Kitumba upgrade reveals true upside of the project
Event: Kitumba resource upgrade – surpassing our expectations Blackthorn has upgraded the Kitumba resource within its 100%-owned Mumbwa copper project in Zambia. The resource has increased from 87Mt at 0.94%Cu to 187Mt at 1.14%Cu (0.5% cut-off), lifting contained copper by 161% to 2,132kt. This positions Kitumba among the largest IOCG deposits globally, with further upside potential for the project. Maintain Buy, trading at 0.7x NPV.
No changes to numbers, but scoping study to enable an NPV Given the early stage nature of the project, we have applied a sector EV/resource analysis to arrive at our A$80m valuation for Kitumba. However, the resource upgrade confirms our view that the deposit can support an economically feasible mine. We believe the scoping study results, due in August, should provide the necessary inputs and confidence to build a robust financial model. We believe this will provide significant upside to our current asset valuation
Action: Reiterating our recent Buy – Kitumba the real deal BTR has ranked Kitumba among IOCG deposits globally; the project sits within the top quartile (at 0.25% cut-off) & within the top half (at 0.5% cut-off). Kitumba now has the third-largest contained resource of projects within our ASX pure-play copper coverage universe. Further upside exists to the resource, with BTR indicating that mineralisation remains open at depth & to the north. Valuation: No change ($1.61/sh NPV, 10% discount rate) Our NPV is unchanged pending the Kitumba scoping study results due in August
BTR Price at posting:
$1.26 Sentiment: Buy Disclosure: Held
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