What the Brokers Say
WHAT THE BROKERS SAY: Interesting news and views from across the Resource Analyst universe.
Luiri Gold Limited (ASX: LGM)
The current management team gained control of the Luiri Hill gold project in early 2011, following the Zambian Government cancelling the previous operator’s licence due to non-performance.
In order to satisfy the Government, Luiri Gold has warranted that it will achieve three key milestones by November 2013.
These are completion of a development plan, arranging project finance and commencing site works.
Against a backdrop of challenging markets for project finance, Luiri Gold is implementing a low risk strategy of commencing gold production at a small scale of 10,000 to 13,000 ounces per annum.
This should limit the initial capital cost to a relatively modest US$20 million.
Luiri Gold Limited (ASX: LGM) is focused on gold exploration in Central South Zambia where the company holds two Mining Licenses, 8074-HQ-LML and 14948-HQ-LML, that together cover 277 square kilometres.
The historical Dunrobin and Matala mine workings are within 8074-HQ LML that covers 31.6sqkm.
The company has a strong management team, supported by Coffey Mining for mining studies and resource estimation.
They are implementing a staged growth strategy, with low cost development of a modest sized operation at Dunrobin followed by incremental expansions supported from operational cashflow.
Infill and step-out drilling is expected to add to existing resources at Matala and Dunrobin of 568,000 ounces and 193, 000 ounces respectively.
A resource inventory of 10.53 million tonnes at average grade of 2.2 grams per tonne gold is a respectable start and provides a solid platform on which to build.
Luiri Gold has a Market Capitalisation of around $5.9 millio.
It has no debt and over $2 million cash, giving Luiri Gold an EV of around $4 million.
This appears very cheap given the company’s exploration success and proposed near term transition to producer status.
Recommendation: Speculative Buy
Rox Resources (ASX: RXL)
Assay results from the first diamond hole at Camelwood delivered 11.4 metres at 2.93 per cent nickel from 282.6m, which included 6.4m at 3.8 per cent nickel including 2.9m at 4.66 per cent nickel.
The assay results compare favourably to the preliminary indications, which were 3.1m of massive to semi-massive sulphides from 282.8m followed by 2.9m of strongly disseminated sulphides.
The next four diamond holes have assay results pending.
Preliminary indications are promising, although the widths of semi-massive sulphides are relatively thin.
The best indication is in the most recent hole (MFED005) which intersected 1.7m of massive sulphides and 2m of disseminated sulphides from 384.6m.
Assay results from RC drilling were also reported with 1m at 2.48 per cent nickel from 126m and 3m at 1.82 per cent nickel from 118m.
RC drilling has been suspended for a week due to a rig breakdown whilst diamond drilling is ongoing but hampered by not being able to step out to the east because of an ungranted exploration license application, which should be sorted out within the next few weeks.
The assay results from the first diamond hole have exceeded expectations and displayed a nickel grade at the high-end of what we anticipated whilst the width of mineralisation is broader than initially indicated (11.4m versus visual indications of 6m).
Whilst follow-up diamond drilling has encountered lesser widths of semi-massive to massive sulphides, there is sufficient encouragement to suggest that Camelwood is a significant discovery.
We believe that the granting of the exploration license application to the east will facilitate the drilling of deeper and more targeted diamond holes.
This should also result in an additional diamond drill rig being deployed.
We retain our speculative buy rating with further assay results due in the next 2 to 3 weeks.
Recommendation: Speculative Buy
Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.