Proactiveinvestors Australia

Wraps: Angie’s broker round-up

Proactive Investors’ Finance Writer/Analyst Angie Kean brings you a wrap of companies in the small to mid cap. space that have made it onto the broker radar. All the information you need in one tight round-up of recent broker coverage. 

On the broker radar: Black Range Minerals, Gunson Resources, Dart Mining

Friday, June 22, 2012 by Angela Kean

A number of resources companies, including Black Range Minerals and Gunson Resources, have had their investment cases validated with coverage by brokers, highlighting a potential investor opportunity.

A number of resources companies, including Black Range Minerals and Gunson Resources, have had their investment cases validated with coverage by brokers, highlighting a potential investor opportunity.

Black Range Minerals (ASX: BLR), Gunson Resources (ASX: GUN), Dart Mining (ASX: DTM) and Greenland Minerals and Energy (ASX: GGG) have attracted some broker attention in the past month with share price targets well above their current respective share prices.

Foster Stockbroking has rated Black Range Minerals as a buy with a target of $0.07 per share, more than three times the last traded price.

Black Range possesses one of the highest grade and largest uranium ore bodies in the U.S, the Hansen/Taylor Ranch Project, which hosts a JORC Resource of 90.9 million pounds U3O8 at a high grade of 600 parts per million.

The project is likely to become a necessary deposit and source of uranium for the U.S. domestic market – given 20% of U.S. electricity comes from nuclear power plants.

U.S. reactors consume around 50 million pounds U3O8 per annum – 85% of which is imported. The U.S. generates more electricity from nuclear power plants than any other country in the world.

The economic case for the project is highly compelling with a recent Scoping Study, based on a production profile of 2 million pounds per annum, showing potential for a lower capital expenditure with the option to process the ore at an existing mill offsite.

Without the need to build a mill, the Scoping Study indicates capital expenditure for Hansen would be under US$80 million.

With mine operating costs from the Scoping Study estimated at US$30 per pound U3O8 at a production rate of 2 million pounds per annum, it propels Black Range into an advanced and potential near term uranium producer.

Meanwhile, on the mineral sands front, Gunson Resources has received a buy recommendation and A$0.35 price target from a UK broker, which is more than triple the last traded price of $0.115.

Gunson is in advanced discussions with POSCO, the world’s fourth largest steel producer, regarding the potential acquisition of a large minority interest in the Coburn Zircon Project.

Supply shortages and rising demand for zircon and titanium dioxide raw materials have improved the financial attractiveness of the Coburn project.

Coburn is one of only a few advanced mineral sands projects in the world.

Demonstrating the strength of the project, POSCO has reiterated its strong interest in Coburn as a landmark new potential investment and agreed with Gunson the basis of establishing joint marketing and offtake arrangements.

Gunson is further de-risking the project with the securing of an offtake agreement earlier this year with the world’s largest pigment producer, DuPont, for its proposed share of chloride ilmenite production from the Coburn Project over a five year period.

The company is also in advanced discussions with other potential offtake partners for the higher titanium dioxide mineral products and zircon.

Dart Mining (ASX: DTM) in a Due Diligence and Valuation Report from a New York-based firm, received a 'Fair share value bracket' of A$0.23 to $0.49.

Highlighting the potential undervaluation of Dart, even the lower end of the price range is more than double the last traded price of A$0.095.

Dart is developing the world class Unicorn Deposit hosting large resources of molybdenum, copper and silver within a climax style porphyry intrusive that is located near Corryong, in northeast Victoria.

The company is continuing to work towards a Resource upgrade at the project in the September quarter, with assays supporting potential extensions to the deposit.

Unicorn hosts a maiden JORC Indicated and Inferred Resource of 105 million tonnes at 0.07% molybdenum equivalent, including 29 million tonnes at 0.09% molybdenum equivalent.

Importantly, this Resource is interpreted to represent only the upper limits of a very large intrusive porphyry system.

The most recent results from drilling highlight the potential to extend the deposit to the south and east, beyond the current conceptual pit boundary.

Further upside is that latest drilling results suggest the conceptual pit design should have a very low strip ratio which could greatly benefit the economics of the Unicorn deposit.

Dart’s Unicorn Deposit is strategically located within the Lachlan Fold Belt, host to major projects such as Newcrest Mining’s (ASX: NCM) Cadia Hill and Ridgeway projects and Rio Tinto’s (ASX: RIO) Northparkes mine in New South Wales.

Cadia Hill hosts 1.7 million ounces gold and 140,000 tonnes copper in Reserves, while Ridgeway hosts Reserves of 2.5 million ounces of gold and 340,000 tonnes of copper.

The Lachlan Fold Belt also hosts Independence Group’s (ASX: IGO) Stockman volcanogenic massive sulphide deposit in Victoria, which has total resources of 12.69 million tonnes at 2.1% copper, 4.4% zinc, 0.7% lead, 39 parts per million (ppm) silver and 1ppm gold.

Greenland Minerals and Energy’s completion of a Pre-Feasibility Study on the Kvanefjeld multi-element project in Greenland has attracted a buy recommendation and a target price of $2.25, more than five times its current share price, from a broker.

The Pre-Feasibility Study demonstrates the clear potential for Kvanefjeld to be developed as a long-life, cost effective producer of heavy, light and mixed rare earth concentrates, uranium oxide and zinc.

Further, the production profile is of global significance in terms of output capacity, and low production costs.
Kvanefjeld will be able to generate four main products including a high grade zinc sulfide concentrate.

The development scenario from an annual 7.2 million tonne throughput would provide uranium oxide of 2.6 million pounds, heavy rare earth hydroxide of 4,200 tonnes, mixed rare earth carbonate of 10,400 tonnes and light rare earth carbonate of 26,200 tonnes.

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