Hi there Please find attached todays flash note from Fox Davies regarding Alecto Minerals acquisition of the 711 sq km Guinean Bauxite Licence 223.

The Company is currently conducting 90 days due diligence but plans to commence the design of an exploration programme for 2012 focussed on identifying drill targets to define an initial resource.

The Company believes that the asset has the potential to host a 500Mt resource and is contiguous to the 3.1 Mtpa Kindia Mine.
House analyst Juan Alverez said "We believe the deal could transform Alecto as a company in a short amount of time."
The deal will be factored into the valuation of the company following a decision on the back of due diligence, so for now, remains a speculative BUY.
Best regards
Lizzie [cid:image001.jpg@01CCFB76.05419AC0]
Alecto Minerals (ALO LN)
SPECULATIVE BUY Current Price: 1.9p
Target Price: -
Market Cap (M): �3.7 EV (M): �2.3
Bauxite deal
Event
Alecto announced that it has entered into an option agreement relating to the acquisition of Forward Africa Resources (FAR), which holds the 711 km2 bauxite licence 223, located in the south west coastal region of Guinea.

Alecto plans to commence the design of an exploration programme for 2012 focussed on identifying drill targets to define an initial resource.
Comments
This is a great development for Alecto and could possibly move the company to producer status in a relatively short amount of time.

The licence has the potential to host a bauxite resource of over 500 Mt and is contiguous to the 3.1 Mtpa Kindia Mine (Exhibit 1).

Exhibit 2 shows the FAR licence and known extent of the bauxite plateaus, one of which crosses into the Kindia licences and is known to contain economic resources.
Bauxite mining is as much about infrastructure as it is about the resource and the FAR licence has existing infrastructure including the Kindia/Conakry railway line within 30 km of the licence, roads and power.

There is also expansion currently underway at the port of Conakry to provide additional capacity for stockpiling and shipping of bauxite, due for completion in 2017.

This infrastructure is government owned and meetings with representatives of the government have assured Alecto that this capacity will be freed up for use by new bauxite producers.
The deal is still under a 90 day due diligence period and therefore not yet a done deal and so we have not yet factored it into our valuation of the company, however if the deal does go through, Alecto will issue ordinary shares in the company equal to 15.2% of the companys issued share capital for 51% of FAR, which at todays market capitalisation (�3 M) is equal to �456 000.

Alecto also has 18 months in which to exercise a second option to move to 100% ownership for a further 14.75% of its issued share capital or �442 500 at todays market cap.

Therefore the total consideration for a potential 500 Mt of bauxite will cost Alecto approximately �898 500 in paper, which we believe is a very cheap deal.
The deal is not without potential problems, with corruption in Guinea being endemic at almost every level of society, and keeping operating costs down will be difficult.

However we believe the deal could transform Alecto as a company in a short amount of time.
Recommendation
We maintain a SPECULATIVE BUY recommendation on the company.
Download FoxDavies Alecto Minerals Flashnote
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