Evolution Securities analyst Charles Kernot commented on Ferrexpo (LON:FXPO) after it hired Brian Maynard as the group’s new chief operating officer.
“The appointment of a chief operating officer will help Ferrexpo manage its large capital investment and expansion programme,” Kernot said in a note to clients.
“We believe this represents sensible structuring of the management team to ensure that the projects run smoothly.”
He adds: “With iron ore prices set to remain strong and Ferrexpo able to fund its expansion from internally generated cash flow and debt we believe that the group is in a solid financial position.”
Kernot rates Ferrexpo as a ‘buy’ with a 450 pence target.
Fox-Davies mining analyst Peter Rose commented on Hochschild Mining’s (LON:HOC) growth prospects, after a recent presentation on the company’s exploration assets.
“The production forecasts are for flat production in 2011 and 2012 at between 20 and 23 million ounces of silver equivalent, growing by a further 10 million ounces by 2014,” Rose said.
“The Fox-Davies model is consistent with this view, albeit at the top of the range, 23,5 million ounces of silver equivalent in 2011 and 2012, rising to 26 million ounces in 2013 and 33.67 million ounces in 2014.”
He adds: “At Azuca, we were told that as it stands at the moment, the current ore resource will basically pay for the plant and development.”
“However, Hochschild are already thinking about doubling the size of the mill to 1,500 tonnes per day. This indicates to us that there is a lot more ore to be found, and certainly we were shown lease maps with new veins marked up.”
The analyst also highlighted that recent drilling cut two intersections, both of which had mineable widths and the grades were double the resource grades. Further drilling is expected to follow up these findings.
“If these grades are typical of the ore grades that Azuca will mill, then it will be a very profitable operation,” Rose added.
Fairfax Securities analyst John Meyer believes that African Aura Mining’s (LON:AAAM, TSX-V:AUR) proposed New Liberty gold mine should provide a good platform for other projects within a potential new gold province.
The senior mining analyst reflected on the findings of a preliminary economic assessment for the gold project in Liberia.
This morning’s statement highlighted New Liberty’s potential for a robust open pit gold mining operation, with strong economics. The proposed mine could have an 8.5 year life, with production at 100,000 ounces per year in the first five years.
The study put New Liberty’s pre-tax net present value (NPV) at US$234 million, or £148 million. It would have initial capex of US$92 million, with an average cash cost of US$484 per ounce and a head grade of 3.6 grams per tonne.
New Liberty’s internal rate of return (IRR) would be 73 percent and the capital payback pay-back period would be less than two years.
“This is a positive step forward for the company demonstrating the potential economic viability for New Liberty which appears relatively low cost from both a capital and operating perspective,” Meyer said in a note to clients.
“New Liberty should provide a good platform for other developments within this potential new gold province with numerous other gold targets within the company’s tenement package.”
He adds: “New resources could be identified along strike, as well as being open at depth that could extend the mine life.”
The analyst believes that African Aura’s gold and iron ore portfolios appear undervalued.
Indeed this can be gleaned from the company's assessment of the New Liberty project alone.
African Aura’s chief executive Luis da Silva highlighted that New Liberty’s pre-tax net present value (NPV) equates to 162 per share. Meanwhile on AIM the entire group’s shares are currently trading just below 170 pence.
Similarly Evolution Securities analyst Charles Kernot also emphasised this point.
“While the final NPV will be dependent on financing routes and associated tax structuring the pre-tax figure is equivalent to last night’s share price – and this is only the open pittable portion of the deposit,” Kernot said.
Kernot rates African Aura as a ‘strong buy’ with a 210 pence target.
Northland Capital is looking forward to significant news flow from Stellar Diamonds (LON:STEL) in the new year.
In a note to clients Northland analyst Andrew McGeary said he was expecting news on Stellar’s key expansion projects, with results from the Tongo kimberlites in Q1 and from Droujba in Q2/Q3.
Stellar today released its final results for the year ended 30 June 2010. This was the first set of annual results since Stellar joined AIM, following its reverse takeover of West African Diamonds back in February 2010.
“The results reflect a challenging period integrating and expanding the new business,” Mc Geary said.
“However the company can cite significant progress in restructuring the alluvial operations.”
The analyst highlighted Stellar’s significant upside potential, by maintaining his 18.9 pence per share valuation.