🕐24.06.13 - 10:00 Uhr

INVESTEC: BELLZONE MINING - FY12A RESULT, SUFFICIENT CASH UNTIL THE 2H OF FY14 - HOLD



Bellzone Mining (Price: 3.91p | Target: 5.09p | Rec: Hold) BZM’s reported a FY12A loss of $54.6m (versus FY11A loss of $44.4m), with the result dominated by expensing of exploration and staffing costs as Forecariah was brought on stream and Kalia advanced.

BZM had cash of just over $20m at the end of May 2013, which it states is sufficient to see it through to the 2H14E.

Forecariah is expected to be self-funding under current production plans and BZM has sufficient funding to complete the Kalia optimisation study that is underway.

Additional financing will be required to develop Kalia and or expand Forecariah. * BZM’s reported a FY12A loss of $54.6m (versus FY11A loss of $44.4m), with the result dominated by exploration expenses ($18.8m), staffing expenses ($20.0m) and corporate costs ($29.5m).

The cash position during FY12A reduced from $153.1m to $40.7m, while non-current assets increased from $82.4m to $141.3m, primarily reflecting Forecariah’s development. * Under the revised Forecariah production plans (announced previously) the operation should produce 0.8-1.0mtpa for the next three years, at FOB cash costs of $45-50/t and shipping costs of $35-40/t.

A new exploration drilling program has commenced, aimed at defining additional DSO-style resources to extend this initial three-year mine life. * The optimisation study on a low capital intensity, early development scenario for Kalia remains ongoing, with an outcome expected in the 3Q13.

This study is targeting the 88mt of higher-grade (54.1% Fe) oxide resource that was identified in Dec’12. * Our TP remains underpinned by a risked NPV, which has reduced from 5.28p to 5.09p post incorporation of the FY12A results.

While the NPV offers considerable upside above the current share price, it is underpinned by uncertain development assumptions and we retain a Hold recommendation pending the outcome of BZM’s forward production plans.
To access the full note please click here Analyst: Hunter Hillcoat
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