South Boulder Mines receives A$6.99 to $16.25 share price valuation from New
York's Arrowhead
. 26/04/12
<
http://www.proactiveinvestors.com.au/companies/overview/1142/South+Boulder+
Mines> South Boulder Mines (
<
http://www.proactiveinvestors.com.au/companies/sponsors_landing/1142/south-
boulder-mines-1142.html> ASX: STB) has attracted a share valuation of A$6.99
to $16.25 from New York firm Arrowhead based on the strength of its Eritrean
Potash and Duketon
<
http://www.proactiveinvestors.com.au/companies/overview/240/Nickel> Nickel
projects.
The following is an extract from the report.
Summary
<
http://www.proactiveinvestors.com.au/companies/overview/1142/South+Boulder+
Mines> South Boulder Mines Ltd is an Australian-listed exploration and
development company focused on Potash in Eritrea (North East Africa) and
<
http://www.proactiveinvestors.com.au/companies/overview/240/Nickel> Nickel
sulphide and gold prospects in Western Australia.
South Boulder's main area of focus is world class Colluli Potash Project,
where the company shares ownership with Eritrean Government.
South Boulders in April 2012 updated JORC estimates of Colluli Potash
Project to 1,079MMT _at_ 17.97% KCl for 194.09MMT of potash.
The shallow nature of resources and high grade is expected to improve the
economics of an open pit mine at Colluli. Company in November 2011 completed
detailed engineering study at Colluli which envisaged a pre- production
capital of US$740MM and pre-tax NPV of US$1,330MM for a discount rate of
12%.
The mine life estimated 17 years with stage 1 production of 1Mtpa is
expected to increase as the study included only ~16% of the potash contained
within the previous October 2011 resource estimate.
Currently, studies are underway to incorporate additional zones of potassium
minerals and a definitive feasibility study is expected to be complete in
2013 to start production by 2016. Arrowhead believes that this is a
significant landmark which reduces the resource risk and improves the upside
potential for the company.
The Eritrean Government through ENAMCO has commenced negotiations with the
company for
ENAMCO to acquire up to a 30% paid participating interest in the Colluli
Potash Project in addition to its 10% interest which signifies the Eritrean
Government's commitment to the Colluli Potash project.
<
http://www.proactiveinvestors.com.au/companies/overview/1142/South+Boulder+
Mines> South Boulder Mines is also concentrating on its Duketon Greenstone
Belt projects which contain the Rosie Ni-Cu-PGE discovery.
The company owns 100% of all gold prospects and participates in a farm-out
Joint Venture with
<
http://www.proactiveinvestors.com.au/companies/overview/477/Independence+Gr
oup+NL> Independence Group NL (earning 70%) for
<
http://www.proactiveinvestors.com.au/companies/overview/240/Nickel> Nickel
sulphide on a small number of tenements within the area.
Independence Group in January 2012 announced the maiden JORC resource
estimate of 1.744MMT _at_1.7% Ni, 0.4% Cu, 0.8g/T Pt and 1.1g/T Pd from Rosie
Deposits. The Rosie deposit does not include the C2 Prospect where
significant mineralised zones have been discovered and are the subject of a
resource drilling program at present.
This further phase of exploration is expected to result in a substantially
increased resource estimate for the project.
In December 2011, the company issued 19.35MM ordinary fully paid shares at
AU$0.55 per share to expedite the completion of the Definitive Feasibility
Study on the Colluli Potash Project in Eritrea, and provide general working
capital. The company in H1 2012 reported a net loss of AU$4.19MM and EPS of
AU$c(4.6).
Given due diligence and valuation estimations based on discounted cash flow
method, Arrowhead believes that
<
http://www.proactiveinvestors.com.au/companies/overview/1142/South+Boulder+
Mines> South Boulder Mines Limited fair share value lies in the AU$6.99 to
AU$16.25 bracket.
This valuation is based solely on the Eritrean Potash and Duketon
<
http://www.proactiveinvestors.com.au/companies/overview/240/Nickel> Nickel
projects and does not consider potential value of the company's other
prospects. We have also presented a comparable valuation based on
EV/resource and EV /proposed capacity.
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Received on Thu Apr 26 2012 - 10:50:39 EDT
