www.nkweplatinum.com
Nkwe Platinum is engaged the acquisition, exploration, and development of platinum group and associated base metal projects in the Republic of South Africa. Its projects include Garatau Project, Tubatse Project, De Wildt Project, Pilanesberg Project, Kliprivier Prospect, Ghost Mountain Prospect and Tinderbox Prospect.
European research firm puts $0.92 price target on Nkwe Platinum
Price A$0.56
Market Cap A$335m
“We expect Xstrata to exercise its option later this year, with development of the Garatau mine scheduled to commence in 2011. Despite this, the shares trade at a discount to our in-situ resource valuation (of A$0.91/undiluted share) and DCF valuation for Garatau alone (of A$0.92/fully diluted share)."
Garatau: Optimised BFS expected in May 2010
The initial findings of the Bankable Feasibility Study (BFS) confirm the feasibility of Garatau, the most advanced of Nkwe’s two projects. Nevertheless, Nkwe is currently optimising the BFS with a view to developing lower and higher capex options.
Tubatse second
With almost double Garatau’s PGM resources, Nkwe’s second project is ripe for development. Nkwe plans to finalise drilling later this year and while Xstrata’s option extends over both projects, Tubatse will likely be developed within 24 months of Garatau.
Sensitivities: Platinum price
Our valuation of Nkwe is largely dependent on the platinum price. A ±10% change in this results in a ±A$0.12 change to Garatau’s base case NPV10 of A$0.92/share.
Valuation: A$0.92/fully diluted share
Based on an in-situ resource valuation of its peer group, we value Nkwe at US$501.6m (A$545.9m) or A$0.91/undiluted share and compared to which the shares trade at a 38% discount. The shares also trade at a discount to our DCF valuation of Garatau of A$0.92/fully diluted share which excludes the value of potential cash flows from Tubatse, an expanded production profile at Garatau and higher platinum prices.”
