Shares in Blencowe Resources PLC (LSE:BRES) have significant upside, according to First Equity, the resources-focused investment boutique, which issued research after the latest news flow from the mine developer.
Earlier on Thursday, Blencowe announced that it had received approval from the Ugandan government to export a bulk sample of graphite from its Orom-Cross project to Chinese testing facilities.
First Equity said that the current low market cap of £8.5mln still does not reflect the rapid progress being made at Orom-Cross and the advanced stage nature of this 100%-owned project.
The company has been able to attract the interest of several shrewd resource-focused investors such as RAB Capital and Jangada Mines PLC (AIM:JAN), and First Equity believes others may follow as the investment case becomes more widely understood.
Furthermore, First Equity believes that investors will seek exposure in 2023 to companies with graphite projects targeting high-growth electric vehicles-destined end markets.
The research house has improved its valuation of the company to 64p per share, based on an estimated “risked NPV8” of the project’s pre-feasibility study, which includes a development/resource, finance, and country risk factor. It continues to rate Blencowe Resources’ shares a ‘buy’.
In early afternoon trade, the stock was changing hands for 5.18p, up 4%.