🕐18.06.10 - 07:18 Uhr

Resource Capital Research ["RCR"] - Kimberley Metals Limited Company Review



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Resource Capital Research ["RCR"] - Kimberley Metals Limited Company Review

Resource Capital Research has put out a research report on Kimberley Metals Limited (ASX: KBL).

Kimberley Metals recently discovered high grade NSW gold resource should see the company in production and generating cash flow within 12 months.

But the big news is a Chinese majors intention to take a stake in KBL at A$0.25/share and a 25% JV interest in KBLs large-scale Sorby Hills lead-silver project in WA.

This de-risks an investment in KBL, which is trading 54% below our assessed NAV of AS$0.37/share.

Key investment points:

* Our base case valuation is A$0.37/share (fully diluted, US$850/oz long term gold price) or A$0.42/share using spot gold.

KBLs closing share price 17 June A$0.17/share.

* Chinese lead giant Henan Yuguangs proposed 15% investment at A$0.25/share and JV on Sorby Hills flagship lead-silver project is a major boost to KBL.

* If the Chinese see value at A$0.25/share and rate Sorby Hills as a viable flagship project, we expect the stock to trade at least to A$0.25 when the deal is approved.

* Cashflow from initial high grade gold production (~30kozpa from 2Q11) will provide development capital.

* Sorby Hills (WA - lead/silver) is the flagship - PFS completed.

16.9mt Pb/Ag mineral resource (A$2.5bn gross value), potential 0.5 mtpa open cut mine in 2014.

* Stock looks undervalued versus peer group base metals companies and recent corporate transactions, which imply much higher valuations than current share prices.

* Senior executives have extensive experience in base metals operations and project development.

To see the research report, visit:
http://www.rcresearch.com.au/fdl?i=732

For details of equity research coverage, please refer to RCR:
www.rcresearch.com.au
+612 9252 9405


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