RBCAmpella Mining Limited (ASX:AMX; 0.35) Upgrading to...

RBC

Ampella Mining Limited (ASX:AMX; 0.35)

Upgrading to Outperform; risk now on the upside

RATINGS REVISION | COMMENT
November 15, 2012

Rating: Outperform (prev: Sector Perform)
Risk Qualifier: Speculative Risk
Price Target: 0.90

Except:

Investment Opinion

Ampella's share price has pulled back 45% over the last 30 trading days and 81% over the last year.

Trading at A35c, we see significant upside if the company can delineate the required ~400koz of oxide material to develop the Stage 1 conventional CIL project at Konkera. In our view, Ampella's large tenement package remains highly prospective and with A$35m cash on hand we believe the risk is weighted to the upside from A35c.

• Pullback provides opportunity: Ampella is currently trading on a P/NAV of 0.2x, materially lower than the 0.55x average for explorers across RBC's global universe. Furthermore, Ampella has an attractive EV/oz of US$17/oz, 60% below the average West African explorer at US$43/oz.