Huntley's gave summary of report and reiterated buy...

Huntley's gave summary of report and reiterated buy recommendation. Here is the report dated April 16


Second report card positive again


CMR released the second of its recently instituted monthly reports on progress at Browns in the NT. It appears another good one. Civil and structural/platework activities are all but complete. Progress on the mechanical, electrical and piping aspects are making good headway. Mechanical has advanced from 35% to 45% finished, electrical from 25% to 45% and piping from 25% to 50%. Estimated remaining man hours have fallen by just under a third to 116,000 as one would hope. Electrical and piping trade numbers tripled during March with further increases planned for April. This will further accelerate progress on those components which naturally come last. Pre-commissioning activities have begun with first ore feed to the plant still scheduled for May.


It appears the drought on good news remains broken. In February's report, CMR said it lost 15 days in Jan/February due to rain and had budgeted for a further 15 days in March/April. Almost 1,000mm fell in Jan/Feb while in the first two thirds of March/April only 375mm has fallen and the immediate outlook appears dry. There was no mention of lost days in the March report. While there are undoubtedly some lost days, it would appear the weather gods have behaved. Despite this, the company has reiterated the possibility for a small increase in the $140m capex budget. If incurred, this would have negligible impact on our valuation and in this environment is forgivable, if the plant commissions successfully and produces metal. Our $6ps valuation is unchanged and the Speculative Buy recommendation retained.


Sulphide project momentum is continuing to build after Ausenco’s appointment to the pre-feasibility study in February. Process options being looked at have been whittled to seven after a number including "whole of ore" and "bio oxidation" were deemed unviable. The number will be reduced further to a maximum of two during the study. Bench testwork on concentrate production is in progress. Work on the conceptual mine plan by GRD Limited subsidiary Minproc is underway. Expect an updated resource model this year incorporating new results from multiple years' drilling.


Browns Oxide Project


OVERALL COMPLETION
FEB-08
MAR-08

Civil
95%
98%

Structural/Platework
90%
95%

Mechanical
35%
45%

Electrical
25%
45%

Piping
25%
50%

Commissioning
0%
3%

Manpower

Civil
20
12

Structural/Platework/
55
40

Mechanical

Electrical
18
52

Piping
12
35

EPCM
18
18

TOTAL
123
157

Remaining Man Hours
160,000
116,000