what a difference two years makes

This is a copy of the research note done by Stateone back in 2006. Stock price of 39c and hardly any resource at a a goldprice of $650 per ounce.

Makes you realise how badly performing this company is. We have all the ingredients large resource, stable country, infrastructure present, increasing gold and silver price. The only thing we have missing is the chef to cook the cake.


Phone: (+61 8) 9288 3388
Fax: (+61 8) 9321 6997
Email: [email protected]
Level 14, State One House
172 St George s Terrace
Perth WA 6000
STATE ONE STOCKBROKING LTD AFSL 247100
This information must be read in conjunction with the disclaimer at the end of this document
STOCK FOCUS: 21st August 2006
Conquest Mining (CQT) Speculative Out Perform Price:
12m Target:
Mkt Cap (dil):
$0.39
$0.50
$20.1m
Investment Data:
Share Price $0.39
Ord Shares 140.9m
Market Capitalisation $55.0m
20¢ Opt Dec 06 (listed) 75.2m
20¢ Opt Sep & Dec 07 (unlisted) 2.3m
Market Capitalisation (diluted) $85.2m
Net Cash (June 2006)* $17.1m
Enterprise Value $68.1m
52 week Low/High 3.5¢ / 51¢
* includes exercise of 2006 options
Directors:
Chairman Richard Krasnoff
Managing Director John Terpu
Non-Exec Director Bruno Firriolo
Non-Exec Director Joseph Radici
Major Shareholders:
Westpac Custodian Nominees 10.4%
John Terpu 5.3%
Resources:
Silver Hill: 3.8mt @ 1.8g/t Au, 82g/t Ag & 0.6% Cu
Mt Carton: 1.5mt @ 1.4g/t Au, 70g/t Ag & 0.2% Cu
Herbert Cr: 0.4mt @ 2.2g/t Au, 4g/t Ag
Total: 5.7mt @ 1.7g/t Au, 73g/t Ag & 0.4% Cu
CQT Share Price Graph
$0.00
$0.10
$0.20
$0.30
$0.40
$0.50
Jan-05
Apr-05
Jul-05
Oct-05
Jan-06
Apr-06
Jul-06
Oct-06
Jan-07
Gold & Silver Price (US$/oz)
$250
$350
$450
$550
$650
$750
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
$2.5
$5.0
$7.5
$10.0
$12.5
$15.0
Gold
Silver
Company Background
Conquest Mining (CQT) is a Western Australian based exploration company
focusing predominately on its Mt Carlton Gold-Silver-Copper project located
approx 100km east of Charters Towers in Northern Queensland (diagram 1). The
Mt Carlton project is only a small part of the 4,200km2 of exploration leases CQT
has amassed over the years in Northern Queensland.
The recent drilling results from the Silver Hill / V2 prospect (part of Mt Carlton)
are in our opinion positioning the prospect as one of the most exciting mineral
discoveries in recent times.
Silver Hill / V2 Prospect
CQT has reported some spectacular drill results from the Silver Hill / V2 prospect
in what is shaping up as a major new poly-metallic discovery. The mineralisation
is unlike any we have come across in Queensland with thick zones (+40m)
containing high grade gold, silver and copper (we also believe zinc is present), as
can be seen in the table below:
Table 1.
From
(m)
To
(m)
Interval
(m)
Au
(g/t)
Ag
(g/t)
Cu
(%)
AuEq*
(g/t)
HC06RC-039 23 81 58 0.5 1,750 2.9 38.7
HC06RC-040 33 45 12 1.9 229 2.7 14.1
HC06RC-048 28 85 57 1.6 109 1.4 7.8
HC06RC-049 23 79 56 2.1 48 0.4 4.1
HC06RC-052 75 120 45 3.6 32 0.3 5.1
HC06RC-053 86 132 46 9.1 68 1.1 13.7
*AuEq (Au US$600/oz, Ag US$10/oz, & Cu US$6,000/t)
Initial indications are that the mineralisation is a 20m
50m thick flat lying sheet
of felsic volcanics, covered by 25m
70m of over-burden. At this stage the
mineralisation appears to be open in most directions, with holes 49, 52 and 53
drilled on the most easterly section, implying the mineralisation is likely to
continue further to the east.
Drilling is ongoing with both RC and diamond rigs on site, diamond holes are
currently twinning holes 39 and 53 to obtain a better understanding of the ore zone
(results expected over the coming weeks), and to obtain metallurgical samples.
RC drilling continues to step out from existing holes in an attempt to discovery the
limits of the mineralisation.
Rough preliminary calculations indicate that the project has the potential to
produce 120,000oz AuEq per annum utilising a 1.0mtpa plant (55,000oz Au,
1.45moz Ag & 4,500t Cu) at a cash cost of A$400/oz AuEq. On a gold only basis
and treating the silver and copper revenues as by-product credits, the cash cost
becomes negative. Due to the complex mix of gold, silver, copper, and zinc, the
metallurgical process will form a critical element of a feasibility study.
Investment Case
With the strong likelihood of further impressive drilling results and resource
increases at Silver Hill we believe there is little risk purchasing CQT below 40¢,
and believe that if the resource at Silver Hill can be doubled to 1.0m ounces AuEq
over the coming months, a valuation closer to 60¢ would be more appropriate.
We are forecasting a continuing rise in CQT s share price on the back of ongoing
step-out exploration drilling and infill diamond drilling. We believe news flow
should be fairly consistent going forward with drilling results announced at least
monthly.
STATE ONE STOCKBROKING LTD AFSL 247100
This information must be read in conjunction with the disclaimer at the end of this document
Location Plan (diagram 1.)
Timeframe of key Milestones going Forward. (Diagram 2.)
Page 3 of 3 STATE ONE STOCKBROKING LTD AFSL 247100
This information must be read in conjunction with the disclaimer at the end of this document
Carey P. Smith
Resource Analyst
Phone: (08) 9288 3302
E-mail: [email protected]
Authorised Representatives
Brendan Fogarty
Equities & Derivatives Advisor
Phone: +61 8 9288 3304
[email protected]
Graeme Johnson
Equities Advisor
Phone: +61 8 9288 3316
[email protected]
Stockley Davis
Equities Advisor
Phone: +61 8 9288 3332
[email protected]
George de san Miguel
Equities Advisor
Phone: +61 8 9288 3334
[email protected]
Brett Walker
Equities Advisor
Phone: +61 8 9288 3337
[email protected]
Matthew Racovalis
Equities Advisor
Phone: +61 8 9288 3307
[email protected]
Peter Wong
Equities Advisor
Phone: +61 8 9288 3318
[email protected]
Kenny Siew
Executive Director
Phone: +61 8 9288 3318
[email protected]
Jason Fung
Equities Advisor
Phone: +61 8 9288 3328
[email protected]
Matthew Lucarnus
Equities & Derivatives Advisor
Phone: +61 2 9024 9107
[email protected]
Ryan Davis
Equities & Derivatives Advisor
Phone: +61 2 9024 9106
[email protected]
Eugene Loy
Equities & Derivatives Advisor
Phone: +61 2 9024 9109
[email protected]
Charles Thomas
Equities & Derivatives Advisor
Phone: +61 8 9288 3308
[email protected]
Carey Smith
Resource Analyst
Phone: +61 8 9288 3302
[email protected]
Alan Hill
Managing Director
Phone: +61 8 9288 3388
[email protected]
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