In the news: GB MInerals & Weatherly International
Following GB MInerals’†† (CVE:GBL) release of an updated feasibility, Jim Taylor and Imogen Whiteside have released a report: GB MInerals — Feasibility Study Improves Economics, 16 September 2015. The study results showed a significant improvement compared with the results of the previous 43-101 technical report of November 2012 in the areas of reserves, production rates, operating costs and capital intensity. Other highlights of the report are shown below.
- The Farim Project in Guinea-Bissau, West Africa, should produce 1.32Mtpa of phosphate rock over a 25-year mine life
- Lowest quartile cash costs of US$52/t
- Initial capital cost of US$194m
- Robust project economics
- Next steps: permitting, off-take and project finance
There are some other opportunities and risks. Given the potential for further material to be converted to reserves and the long mine life, we note the chances for significant capital efficient expansions of the project. In addition to risks typical for developments at this stage, we consider that project-specific technical risks relate mainly to hydrogeology. Water management will include dewatering of mining areas ahead of production and the construction of a bund between the Cacheu River and the South Pit.
We maintained our SPECULATIVE BUY rating. Although we recognise the potential value of the Farim Project, we believe that a number of issues remain to be resolved, including the normalisation of the company’s balance sheet, which could have a significant impact on the number of shares outstanding. We also await further news regarding the completion of debt funding, which would represent a significant milestone in terms of political and financial de-risking.
As if that wasn’t enough, Jim and Imogen put out a piece on Weatherly International*† yesterday as well. This was called (not too originally) Weatherly International (LON:WTI) — Valuation Update, 15 September 2015. This focused on the just-announced increased production guidance at Tschudi for 3QCY15 (by 15% to 1,150tpm, representing 80% of the 1,400tpm design capacity). This followed news that mining acceleration was ahead of schedule at Tschudi for the June quarter. We reinstated our BUY rating, with a new target price of 3p.