What the Brokers Say
WHAT THE BROKERS SAY: Interesting news and views from across the Resource Analyst universe.
Mutiny Gold (ASX: MYG)
Paterson Securities considers Mutiny Gold’s (MYG) Deflector deposit to be a quality gold-copper asset with the potential to generate significant cash flow.
With an updated Definitive Feasibility Study (DFS) demonstrating a considerable reduction to start-up capital, the key challenge for MYG is obtaining project financing.
Robust project economics should underpin a funding outcome in the near term and we highlight mid-2015 as a potential start date for production.
With upside to both resource size and production profile we see MYG as a valid investment proposition, well leveraged to any improvement in commodity prices.
Numbers stand up on all fronts.
A revised DFS released in September 2013 allowed for a 32 per cent reduction in start-up capital costs to $62 million while maintaining average production of approx. 80,000 ounces per annum gold equivalent.
Cash costs are forecast to be around $638 per ounce and all-in sustaining costs around $800 per ounce, on a gold equivalent basis.
Funding solution the key catalyst.
We have modelled funding for the Deflector project on a 70:30 debt-equity basis.
Despite tight debt markets, we see financing the portion of the $62 million capital requirement as achievable given the robust economics of the project.
Rocksteady iron ore project a strategic asset.
MYG is also developing the small scale Rocksteady iron ore project with current drilling aiming to increase the 650,000 tonne DSO resource to between 1.5 to 4.5 million tonnes.
The asset is strategically located near rail and port infrastructure and as the scale grows, it may attract corporate interest from regional producers.
Lamboo Resources Limited (ASX: LMB)
Lamboo Resources (ASX: LMB) continues to make steady progress at the McIntosh flake graphite project (located in northern WA) and at its three South Korean flake graphite projects (called Geumam, Taewha & Samcheok).
At the McIntosh project, Lamboo released a maiden JORC Resource of 5.3 million tonnes at 4.9 per cent TGC (Total Graphitic Carbon) covering the north-eastern end of ‘Target 1’.
Encouragingly, only 10 per cent of the interpreted strike length of the graphitic schist horizon has been tested, paving the way for meaningful resource upgrades as drilling continues along strike and at depth.
Lamboo has also identified an additional four high priority targets at McIntosh, increasing the prospective strike length by an additional approx. 10 kilometres.
A further 15km of geophysical anomalies (proven to have a high correlation to graphitic schist horizons) have also been identified at the neighbouring ‘Black Rock’ project, which is currently under application.
The South Korean projects cover three different project areas, each of which were historically mined by open cut operations.
The three deposits have a combined JORC Resource estimate of 0.57 million tonnes at 7.5 per cent TGC and offer significant exploration potential.
Processing of the flake graphite ore is relatively straight forward as demonstrated by the historical operators who employed a simple flotation processing route to produce a large flake carbon-graphite concentrate on site.
A ‘Mining Right’ was recently granted over the Samcheock project paving the way for further exploration and potential early start-up of mining operations.
The initial 5.3 million tonnes at 4.9 per cent TGC, JORC Resource at the McIntosh project was broadly in line with the company’s stated exploration target and provides Breakaway with confidence that Lamboo will reach its next stated objective, which is to double the resource in the near term.
Breakaway is also encouraged by the large flake size of the graphite mineralisation from the McIntosh area.
Flake graphite of a size >425µm (0.425mm) as appears the case for around 15 per cent of the mineralisation at Target 1, commands a significant premium trading in a price range of $3,000-$35,000 per tonne.
On the path to production
A recently completed capital raising of A$1 million (at 6 cents per share) will support Lamboo as it embarks on engineering and baseline environmental studies as well as associated metallurgical test work.
An application for a Mining Licence at McIntosh has already been submitted although parameters around the potential size and cost of the operation are yet to be fully assessed.
Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.