$4 dollar target on the stock, page-2

Interesting that Euroz have set a $4 target given the Xstrata offer is on the table. Would like to think surge in volume over last few days at a few cents under the offer price is indicative of the confidence in a counter-offer.

I posted a few months ago with re: to initiation of coverage by both GMP and RBC but bears repeating given the current situation and possible counter offers to Xstrata.


http://www.gmpsecurities.com
GMP reviewed 24 African iron ore projects and have initiated coverage on SPH (Focus Buy, PT A$3.80) and had this to say in the summary:

"Based on our analysis and screening, we rate Sphere Minerals as our most preferred stock in the African iron ore sector...we believe that the market has failed to appreciate the high quality of Spheres projects and their proximity to existing infrastructure solutions"

GMP have 3 values for SPH:

"Based on this methodology we calculate a valuation of A$3.83/share for Sphere. We
note that if we included the full value of Lebtheinia, the valuation would rise to A$6.59, and if Askafs exploration potential is converted into 300Mt of resources at 35% iron as well, it would yield a total valuation of A$7.25 for the company."

On Lebtheinia:

"The Lebtheinia project is a monster. With a 2.74Mt resource grading 32% iron the orebody could support a 30+Mtpa mining operation for 25-30 years, in our view.
However the sheer size of the project and the likely capital cost of US$3-5bn means that the project would likely only be of interest to either a major steel producer or a major mining group. We believe it is most likely that the project will end up as a JV with a Chinese steel producer"