Thor Mining PLC THR The cheapest tungsten/molybdenum stock in the market
Trading Data Share Price 11.5c 12 Mth High/Low 9c-42.5c Market Cap’n $17.3m Issued Shares 150 mill. ordinary Listed Warrants 65 mill. 15/6/09, 8p Other Warrants 22mill. various Cash Balance $3.3m (31/3/08) Largest Shareholder Western Desert 17.7% Top 20 44% Investment Perspective The introduction of a new controlling shareholding group with mining and related industrial experience opens a new chapter for THR. It should now be seen as a more focused company intent on developing, rather than promoting, one of the more attractive molybdenum/tungsten projects in Australia. It is more than twice the size of Queensland Ore’s modest operation, but not so large as to be capital expenditure intimidating, as is the case with Moly Mines’ Sphinfex Ridge project. The market doesn’t seem to have appreciated the corporate changes and financing plans yet, with the result being that the shares are still trading around the depressed levels emanating from the bear market in the first few months of the year. We see room for considerable upwards movement in the near term. THR shares are selling at half the price that we think would be reasonable at this juncture, with room to appreciate even further as project finance and development become more visual. The Tungsten/Moly Sector We have been following the sector closely for the last two years, providing comparative analysis of the sector on an intermittent basis. Not much has happened since our last review in October 2007, apart from the volatility in the equity markets making it more difficult to raise equity funds. The largest casualty of this was Moly Mines, which has had to defer it capital raising plans for the +$1bn Spinifex Ridge project. Heemskirk has been commissioning its project in Spain and the 85%-owner of the most advanced Australian project at Wolfram Camp, Queensland Ores, has had to undertake a sizeable $12m placement, at the very low price of 12¢, to cover a shortfall in finances as it approaches the commissioning phase over the next month or two. Vital Metals has continued with good exploration success as it is progressing with a project that could supply up to 5% of the world market for tungsten. A company that has always looked attractive on the spreadsheet is Thor Mining, with the Molyhil mine in the Northern Territory. Given that its shares are still near the lows it is appropriate to have a quick look to assess the relative value. Corporate Changes at Thor Mining There has been a changing of the guard at Thor. Both Mark Smyth and John Barr have resigned from the board and sold down their holdings. Western Desert Resources Ltd (“WDR”) has acquired a 16.7% stake and it has appointed three directors to the board. The acquisition comprised a placement of 9 mill. shares at 8¢ in April, injecting $720,000, and a purchase of 6 mill. shares from retiring directors. WDR and associates lodged a substantial shareholder notice on 6th May, disclosing a 17.7% interest. The new directors are Mick Billings, Norman Gardner and Michael Ashton. All have previous management experience in mining operations. John Young continues in his position as Managing Director. Molyhil Project Description The Molyhil tungsten-molybdenum project is located in the Northern Territory, about 200 km ENE of Alice Springs. The leases cover the same orebody that was mined in the early 1980s by Nicron(Petrocarb), but that company operated with limited capital budgets and it never really got into large scale production. Molyhil has a open pittable JORC compliant measured and indicated mining reserve of 2.15 mill. tonnes of 0.47% WO3 and 0.21% MoS2 from a 3.7 mill. tonnes resource base. There is a two-stage open pit mining plan covering a 5.7 year mine life, with potential for underground extensions below the planned 155m depth of the pit. The 400,000 tpa treatment plant and infrastructure is estimated to cost $65m and operating costs are estimated at $78 pt. Using net prices of A$203/mtu, which is a discount on the quoted tungsten ATP price of US$240/mtu, and molybdenum at A$33/lb, which is a discount on the current US$32/lb, THR would generate revenue of $147 pt, amounting a healthy $54 pt margin
THR Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
