Hanson Westhouse places Buy recommendation on West Australian...

Hanson Westhouse places Buy recommendation on West Australian Metals and $0.35 share price target
by Proactive Investors

Hanson Westhouse has initiated coverage on West Australian Metals (ASX: WME).

"West Australian Metals (WME) has announced an aggressive drilling program at its 80% owned Marenica uranium project in Namibia. The A$5m budget for the next six months is expected to see both a significant increase to the existing 34.4Mlbs U3O8 inferred resource, including the addition of primary mineralisation, and a large part of the current resource converted into indicated resources."

"With new strategic investors including Polo Resources and a new board all added this year; WME has put last year’s corporate issues behind it firmly. With potential partner, Areva just 30km away at Trekkopje and an initial scoping study to be completed by the end of the year, we believe that the next six months will be a very important period for WME.

Our current target price of A$0.35 per share represents a 70% premium to the current share price. As a result, we are initiating coverage with a BUY recommendation."

"Whilst there will be much activity at Marenica, we believe that the board will also be active behind the scenes, talking to potential partners. Indeed, WME recently stated that it had been talking to Areva, albeit informally. This is significant given that Areva’s Trekkopje project, due to enter production next year, is only 30km away to the south."

"The possibility of Marenica providing either run of mine or part processed feed to Areva or one of the another operations in the area provides additional development options that would reduce capex and provide earlier cash flows to WME."

"We believe that WME’s additional shareholders will also provide value beyond their initial cash injection. Polo in particular is well placed, given its existing relationship with Areva and experience at Trekkopje, to assist WME if required.

After overcoming the difficult issues faced last year, we believe that the current fully funded board will be able to continue to maintain the momentum it has gained. Although the market has softened recently, West Australian Metal’s share price has performed well over the past six months. Nevertheless, our current target price of A$0.35 per share represents a 70% premium to the current share price. Consequently, we are initiating coverage with a BUY recommendation."

Hanson Westhouse Limited is a member of the London Stock Exchange.