daytrading april fools morning, page-59

Kas getting some interest today as peps read the Australian

Below is part of it get online or the paper for the rest .

Kasbah Resources (KAS)

THAT is all good news for ASX-listed Kasbah Resources, which is moving towards a $US181 million development of its Achmmach tin project in northern Morocco.

As luck would have it, Kasbah yesterday released its long-awaited definitive feasibility study (DFS) in to Achmmach’s development as the annual producer of 5300 tonnes of tin (in concentrates) for an initial nine-year mine life. That would rank it as the world’s eighth-biggest tin mine.

More to the point is the DFS confirmed robust economics, with life-of-mine C3 cash costs (it includes depreciation and amortisation, royalties and project-related corporate costs) of $US15,309 a tonne.

That would enable a payback of capital within 3.2 years, and would generate life-of-mine post-tax free cashflow of $US270m.

All nice stuff for a company that traded yesterday at 11.5c a share for a market capitalisation of $45m. Now it has to be said that at 11.5c, Kasbah was down 1.5c from its previous close.

That reflected some disappointment that the maiden ore reserve for Achmmach was down a little on tonnage and grade expectations, and that planned first production had slipped to the June quarter of 2016.

Still, there was also good news on the C3 costs, which were more than a $US1000 a tonne lower than most were expecting. And forecast capital costs were as much as $US20m lower than ­expected.

Net all that out, and apply the Warren Buffett mantra that ­falling share prices can be good news in that things have got cheaper, and Kasbah at 11.5c a share has just got a whole lot more interesting.

Clearly, the main factor in yesterday’s sell-off was the issue of funding the Achmmach development, given it is a multiple of Kasbah’s current market cap.

Canaccord analyst Luke Smith — he has a 26c-a-share price target on the stock under review in light of the DFS — reckons that while funding Achmmach will not be straight forward, Kasbah is in a fairly unique position to clear the ­hurdle.

That is because Japan Inc has lined up as a strategic supporter of Achmmach as it needs access to long-term supplies of tin for its consumer electronics industry and its industry in general.

Japan’s Nittetsu Mining has a 5 per cent interest in the mine and the trading arm of Toyota Motors, Toyota Tsusho (TT), has an 18.8 per cent stake, which cost it $16m in 2012, with an option to go 20 per cent.

In his note to clients yesterday on Kasbah’s DFS, Smith drew parallels with the Japanese funding that lined up for Orocobre’s (ASX: ORE) lithium project in Argentina.

TT is a 25 per cent partner in that project and paved the way for Japanese banks to fund $US146m of the $US229m development. In addition, the Japanese government provided the debt guarantees.

Smith reckons it would be no surprise to see a similar funding package transpire for Ach­mmach.

“Kasbah has built a strong relationship with Toyota over the past two years and Toyota sees tin as a strategic commodity which will highly likely see them exercise the option to become a 20 per cent project partner,’’ Smith said.

In addition, Kasbah has the World Bank’s International ­Finance Corporation as a major shareholder (15.8 per cent).

Its mandate is to provide development financing for private projects in developing countries.

Then there are the three trading groups on Kasbah’s share register that want to expend their tin trading activities off the back of Achmmach’s development — Transamine (3.3 per cent shareholder), Traxys (3.3 per cent and Thaisarco (2 per cent).