What the Brokers Say
Interesting news and views from across the Resource Analyst universe
Hastings Rare Metals (ASX: HAS)
Hastings Rare Metals Limited (ASX: HAS) is an Australian company headquartered in Sydney, focused on the exploration, development and production of Heavy Rare Earth Oxides (HREO) from its world-class deposit located in the North West of Western Australia.
The company recently completed a Scoping Study on its 100 per cent-owned 36.2 million tonne Hastings deposit.
The base case study returned a mine life of plus-25 years, Net Present Value (NPV) of $1.9 billion, Internal Rate of Return (IRR) of 26 per cent and a payback period of 3.6 years.
The Hastings project contains significant quantities of dysprosium and yttrium, both considered critical strategic materials by the US Department of Energy.
Hastings also owns 60 per cent of the Yangibana rare earths project located near Carnavon in the North West Western Australia.
Key Points:
Hastings Rare Metals has a JORC Resource of 36.2 million tonnes grading 2,100 parts per million total Rare Earth Oxide (TREO), containing 65,000 tonnes of Heavy Rare Earth Oxides (HREO) (85 per cent ratio of HREO to TREO);
The deposit contains significant quantities of dysprosium and yttrium, two critical HREO required in the manufacture of hybrid cars, wind turbines and several clean energy technologies. Both are considered critical materials by the United States Department of Energy, with supply shortages expected over the coming decade;
Recently completed a scoping study on the Hastings deposit confirming metallurgical flow sheet at bench scale (100kg) and financial viability of the project;
Base Case economics of NPV $1.9 billion, IRR of 26 per cent, payback 3.6 years, and total capital costs of $720 million excluding contingencies;
Hastings is progressing with a Pre-Feasibility Study, with operation of a pilot plant forecast to commence in the March quarter 2013 with the treatment of 30 tonnes of ore;
The Hastings project is significantly more advanced than many of its peers, with metallurgical flow sheet test work often takings several years to refine (ANSTO confirmed Hastings metallurgical flow sheet as part of the Scoping Study);
Recommendation:
We have maintained our Speculative Buy recommendation and a 12-month price target of $0.30 per share.
TNG Limited (ASX: TNG)
TNG Limited (ASX: TNG) has a large vanadium-titanium-iron resource at the company’s 100 per cent-owned Mount Peake project located close to existing infrastructure in the Northern Territory.
A patented processing flow sheet, called TIVAN, provides TNG with a significant competitive advantage allowing for high recovery rates of vanadium whilst also achieving high recovery rates for titanium and iron, which can be sold as a by-product.
The company is now well funded to advance the project through the DFS stage and continue exploration within its diverse portfolio.
TNG’s principle focus is the advancement of the 100 per cent-owned Mount Peake vanadium-titanium-iron project located 235 kilometres north of Alice Springs.
The project currently hosts a JORC resource of 160 million tonnes at 0.27 per cent vanadium pentoxide, five per cent titanium dioxide and 22 per cent iron with significant opportunity for resource upgrades as drilling continues.
TNG has a conceptual exploration target for an additional 500 to 700 million tonnes in the surrounding area at similar grades to the current resource.
The recently completed Mount Peake PFS indicates an economically robust and lucrative project.
The economics have been enhanced by a revolutionary processing route, called TIVAN, which has been developed and patented by the company.
Using TIVAN, TNG is able to achieve high recovery rates of vanadium whilst also achieving high recovery rates and purity for titanium and iron which can be sold as a by-product providing the company with a significant competitive advantage.
Following the positive outcomes of the PFS, TNG will commence a Definitive Feasibility Study.
TNG recently completed a $13 million placement with two cornerstone Chinese investors at 11 cents per share.
The company is now well funded to advance the Mount Peake project through the DFS.
Recommendation:
Speculative BUY
AusQuest Limited (ASX: AQD)
AusQuest Limited (ASX: AQD) recently announced an agreement with major shareholder Cliffs Australia to sell 70 per cent of its interest in the Stanley manganese project in Western Australia, in exchange for the buy-back and cancellation of Cliff’s 29 per cent shareholding in AusQuest.
AusQuest will retain up to 30 per cent in the project and under the proposed agreement will sole-fund exploration of up to $1 million over 2 years.
After the $1 million exploration expenditure Cliffs may elect to sole-fund further exploration up to $3 million to earn an additional 10 per cent project interest, with the final joint venture (JV) form being AusQuest 20 per cent and Cliffs 80 per cent.
The Stanley manganese project is still in the early stages of exploration with manganese horizons identified but to date, no economic zones have been delineated.
AusQuest’s main commodity focus is on gold and copper, so it is a sensible move to sell a majority interest in a non-core (manganese) asset in exchanged for a reduced number of shares on issue.
The consideration for the project interest sale is approx. 68 million AusQuest shares, which is approx. 29 per cent of the AusQuest ordinary shares, which (if approved and successful) implies that after the transaction AusQuest will have approx. 160 million shares on issue.
Existing shareholders will have an increased interest in the company but a decreased project interest at Stanley.
AusQuest has a diversified portfolio of base and precious metal projects across Australia, Peru and Burkina Faso.
Recent exploration focus has been advancing gold and base metals prospects in Burkina Faso, through activities over the 100 per cent-owned Comoé project.
The project is located within the under-explored Banfora greenstone belt, to the east of Gryphon Minerals (ASX:GRY) 4.5 million ounce Banfora gold resource.
AusQuest has also been active with the Cliffs Peru JV, in which it holds a 30 per cent interest in a project area covering approx. 45,000 square kilometres.
The ground in Peru is largely under-explored and is considered prospective for large copper-gold mineralised systems (IOCG and porphyries).
Recent reconnaissance mapping and sampling by AusQuest has identified anomalous copper (up to 1.7 per cent copper) and some gold (up to 2.7g/t) in some of the targets investigated with exploration activities now set to increase until the end of the year.
With a current estimated cash position of over $4 million, and with approx. $750,000 to come in from other asset sales in mid-January 2013, the company remains well funded for budgeted exploration programs in 2012 and early 2013.
Recommendation:
We continue to recommend AusQuest Limited as a Speculative Buy.