Ann: High-Grade Results from Maxwells Deep Drilli, page-26

re: Ann: High-Grade Results from Maxwells Dee... THE MOST ATTRACTIVE GOLD PROPOSITION IN THE MT MONGER DISTRICT??
RECOMMENDATION : POSITIVE

With a string of positive exploration results, production set to commence in 3 months, and a substantial resource base behind it, Integra is emerging as a highly attractive gold play. A comparison to its immediate Mt Monger neighbour, Silver Lake Resources highlights the value differential between the two players. We recommend switching from Silver Lake into Integra.
Underground future at Mt Monger is likely given recent high grade hits at Maxwells. The results confirm extensions of known high grade gold mineralisation to 400m depth – more than 200m below the extent of the existing mineral resource.
Production set to commence in September at an annual rate of 75k ounces per annum, with considerable upside potential. Integra is currently investigating options to increase annual production to 100,000 ounces per annum through processing higher grade ore sources, with a further rise to 140,000 ounces through a low cost 50% increase in plant capacity, and a capital cost of around $5m. Whilst total costs currently average around $A800/oz (including dv/amtz), these have the potential to reduce markedly upon any expanded production base.
We view a switch from fellow Mt Monger gold player Silver Lake Resources into Integra as highly attractive for the following reasons:
1. Integra is trading at a far greater discount to valuation.
2. The two companies have similar longer term production forecasts from their Mt Monger operations (Silver Lake does have the potential to establish a second operation within the Murchison region of WA, but that will require further capital expenditure).
3. Integra has a greater resource position, and its resource is not fragmented like Silver Lakes (which is spread across three project areas).
4. Both have similar exploration budgets, and we view the probability of significant resource upgrades at both companies as high (however, Silver Lake is more advanced in this regard having spent considerable $ drilling out underground and open pit extensions to its existing operation at Mt Monger).
5. Integra has a far greater scale of tenement holdings within the Mt Monger region (2200km sq vs. just over 100km sq including tenements under application).
6. Silver Lake has outperformed on the back of strong exploration results and a very strong March quarterly. The March quarterly was a one off even due to mining a particularly high grade zone at Daisy Milano and is not viewed as easily repeatable.
Trading Data
Last Price
$0.25
12 month range
$0.22 - $0.33
Market cap.
$181m
Free Float
$172m (95%)
Avg. daily volume
3.0m
Avg. daily value
$0.9m
12m return (historical)
(21.3)%
Earnings Forecasts
Yr to June
09A
10E
11E
12E
NPAT ($m)
(5)
(6)
16
27
EBITDA ($m )
(5)
(7)
30
43
EPS (¢)
(1.0)
(1.0)
2.6
4.3
EPS Gth (%)
N/A
N/A
N/A
65.7
PER (x)
-
-
9.7
5.9
Production (k oz)
0
0
57
76
Cost ($/A$ oz)
0
0
582
586
DPS (¢)
0.0
0.0
0.0
0.0
Yield (%)
0.0
0.0
0.0
0.0
Franking (%)
0%
0%
0%
0%
NetDebt/EBITDA (x)
3.6
0.9
(0.2)
(1.0)
Valuation (DCF - cps)
0.46
Share Price History
Cathy Moises

COMPARISON BETWEEN INTEGRA AND SILVER LAKE RESOURCES.
Both Integra and Silver Lake will have operating mines in the Mt Monger district in the current year, Silver Lake have been in operation with their Daisy Milano Project for 2 years, with Integra are set to commission their Aldiss-Randalls project in September 2010. The interesting point is that Silver Lake is currently trading at over double the market capitalisation of Integra despite having similar cost and resource positions. Whilst production from Silver Lake is forecast to remain higher than the initial forecast for Integra, Integra are well under way to look to optimise production from their project to similar to levels to that enjoyed at Silver Lake, at little or no additional capital expenditure. Silver Lake are also looking to expand production by bringing on an additional project (Murchison), but this will require additional capital expenditure. Integra is currently trading at just over half valuation, whereas Silver Lake is only trading at a 15% discount to valuation.
Interesting, whilst Silver Lake’s Resource position is only a little lower than Integra (and expected to increase sharply in July), the inventory is split between 3 sites, with more pressure on this company to increase the resource base at Mt Monger to extend the life of that project. All of Integra’s inventory is within a relatively small radius, with the majority of the ore able to be trucked to the existing plant, rather than necessitate further capital expenditure.
Similarly a comparison between the relative tenement holdings within the Mt Monger region show Integra to have a magnitudes larger tenement holding in the district than Silver Lake. The diagrams on the following page shows the relatively small size of the Silver Lake Holdings. As at the purchase of the Mt Monger project from Perilya, Silver Lake had 44sqkm of tenement holdings, with a further 67km under application. Integra currently hold a package of approximately 1500sqkm in of tenement holdings within the Mt Monger region.

Link Provided: www.integramining.com.au/Portals/2/docs/PDFfiles/i...