patersons re rating

Patersons has re-rated SRK to $7.89 and is very pleased with results of placement. See below

We believe this is a good outcome with the Company placing slightly under 15% more shares at above the last traded price of $2.41/share.
While SRK is yet to provide guidance on what these funds will be spent on, we speculate that it will allow the Company to move towards developing its Stage 1, 2Mtpa lump operation at Cuzco.
The Stage 1 operation will utilise existing road, rail and port infrastructure in the region. The ore will be hauled 70km by truck to a nearby railhead and then transported by rail for 300km to the port at Matarani.
SRK has entered into an MOU with Peru Rail which owns the existing railway in the region. Negotiations continue regarding rail access terms and costs with a resolution expected in the next two months.
SRK is currently in discussions with the management of the privately owned Matarani port who have confirmed availability of loading capacity of up to 2Mtpa.
Importantly, Stage 1 is not infrastructure constrained under the current mine plan of 2Mtpa, and first production appears on schedule for the Company's mid-2009 target.
SRK is one of the only iron ore juniors which is not infrastructure constrained in the short-term. Atlas Iron (AGO) and Gindalbie Metals (GBG) being the only other near-term producers who we view as being unrestricted in their small-scale projects.
These financing terms are more favourable than our estimates called for and accordingly our DCF derived and risk-weighted price target has increased to $7.89/share. We reiterate our BUY.

Cheers