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MOD Resources extremely undervalued say analysts based on pre-feasibility study

A pre-feasibility study (PFS) released in January pointed to a low-cost, long-life open pit mining operation.

Core samples from T3 deposit
The base case PFS outlined production averaging 23,000 tonnes of copper and 690,000 ounces of silver

MOD Resources Ltd’s (ASX:MOD) environmental management plan has been approved, paving the way for drilling at its T3 copper deposit in Botswana.

T3 is in the Kalahari Copperbelt and MOD, together with its 30% joint venture partner, Metal Tiger (LON:MTR), has already had substantial exploration success.

A pre-feasibility study (PFS) released in January pointed to a low-cost, long-life open pit mining operation.

Brokers upbeat about MOD

With the environmental approval now in hand from Botswana's government, some brokers have done a second take on MOD.

Blue Ocean Equities' Steuart McIntrye reaffirmed his positive stance on the company, saying, “MOD remains our top pick in the ASX copper space.”

Argonaut Equity Research analyst Matthew Keane said: “Argonaut recently visited MOD Resources copper development and exploration assets in the Kalahari Copperbelt, Botswana, confirming our view that this is amongst the best copper development companies globally.”

This is a big call for a company with a market capitalisation of $100 million.

Is MOD poised for a re-rating

MOD was attributed market darling status in 2016/2017 with the company’s shares increasing more than 10-fold in the 12 months to March 2017.

This was largely a result of exploration news, but for the last 12 months, it has been less news flow and more number crunching as the company worked on its PFS.

However, the recent news appears to have reignited interest in the stock.

Argonaut raises valuation by nearly 50%

The base case PFS outlined production averaging 23,000 tonnes of copper and 690,000 ounces of silver over nine years with Argonaut’s estimates pointing to a post-tax value of $243 million.

The broker subsequently increased its some of the parts valuation for the stock from 7 cents per share to 10 cents per share.

This implies a premium of or than 100% to MOD’s closing price of 4.5 cents on Tuesday.

McIntyre is even more bullish on the stock with his price target recently being increased from 10 cents to 14 cents.

Quick facts: Mod Resources Ltd

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ASX:MOD
Market: ASX
Market Cap: -
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