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Independent Resources: Latest approval is positive, says Seymour Pierce

Last updated: 12:47 22 Feb 2012 GMT, First published: 13:47 22 Feb 2012 GMT

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Broker Seymour Pierce described Independent Resources' (LON:IRG) receipt of a long awaited approval for its Rivara underground gas storage facility in Italy as "positive".

The firm has received governmental environmental approval, which confirms the scheme's technical parameters.

The AIM-quoted company said it now hoped a licence could be granted so it could sink its planned appraisal wells, therefore paving the way towards securing the gas supply in a way Italian Industry has been calling for.

The firm aims to build an energy trading platform and is developing this project in northern Italy against a backdrop of the country's urgent demand for new storage, following disruptive winter supply shortages and major supply disruptions.

Seymour Pierce analyst Sam Wahab said: "Rivara's working capacity is estimated at approximately 105bcf, which would make it one of the largest gas storage facilities in Italy and in Europe."

The firm expected to develop the project in two stages, added the analyst.

The first stage starts with an 18-month appraisal and optimisation programme potentially leading to its bankable Final Investment Decision. The company, then, expects a three year construction and commissioning period would follow, he said.

"We feel this is a positive development for the company, however it is one (albeit important) element of a long term strategy to construct the facility and ultimately provide additional security of gas supply in Italy," said the broker, which rates the stock a buy, targeting a price of 67 pence.

Incorporated in 2005, Independent's main efforts include the development of this major underground gas storage facility but it is also involved with developing a major new source of unconventional gas onshore Italy, and a major source of conventional oil in Tunisia.

Although its Tunisian assets are not core to the business plan, they are destined to become important sources of future capital for its development.

As at 1.40pm, shares in Independent were up 3.81 per cent, at 54.5 pence.

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