australian article

Gindalbie Metals (GBG)
Southern Cross Equities
Buy recommendation
12-month price target of $1.90

IT'S all about size and grade when it comes to assessing the growing number of iron ore hopefuls. Recent increases to Gindalbie's hematite and magnetite resources has prompted Southern Cross to rethink the value of the company, especially given the likelihood that it can now seriously contemplate expansion plans and its dream of holding 40 million tonnes in hematite reserves looks a real possibility. Analyst Peter Chapman told clients that the base case valuation for Gindalbie shares was calculated at $1.50 -- up from 95c -- because of the expected lift in iron ore prices next year and an "increased component for potential expansion". "However, over the next 12 months we expect to see more of the upside value realised as the company provides further details on future expansion plans," Chapman wrote. A feasibility study for the Karara iron ore project is due this month and Gindalbie is eyeing 12 million tonnes of output a year split equally between hematite, magnetite and magnetite pellets. Chapman believes there is real potential to improve that figure by 100 per cent