource market in general and sustained recoveries in tungsten prices in particular, which should then lead to progress on financing and potentially development.
Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.
The views, opinions or recommendations of this article do not in any way reflect the views, opinions, recommendations, of The Resources Roadhouse.
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