510.81 m shares (c 735 m fully diluted - which, at 3 p per share would give a market cap of £22 m)
Australian company, with an AIM listing. Looks to become a mid-sized mining house, and claims that any one of its four projects can achieve that.
Lead project is a proposed zinc mine at Perkoa in Burkina Faso. A bankable feasibility study was announced on 22 December 2005. (The AIM share price rose from 2 ¾ to 3 ½ p on the BFS news, but has eased back.) Pre-production capital costs are estimated at US $ 72 ½ m, and the mine should be producing in 2007 (with a two year pay-back period). Revenues of US $ 100 m in 2 years’ time were estimated in a Minesite presentation in November 2005. A roadshow (up-dating on the project and its financing) is planned for early 2006. News also seems likely on off-take agreements and, later, on the financing. (Incidentally, Barclays Capital have taken 16 ½ m unlisted options for their work on the debt financing.)
The 2005 AR stated “the potential for additional discoveries in the Perkoa area is considered to be very good” (and gave what look to be good reasons). The prospectivity may not add value in 2006, but might ease the financing and could bring positive news.
Perkoa, though remote, seems an attractive project; and news flow can be expected on this and other projects - see slide 30 of the November presentation. The BFS npv(10) for Perkoa is about four times the fully diluted market cap, so there is scope as well as reason for a price rise in 2006. A double would not exhaust the potential.
