bullish on tin; good progress at achmmach

http://www.kasbahresources.com/cms/attachments/828_20121113_Octa%20Phillip%20Research%20Note.pdf


Kasbah Resources (KAS)
Bullish on tin; good progress at Achmmach

The KAS share price moves with the tin price. Past
deviations have been good buying opportunities, The
present time may be another.
· Octa Phillip is bullish on tin prices, even though apparent
demand in 2012 has been much more subdued than
expected. However, supply will struggle, especially with the
closure of the 38kt/yr San Rafael mine in 2017.
· We assume a long run tin price of $25,000/t which is not a
bullish assumption give the lack of projected supply and the
cost curve. Using this, we get a base case valuation of
35c/share (45c/share un-risked).

KAS : Tin producer in 2015, into a good market
KAS is funded to deliver its DFS by the end of 2013
In March 2012, KAS executed an agreement with the
Japanese trading company, Toyota Tsusho, fro Tsusho to pay
$16m to KAS in 3 stages, with the third payment being made
after the PFS was delivered in June 2012.
In March 2012, KAS announced a Resource of 14.6Mt at 0.9%
Sn for 135kt of contained tin.
KAS has recently increased its drilling rate and has completed
40m infill drilling to be able to upgrade its resources to
Indicated and be included in the DFS mining plan.
KAS is now drilling the eastern zone, which should lead to an
increase in the total of the Resources estimate.
A revised resource statement is expected to be announced by
March 2013.

Octa Phillip is bullish on tin
Tin demand has been unexpectedly subdued during 2012.
ITRI attributes this to some de-stocking and a shift to smaller
size electronic goods (eg. tablets v. desk-tops).
However, supply continues to struggle. In a global market of
about 360kt, the closure of San Rafael in 2017, which
produced 38kt in 2011, will be difficult to replace and the
present known projected are unlikely to fill this gap, without
any increases in demand.
The price projections we have used are less bullish than those
published by ITRI.
Investment View
KAS has 80% of the Achmmach project, which is expected to
begin production in 2015 of 5,600t/yr of tin in concentrate; it is
a significant project.
KAS executed over 11,500m of diamond core drilling in the
September quarter on Achmmach and began drilling at the
Bou El Jaj prospect nearby.
Our risk adjusted valuation is more than twice the current share
price, so upgrade our recommendation to Buy