c1 cash costs q, page-3

Fosters continue to recommend as a BUY.....

Tiger Resources Ltd (TGS.ASX; $0.26/sh; Mkt cap $175m) – Credit approval received for bridging debt facility a positive.

BUY PT $0.55/sh.

•TGS yesterday announced that credit approval has been received by RMB in respect of their participation in a US$30m bridging debt facility which it is jointly arranging with Nedbank. This represents US$15m and, following final completion of standard documentation (expected in the near term), is expected to be drawn down thereafter. We understand Nedbank is also in the final stages of completing their credit process.

•The US$30m bridging facility is being provided in advance of the Export Credit Insurance Corporation of South Africa Ltd’s (ECIC) US$80m debt facility, expected to be made available in H2 2013.

•We view this as a major positive. Not only because it removes funding risk for the development of Stage 2 at Kipoi, but also because of the rigorous technical review that the banks completed as part of the process, which included an independent technical report and multiple site visits. RMB and Nedbank are specialist providers of finance for African mining projects and have considerable experience in this area.

•The bridging finance facility of US$30m will be used to act as supplementary funding from the existing Stage 1 HMS operation (~37ktpa Cu in conc) and for the development of the Stage 2 SX-EW (~50ktpa Cu cathode) plant at Kipoi, expected to come on-line in mid 2014.

•The stock has rebounded strongly in recent days up 37% after being well oversold to $0.19. However at the current market cap of ~$175m and with FSBe 2014 operating cash flow of ~$150m (based on production of 18kt Cu HMS, 25kt Cu SX-EW at group cash costs of US$0.87/lb), the stock is trading at a little over 1x cash flow. Notwithstanding the ‘DRC risk factor’, this is extremely cheap for a company that has a quality asset in Kipoi which is fully funded to ramp up to 50ktpa Cu cathode at
•BUY recommendation and PT of $0.55/sh maintained.

http://www.fostock.com.au/announcements/tiger-resources-ltd-tgs-asx