Discovery Metals (ASX: DML) combines a portfolio of mineral assets in Africa and joint ventures in Australia. Discovery Metals is focused on developing the Boseto Copper Project in north west Botswana and to create shareholder wealth through discovery and development of economic mineral deposits.
The Company’s major asset and current focus is its Boseto Copper Project in north west Botswana. The company also controls the Dikoloti Nickel Project in north east Botswana. There are two smaller Australian projects which are joint ventured with the JV partners potentially earning into 51 percent equity.
Fox-Davies Capital on Discovery Metals: 3Mt pa sooner than expected?
The UK broker has provided an update on dual-listed copper miner, Discovery Metals (ASX/AIM: DML). In it the broker reported on the recently updated resource statement for the Boseto copper project.
"The total resource now stands at 102.8Mt grading 1.4% copper and 17.3g/t silver. The resource now contains 1.422Mt of copper.
"This is excellent news for Discovery. The new resource figure contains all the drill results since the last resource estimate release in October 2009.
Apart from the significant upgrade to the Resource Estimate for the Plutus and Petra Prospects, it also contains the new Resource Estimate for South West Petra and North East Plutus.
Apart from the overall 68% increase in Resources, it is particularly important that the measured and Indicated resources have grown from 11.7Mt to 22.5Mt, whilst the grade has been maintained at 1.5% copper.
The mineralization in the Boseto area remains open at depth and potential remains for growth in Mineral Resources both along strike and at depth. There are another 5 drill holes at Zeta which were drilled to test the potential below that in the recent underground scoping study and extending to a depth of 650m which are currently being reviewed and quality assured.
In addition, a series of diamond drill holes have recently been completed at North East Plutus. These holes have been designed to infill between the existing diamond drill holes and to facilitate improved understanding of copper grade distribution within the North East Plutus Prospect. The results of these holes will be released when they become available.
All of this is very encouraging. Whilst the Bankable Feasibility Study (BFS) is due for completion in late April 2010, it is based on 2Mt pa. With the Resource base expanding, a 3Mt pa option, either at the commencement of operations or through a scaling up of the project at an early stage in the project life is being considered in more detail.
The current BF was always planned for an easy expansion to 3Mt pa by the addition of a second ball mill and some flotation cells.
We retain the Buy recommendation with an unchanged target price of £0.65 (A$1.07)/share. At this point in time, we are waiting the results of the BFS before we upgrade the model. However, it is fair to say that the economies of scale associated with a 3Mt pa plant would be expected to give a significantly higher target price, all other factors remaining constant."
