🕐03.06.14 - 05:54 Uhr

RESOURCE CAPITAL RESEARCH [RCR] - RCR COMPANY UPDATE, AXIOM MINING LIMITED (ASX:AVQ), 30 MAY 2014





Fortbridge Media Release

Resource Capital Research [RCR] - RCR Company Update, Axiom Mining Limited (ASX:AVQ), 30 May 2014

Resource Capital Research has released an equity research report on Axiom Mining Limited (ASX:AVQ).

Due to Indonesias export ban the nickel price has surged by >30% in just three months and Chinas nickel pig iron and ferro-nickel smelters are desperate to find new sources of direct shipped nickel ore (DSO). This is of great significance to Axiom, currently engaged in a long running court battle with Japanese giant, Sumitomo Metal Mining, over the ownership of potentially one of the worlds major nickel laterite deposits in the Solomon Islands.

If, as we expect, Axiom wins the court case in the next few months and cements its ownership, it could open up a fast-track low-capex path to production (~2mtpa DSO) within 15-18 months for Axiom, which at current prices could generate gross cashflow of >A$50m per annum. With a current market capitalisation of ~A$50m, we see potential for the share price to at least double with a court victory. There is share price downside with an adverse outcome, buffered by the companys gold exploration prospects.

Investment points:
* The three year court battle for ownership of the large scale Isabel Nickel laterite project in the Solomon Islands should be finally resolved early in 3Q14.
* The Japanese giant Sumitomo Metal Mining is spending millions challenging Axioms 80% ownership of the project, clear indication that the project is of great significance to a major company.
* Axiom has spent over A$10m on its court action, largely bankrolled by a New York-based private hedge fund.
* Axiom, which has been on the ground since 2007, has strategically aligned itself with the local landowners, who have the right of veto over project development.
* Extensive exploration and evaluation (including feasibility studies) has been undertaken on Isabel by nickel major INCO and Kaiser Engineers, as much as fifty years ago, and has clearly shown that this is a large scale nickel laterite deposit.
* The previous work led to the establishment of an estimate of mineralisation (non JORC compliant) of 159mt @1.05% Ni and 0.06% Co (equivalent to 1.6mt of contained nickel) to a depth of only ~6 metres � meaning that this deposit, if confirmed as a resource, ranks with some of the worlds major laterite resources.
* The past work indicated mineralisation down to ~12m depth and increasing grade with depth, giving a high probability of expansion of the potential resource size and grade with further drilling.
* The recent banning of the export of unprocessed direct shipping ores (DSO) from Indonesia, a major global supplier, has resulted in a >30% surge in the nickel price and major concerns over shortage of nickel DSO.
* Prices for DSO have also surged and a number of nickel pig iron smelters have already approached Axiom seeking supply sources.
* A ~2mtpa DSO operation would give Axiom a low capex (~A$20-25m) fast track (~15-18 months) route to production, if its ownership of Isabel is confirmed.
* A 2mta DSO operation could generate strong cashflow (>$50mpa) at current DSO prices and provide a launching pad for development of longer term expanded nickel metal production with a major partner.
* Axioms West Guadalcanal gold exploration project, also in the Solomons, is throwing up some exciting results and we should see drilling of potential large scale high-grade targets in 2H14.
* Gold-focused exploration in Vietnam and North Queensland will continue but with lower priority relative to the Solomons nickel and gold activity.

To view the full announcement please click on the link below:

For further information please contact:
Tony Parry
Analyst
+61 2 9439 1919




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