broker note

Like most of us, I"m struggling to understand why the stock is trading where it is, but I think we all know that the market is a strange beast at the best of times!

Anyways, I thought I'd cut and paste the todays note from Canaccord..

ABM RESOURCES NL (ABU:ASX)
Price: $0.027 | Market Cap: $89m | Recommendation: SPEC BUY | Target Price: $0.06

Metals and Mining – Precious Metals & Minerals

UPBEAT ON OLD PIRATE AFTER RECENT SITE VISIT

Investment Perspective
Our recent site visit to ABM Resources’ Old Pirate and Buccaneer Projects has reinforced our positive outlook for the company. The high grades being confirmed through extensive bulk sampling as part of the trial mining program, with apparent continuity of the resource is another positive aspect. We remain attracted to ABU for its high grade/low cost Old Pirate project, and maintain our SPECULATIVE BUY rating.

Investment Highlights
A recent site visit which allowed inspection of the trial open pits at Old Pirate has provided further confidence in the high grade nature of the project, with visible gold clearly evident throughout all the trial pits. Although veining pinches and swells along the pits (5cm – 5m), they display a consistent strike and continuity with demonstrable high grades over the length of the veins.
Mapping of the well exposed geology within the pits has provided ABU with further confidence in the geological model, but after walking the Old Pirate area we gained a stronger appreciation of the near-mine exploration upside. Much of the untested area of Old Pirate features shallow cover (0 – 5m), under which very little exploratory work has been undertaken. We find it highly possible that the mineralisation trend could continue undercover both to the north and south of the current resource. If drilling proves this theory, Old Pirate has the potential to host a continuous open pit of 2.5 – 3.0 km of high grade narrow vein mineralisation.
The pilot plant has experienced some minor setbacks during the trial program, mainly due to water flow balance issues and some minor shut downs. A nightshift operation is expected to begin next week to recover any lost throughput, finalising the ore processing in ~4 weeks.
We continue to expect the granting of the mining license for Old Pirate in the DecQ’13, with Stage 2 commercial production to commence shortly thereafter in early 2014.

Maintain SPECULATIVE BUY rating and Target Price of A$0.06
Our target price (NPV5%) of A$0.06/share remains unchanged.