hartleys research update target price 68c

Hi Kasbah Holders, i read this in proactive investors' website. The latest report from Hartleys, on 16th March 2012. You can read the Hartleys report on kasbah's website:

http://www.kasbahresources.com/cms/attachments/837_KAS%2020120314%20Hartley%5C%27s%20Research%20Update.pdf

or from Proactive Investors' website:

http://www.proactiveinvestors.com.au/companies/news/26534/kasbah-resources-receives-068-twelve-month-price-target-from-hartleys-26534.html

The summary from Proactive Investors is as follows:

Kasbah Resources receives $0.68 twelve month price target from Hartleys

Friday, March 16, 2012 by Proactive Investors

Kasbah Resources (ASX: KAS) has received a buy recommendation from Hartleys, with a $0.68 price target - more than double the last traded price of $0.29.

The following is an extract from the report.

Toyota Tsusho to Acquire 20% of Achmmach Tin

Kasbah Resources Limited (“Kasbah”, “KAS”, “Company”) has signed a Memorandum of Understanding (MOU) with Toyota Tsusho Corporation (“Toyota Tsusho”) to acquire an interest in the Achmmach Tin Project in Morocco.

Toyota Tsusho is one of the largest trading companies in the world and has an option to earn up to a 20% interest in the two Achmmach permits, through staged cash payments upon project milestones.

To acquire the project interest Toyota Tsusho must pay an initial A$16m, which includes A$1m upon signing of the MOU (which is non-refundable), A$4m near the end of April 2012 (45 days of signing the MOU) and A$11m within 60 days of completion of the pre-feasibility study (PFS), estimated for payment late June 2012.

A Final Payment which consummates the joint venture is due within 90 days of completion of the definitive feasibility study
(DFS), is calculated from the project valuation (NPV) as assigned at the DFS (ie 20% of DFS NPV less the initial project interest payments).

We estimate that the Final Payment could be in excess of A$24m, assuming similar current tin prices, slightly upgraded project (1mtpa) and marginally improved cost estimates from the released scoping study.

We conservatively value the Toyota Tsusho 20% project acquisition to be worth ~A$40m to Kasbah. Importantly, Kasbah will continue to manage the operation, retaining an 80% project interest and full control over marketing of 80% of the tin concentrate.

Transaction will De-risk Development; Accelerate Exploration

Toyota Tsusho facilitates trades amounting to ~8% of the global tin market, predominantly in Japan and throughout Asia. Partnering with Toyota Tsusho in the Achmmach Tin Project will provide Kasbah with access to increased technical, marketing and financing capability; along with upfront cash and milestone payments to fast-track both development and exploration.

The strategic partnership is also expected to provide financing option upon completion of the DFS. Toyota Tsusho’s extensive global network could also provide other new tin opportunities for Kasbah.

Significant Resource Upgrade Imminent; PFS in late April 2012

Recent exploration has focused on resource growth, with KAS concentrating efforts on the “Gap Zone”, a ~500m tin mineralised zone that links resources west and east within the ~2km long Meknes Mineralised Trend.

Prior to a development decision, KAS was targeting a minimum resource size of 10mt for ~80Kt of tin (grade 0.8% Sn), which implies an increase of over 3mt, which we believe will be comfortably exceeded.

The new Achmmach resource estimate is due for release in March 2012, prior to the PFS in late April 2012. At this stage the DFS will be completed in Q1 CY2013.

A significant resource upgrade will provide an opportunity to expand the project, increasing processing throughputs for 1mtpa producing over 6.5kt of tin in concentrate.


Broker comment

We see value in an up-scaled operation and have updated our Achmmach NPV12 valuation (as detailed in this note), which has improved sum of parts valuation for Kasbah to 53cps (up from 43cps).

With sentiment for tin strong and Achmmach continuing to prove-up as a quality project we recommend Kasbah as a Buy.

Good times ahead in my opinion. Please do your own research.