Aquila Resources (AQA) Foster Stockbroking Buy recommendation Price target of $14.49 Last traded $9.20
HERE'S a question for the those with a penchant for all things hematite: which company has the biggest JORC-compliant hematite resource in the Pilbara outside of BHP Billiton, Rio Tinto or Fortescue? That's right, Aquila Resources. However, the company's iron ore assets took a back seat recently as Aquila and its partners moved to advance their coal assets in Queensland. "Belvedere, Washpool and Botswana add to the coal pipeline," Foster Stockbroking analysts write. "Besides Peak Downs, Washpool and Belvedere provide a robust pipeline for the company to increase its coal production and become a major independent Australian exporter. Additionally, the company has coal projects in Botswana which it hopes to extract value from." As for the iron ore, Aquila is targeting a production start in 2011 from its 266 million tonne project in the Pilbara. However, the company's initial focus in iron ore will be on South Africa, according to Foster. "This is mostly because of pre-existing infrastructure and capacity (rail, port) and potential domestic customers (Mittal), meaning production could be as early as 2010." As for what's still to come out of the Aquila headquarters before the end of the current financial year, Foster said to watch out for an inaugural resource for Washpool, and upgrade of the Pilbara resource and initial drilling results from South Africa. "A resolution of Aquila's dispute with ACMI of its joint venture with the latter is also expected, which could eventuate in Aquila buying its partner's interests at an attractive valuation.
AQA Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
