Key message from the research is "USL is one of the most exciting silver explorers and is well under the radar" "with potential to re-rate to multiples" of current SP. I agree 100% with these comments.
While they have upped the potential the annual production by 25% (subject to more drill results) they have not changed their target SP.
We maintain our BUY rating and A$0.80/sh price target based on a target multiple of US$1.25/oz AgEq. Next, with another rig added, we expect the remainder of the program (~10,000m total) to combine step down drilling targeting higher grades in fresh rock, plus vein extensions and new targets, aiming to convert and upgrade the 73Moz 43-101 MRE, plus add ounces to get group ounces above 200Moz AgEq. Our big picture expectations were for Unico to target an 80-100Moz reserve for 8Mozpa AgEq which assumed 60-80Moz at Joaquin and 20-30Moz at Cerro Leon but today’s drilling shows potential to deliver more than this at Joaquin, which could mean 100-120Moz and 10Mozpa if they add strike and then step down to target higher grades in the fresh. Big picture, we think Unico is one of the most exciting silver explorers and is well under the radar at sub US$0.50/oz AgEq; with potential to re-rate to multiples of this.
USL Price at posting:
24.5¢ Sentiment: None Disclosure: Held
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