What the Brokers Say
WHAT THE BROKERS SAY: Interesting news and views from across the Resource Analyst universe.
Lamboo Resources (ASX: LMB)
Lamboo Resources has a quality portfolio of graphite projects with significant exploration potential.
Newly acquired South Korean projects host existing JORC Resources, a ‘Mining Right’ and established infrastructure while at the company’s Australian based McIntosh project, a maiden JORC Resource is expected imminently, with substantial upgrades likely in due course.
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 (Total Graphite Content) and offer significant exploration potential.
Processing of the 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 McIntosh project (WA) has been assessed by over 12,200 metres of drilling and is set to imminently deliver a maiden JORC Resource estimate (targeting a 5 to 6 million tonnes at 5 to 6 per cent TGC) at just one of the five targets identified.
At ‘Target 1’, Lamboo has identified a 3.7 kilometre electromagnetic (EM) anomaly which has a strong correlation to the known areas of mineralisation.
Encouragingly, Lamboo has only drill tested approximately 10 per cent of this anomaly, highlighting the potential for substantial increases with further drilling.
Additional nearby targets demonstrate similar mineralisation characteristics and contribute to a combined 10km of prospective strike.
The outlook for graphite remains robust, buoyed by the growth in electric vehicle fuel cells and lithium ion batteries.
Demand from these sectors will likely keep graphite prices on an upward trend for the foreseeable future.
Recommendation: Speculative BUY
Wolf Minerals (ASX: WLF)
Wolf Minerals is in the final stages of securing finance to advance the Hemerdon Ball tungsten and tin project into production.
This is a major achievement and is testament to sound management and a quality project.
The EPC contract has now been awarded to GR Engineering with the expected time of construction and commissioning scheduled for 24 months.
Wolf Minerals is an ASX-listed (ASX: WLF) and AIM-listed (AIM: WLFE) emerging tungsten producer focused on the development of the world class Hemerdon Ball tungsten and tin project, located in Devon, SW England.
Hemerdon currently hosts a JORC resource of 401 million tonnes at 0.13 per cent tungsten trioxide (WO3) and 0.02 per cent tin, placing it as the third largest (known) tungsten deposit in the world.
A Definitive Feasibility Study (DFS), completed in May 2011, indicated robust economics based on a 3 million tonnes per annum operation over a 9.25 year life of mine.
Production is estimated at approximately 350,000 metric tonne units (mtu) per annum of a 65 per cent tungsten concentrate and a further approx. 450 tonne per annum of tin in concentrate at C1 costs of US$105 per mtu (after tin credits) versus the 2012 average APT price of US$387 per mtu.
The current mining reserves of 26.7 million tonnes at 0.19 per cent WO3 and 0.03 per cent tin are bound only by the constraints of the open pit limits as per the parameters of the granted ‘Planning Permission’.
Significant opportunity therefore exists to extend the mine life should approval for a larger open pit be sought in due course.
Based on the outcomes of the DFS, Breakaway estimates the total required CAPEX is approx. £130 million ($200M).
Wolf is completing documentation and conditions president for approx. $212M (raised through debt and equity) which should be sufficient to commission the mine.
Wolf will however be required to repay a US$75 million ‘bridging facility’ within 12 months of first draw down.
This would likely be accomplished via an equity placement with the top 2 shareholders already indicating support.
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.