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Metal Tiger: THE INVESTMENT CASE

Metal Tiger believes it has only scratched surface in Thailand and Botswana

The company has two core projects: T3 in Botswana and Kemco and a lead-zinc-silver project in Thailand
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INVESTMENT OVERVIEW: MTR The Big Picture
T3 is developing into a sizeable copper find

News has been coming thick and fast this year from Metal Tiger PLC.

The company has two core projects: T3 in Botswana and Kemco, a lead-zinc-silver project in Thailand.

At T3, it has a 30% stake in the Kalahari copper belt project, with the other 70% belonging to its partner, MOD Resources (ASX:MOD).

The two have worked together to rapidly develop the T3 deposit at the project, and has already had a scoping study released for it despite only being found in March.

Teeing up nicely

VSA Capital estimates that the deposit has a net present value of US$170mln on a 100% basis, following an initial outlay of US$135mln.

The low-cost (VSA estimates an average US$2,690 per tonne over the nine year mine life) open pit mine at T3 will exploit an initial 28mln tonne resource with a grade of 1.24% copper.

There are also satellite deposits at the project, which could lead to future exploration and expansion potential.

Resource update in August

Further drilling results are expected in the near term and the results to date indicate that the planned resource update, due in August 2017, is likely to result in a larger resource with increased confidence, said house broker VSA.

Additional exploration work, including an Airborne Electro Magnetic Survey, is also ongoing at the peripheral satellite deposits to T3.

Thailand also moving forward

In Thailand, Metal Tiger has an effective 78% interest in Kemco, a silver-lead-zinc project, which has become more attractive given the surge in lead and zinc prices this year.

VSA reckons the project has “strong cash flow potential” and attractive returns with a net present value of US$47mln.

A lot of the mine’s original underground infrastructure and processing plant remains in good order, which should mean that starting the project back up again is a relatively low-cost affair.

The firm is currently going through the permitting process in the country to try and get a mining licence as well as exploration licences on some of the surrounding areas.

In June, a competent person’s report indicated the key project metrics had seen material improvements since the previous study with contained metal increased by up to 25%, resulting in a net 12% increase in modelled revenue and operating income up 9% to US$202.5mln despite silver prices falling to US$20 an ounce from a previously modelled US$30.

KEMCO listing expected to occur by third quarter

The AIM-listed firm announced on March 7 that KEMCO will raise further capital and itself seek admission to trading on the AIM market, with Metal Tiger to retain around an 80% stake after the listing.

While these two represent the company’s primary focus at the moment, it also has interests in Spain, Russia and Tanzania.

It has teamed up with Mineral Exploration Network (Finland) Ltd and the two are targeting gold and tungsten at the Logrosan Project and gold and antinomy at the Maria Project.

At Logrosan, MEN is assessing and costing an exploration programme.

Asset trading

To try and generate some cash flow, Metal Tiger also has an Asset Trading division and has a stake in several natural resources companies, the returns from which are put straight back into its own projects.

The current investment portfolio includes the likes of Goldstone Resources (LON:GRL), Red Rock Resources (LON:RRR), Greatland Gold (LON:GGP) as well as several others

What the broker says

VSA adds: “With a current market cap of £19mln we believe that MTR receives little credit for its core projects in Botswana and Thailand, which based on our analysis have risked attributable NAV’s of £26m and £14m respectively.

“The progress in recent months including strong drilling results in Botswana and the updated CPR for the Thai project further de-risk the projects and underpin our confidence in their potential.”

The broker has a target price of 4.57p per share or more than double the current 2p share price. 

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