buy with a target of 11 cents

4 August 2008
Mining Western Metals Limited
BUY
Uranium exploration recommences in Tanzania
KEY POINTS
Hayden Bairstow
613 8660 7210
[email protected]
ASX code | WMT
Last price | $0.068
Fully diluted shares | 732.6M
Market cap | A$49.8M
52 week hi/low | $0.22 / $0.066
12 month price target1 | $0.11
Valuation | $0.11
Valuation methodology | DCF
Drilling at the Tanzania Uranium project continued to generate encouraging results
including 12m @ 676ppm U3O8 from 22m and 2m @ 1,525ppm U3O8 from 11m.
WMT recommenced drilling in Tanzania in May with the current RC drilling program
designed to evaluate the Mtonya, Ruhuhu and Ruvuma project areas.
At Mtonya drilling will focused on the Grandfather, Rufus, Henri, Para Extended and Mad
Fish prospects.
Diamond and RC drilling commenced at West Georgetown in North Queensland in early
June targeting two Falcon gravity magnetic zinc/lead/silver/uranium/copper prospects.
A decision was made in the 4QFY08 to purchase a 100% interest in the Snowbird
nickel/base metal/gold project in Canada from BHP Billiton Limited (BHP).
COMMENT
WMT has defined a number of high grade uranium prospects at its Tanzania Uranium project
through surface sampling and drilling over the past twelve months. Some of the more
promising targets include Grandfather and Henri. A number of holes have recently been drilled
into the Grandfather prospect with the majority of assay results yet to be received.
In April, WMT signed a term sheet with Anglesey Mining plc (LSE:AYM) to acquire a 100%
interest in the Parys Mountain copper-zinc project on the island of Anglesey in North Wales.
Under the term sheet WMT could acquire the project for an initial payment of $7.6M with a
further $21.5M payment to be made within three years or on the completion of a bankable
feasibility study. WMT has announced it has extended the due diligence period until 30
September and will look to re-negotiate terms with AYM.
INVESTMENT VIEW
WMT has an excellent portfolio of exploration projects in Tanzania, Canada, USA, Peru,
Australia and potentially the UK. The company’s projects include Tanzania Uranium, the
Snowbird Nickel project in Northwest Territories Canada, the West Georgetown base metals
project in North Queensland, the Glade Uranium project in Colorado USA, the Mid-Continent
Nickel project in Minnesota USA, and the Lukkacha copper-molybdenum project in Peru.
The recommencement of drilling in Tanzania has the potential to provide WMT with positive
news flow over the next few months. A significant amount of drilling has already been
completed over the prospective Grandfather target and assay results are expected to be
received in the next few weeks.
Due diligence on the Parys Mountain copper-zinc project has been extended until 30
September and WMT has indicated it is negotiating with AYM to secure improved terms for
the acquisition the project. Should WMT proceed with the Parys Mountain acquisition, the
company could move from explorer to producer within three years. We are reiterating our BUY
recommendation on WMT and set a price target of $0.11/share.