An excerpt from a slightly older research report from Canadian brokers Sprott. Note that Sprott handled their recent capital raising.
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We are initiating coverage on Equinox Minerals with a NAV10% based C$1.35 target
price. Were the Company’s Lumwana deposit to be exploited to its fullest potential, the
NAV10% could be as high as C$2.60. Equinox is an Australian-based dual-
Canadian/Australian-listed junior base metals exploration company. Its key asset is its
wholly owned Lumwana copper-cobalt project in Zambia. The deposit is well
advanced with a high-quality Kvaerner feasibility study currently being updated for
release in Q3/05. Equinox also has several early stage exploration properties globally.
We recommend this company because:
1) The base case mine ($400MM capital, producing 275 MMlb of copper annually at a
cash cost of $0.65/lb) producing copper in concentrates has, by our determination, a
NAV10% of $384MM. or $1.35 (fd), some 170% above Equinox’s current share price.
2) It is highly likely that uranium is recovered from the mine. The viability of recovering
1 MMlb p.a. of U3O8 has already been investigated and costed in the 2003 feasibility
study. This wasn’t economic back then at an $11/lb U3O8 price but should be highly
profitable at our $50/lb long-term uranium price assumption. A U-plant would add a
further $0.35 in NAV10%.
3) Installing a $400 MM Roast-Leach-Electrowin (RLE) plant would add significant
cobalt and acid by-products value. Were an RLE plant installed, Equinox’s NAV10%
could increase by $0.90.
4) The Lumwana deposit is a major deposit with a proven and probable reserve of 205
MMt grading 0.8% copper (and 0.021% cobalt); a size and quality likely to attract midtier
and senior producers. Beyond this, there is another 700 MMt in inferred resource.
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