Hi there, Please find attached an initiation of coverage note for FinnAust Mining plc from Sanlam Securities plc, which includes a BUY recommendation with a target price of 8p (current share price 3.2p). Finnaust Mining is a base metals explorer that controls circa 70% of the Outokumpu belt, a Finnish mining region which saw 60 years of commercial copper production.

Finnaust also has impressive land positions at two further historical producing mining camps; all three properties are in Eastern Finland.

Finnaust’s strategy is to explore near the old mines where the same rocks are known to exist and the potential of finding new ore bodies is high.

The Company is currently drilling at these three projects as part of a rolling 10,300m drill programme, which commenced in December 2013 following the acquisition of the projects.

With a potential new copper discovery already identified, strong news flow is expected this coming year. I have attached the full note. Kind regards, Charlotte Finnaust Mining* (FAM.L) Finland’s copper and nickel explorer Mining: Finnish based copper and other base metals explorer Recommendation: BUY (Initiation of coverage) Closing price: 3.2p Target price: 8.0p Market cap: £8.0m
n Finnaust Mining is a base metals explorer that controls circa 70% of the Outokumpu belt, a Finnish mining region which saw 60 years of commercial copper production.

Finnaust also has impressive land positions at two further historical producing mining camps; all three properties are in Eastern Finland.

Finnaust’s strategy is to explore near the old mines where the same rocks are known to exist and the potential of finding new ore bodies is high.

We initiate coverage with a BUY recommendation and 8.0p target price.
n High grade: Finnaust is exploring for high grade base metal systems.

Drilling in 2012 at one of its flagship assets returned 3.4m at 11.5% copper and 3g/t gold, while last month Finnaust discovered a new zone of copper mineralisation demonstrating the underexplored nature of its properties.
n Finland’s developed infrastructure removes many of the logistical complexities that typically impact exploration programmes.

Finnaust’s properties are easily accessed by modern sealed roads and supplied with mains power.

The one caveat is that lake drilling requires thick ice and can only take place in winter.
n Western Areas owns 68% of Finnaust and is expected to provide financial and technical support going forward.

It has made some of its best technical people available to Finnaust including base metal exploration geologists who are expert on the narrow vein systems Finnaust is looking for.
n Valuation and recommendation: We initiate coverage with an 8.0p target price and buy recommendation.

Our valuation is based on a risked sum of the parts approach that includes values for the two main projects.
*Sanlam Securities UK acts as joint broker Y/E June Revenue (£m) EBITDA (£m) PBT Adj (£m) Tax (%) EPS (p) PER (x) DPS (p) Yield (%) Net cash (£m) EV/EBITDA (x) 2013E - (2.07) (2.07) N/A (0.85) N/A N/A N/A 1.54 N/A 2014E - (1.20) (1.20) N/A (0.49) N/A N/A N/A (0.48) N/A
Source: Company (actual), Sanlam Securities UK (forecasts);