"EXT has been a standout sharemarket performer with its stock up by >200% since the announcement (Jan '09) of a 108mlb U3O8 resource at Rossing South Zone 1. With total resources of ~250mlb expected by 3Q09, and RIO now holding 15.5% the shares still look undervalued....
Overview: EXT’s exploration for uranium in Namibia is exceeding expectations as the world class potential of the major Rössing South discovery (located immediately South of the RIO’s Rössing uranium mine) becomes more evident. Exploration is advancing rapidly towards 200mlb U3O8 and beyond...
Now in ASX 300 index. Still looks undervalued based on resource valuation, RIO stake-building. Medium term target A$5.00-A$5.50/share....
Investment Comment: With market cap approaching A$1bn, EXT has recently been added to the ASX 300 index. RIO has recently upped its stake in EXT to 15.5% with an exercise of options. It also owns 15.8% of EXT’s parent KAH (KAH owns 38% of EXT). The question is, what price will RIO pay for the opportunity to potentially more than double its ~US$20bn Rossing uranium reserves? Current EXT price values the potential resource at US$2.30/lb (200mlb) or US$1.50/lb (300mlb), which would be a steal for RIO. Given the FSY takeout at US$7.50/lb, EXT (with RIO accumulating) looks very undervalued. Our 6 month target (anticipating Zone 2 JORC statement) is A$5.00-A$5.50/share (~US$3/lb valuation). 12 months could see A$7.00. Still an excellent risk/reward investment despite recent huge gains."
EXT Price at posting:
$4.57 Sentiment: LT Buy Disclosure: Not Held
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