What the Brokers Say
WHAT THE BROKERS SAY: Interesting news and views from across the Resource Analyst universe.
King Island Scheelite (ASX: KIS)
King Island Scheelite is looking to fast track its King Island Scheelite project, with an aim to commence production possibly as soon as early 2016.
This historical high-grade producer still has significant open cut and underground resources, at grades significantly higher than ASX-listed peers.
The key to the King Island project is its grade – an average LOM feed grade of approx. 0.83 per cent tungsten contributes to a potentially robust operation.
There is also good exploration potential on the flanks of the mineralising intrusives.
The company share register is dominated by key stakeholders in the project (including the directors), and hence we see significant motivation to generate value in the company.
King Island Scheelite has completed a Definitive Feasibility Study and supplementary studies for re-opening the historic King Island Scheelite Mine located on King Island, in Bass Strait, Australia.
Current open cut and underground hard rock resources are in the order of 6.4 million tonnes at 1.2 per cent tungsten (10.6 million tonnes at 0.93 per cent tungsten using a lower cut-off), with additional low grade resources in the tailings dam.
The company is considering a staged open cut and underground development, and is looking to fast track development of the project.
Little needs to be done with regards to permitting by virtue of approvals being in place from previous work, with this development not proceeding due to circumstances largely out of the company’s control.
King Island Scheelite is currently scoping a combined open cut, limited tailings retreatment and underground operation at its 100 per cent-held King Island Scheelite project, with the potential to produce up to 36,000 tonnes of tungsten over a 13 year mine life.
This is in effect a hybrid of two previous studies – a 2006 DFS that was based on a large open cut at the historic Dolphin Mine, and a 2012 study based on tailings retreatment followed by underground mining at Dolphin and Bold Head.
Centrex Metals Limited (CXM)
Centrex Metals has successfully implemented a business strategy of attracting foreign investment to develop early stage exploration assets in Australia.
To date the company has secured the support of two major Chinese steel producers for its iron ore assets in South Australia and one major Chinese partner for a base metals project in New South Wales.
With $35 million in cash, CXM is well positioned to maintain these assets and advance its new metals portfolio which will provide short, medium and long term value to the company.
CXM has been focused on the development of its iron ore assets and infrastructure on the Eyre Peninsula in South Australia since 2001.
In 2010 it successfully created joint ventures with major Chinese steel producers, Wuhan Iron & Steel (WISCO) and Baotou Iron & Steel (Baotou), to fund the development of two magnetite projects.
CXM also owns 100 per cent of a small hematite DSO operation and another magnetite project which has had some encouraging exploration results recently, which could lead to another Joint Venture agreement.
These magnetite projects are located between 40km and 100km via slurry pipeline from ports and
CXM has identified and developed a conditionally approved port solution at Port Spencer.
The projects are also located in an area close to large regional centres and relatively well endowed with infrastructure including roads and national grid power.
CXM has built a portfolio of early stage exploration tenements in the Lachlan Fold Belt, NSW.
The portfolio is prospective for base and precious metals with historical mineralisation evident at all prospects.
CXM will endeavour to develop these projects in a similar fashion as it has developed its iron ore holdings.
This will be done through conservative exploration expenditure to develop each tenement, prior to seeking foreign investment partner.
CXM has successfully executed this strategy with the Goulburn zinc-lead project by executing a Joint Venture agreement with the Shandong 5th Geo-Mineral Prospecting Institute.
All Joint Ventures are structured to have minimal impact on the company’s cash reserves and financial structure.
As the projects develop, CXM, with its JV partners, will look to raise the require capital at the project level.
This should ultimately provide CXM with a portfolio of minority holdings in projects producing a number of commodities around Australia.
Over the next 12 months Patersons envisages a number of significant catalysts for CXM including 1) Chinese approval and commencement of drilling on the Goulburn JV tenements; 2) Exploration success at Woolgarlo and Gundaroo; 3) Resource definition and JV agreement for Kimba Gap; 4) Baotou increasing its interest in the Bungalow JV to 50 per cent and investing the additional $16 million.
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.
The Roadhouse makes no representation or warranty with respect to the accuracy, completeness or currency of the content. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian financial services licensee before making investment decisions.