WMT was clearly a uranium stock up until 10th April 2008, when it announced a deal to buy 100% of the Parys Mountain copper-zinc project on Anglesey, off the coast of Wales. WMT will have a 120 day due diligence period to consider the transaction, which will cost $7.6m in cash and shares initially, then $21.5m on the completion of a bankable feasibility study or the expiration of three years, whichever is sooner. WMT estimates that a feasibility study will cost it $12-15m over the next two years. Parys was been a sizeable copper producer in the past, yielding more than 300,000 tonnes of metal before closing about 100 years ago. Modern exploration and development to the value of $39m has already been performed, and approvals are in place for a 350,000 tpa operation. In another transaction, WMT has sold its 60% interest in the Zeehan tin project in Tasmania for shares and cash worth $1.2m, to Stellar Resources. Stellar is planning to spinout its tin assets in an IPO. WMT’s main uranium interests continue to be in Tanzania, where it is farming into projects held by Uranium Resources plc, earning a 60% equity. It is targeting the same formation that hosts Paladin’s Kayelekera project, which has a resource of 13,360 t. Also, it has a JV to acquire ground in the USA where it is funding the acquisition to earn 52%, then can Back ino to 80%. In August 2007, WMT confirmed sandstone-hosted uranium mineralisation over a 2 km trend following a 1,648m RC programme at the Mtonya project in Tanzania. This added to the positive results achieved earlier, from other locations along a 7 km trend. Final assays for the Phase Two drilling, comprising 40 RC holes, were detailed in the September quarterly report. Many of the intercepts were narrow (1-2m), and many of these were only 100-200 ppm. Occasionally there were higher assays, but statistically they probably haven’t lifted the tenor above low to modest grade status. Separately, trenching of the Grandfather prospect gave assays as high as 1.2m at 7,723 ppm, 2,393 ppm and 4,773 ppm. At this point is would be fair to suggest this is selective surface enrichment, but only drilling will confirm or dispute this view. Final assays for the 40-hole program on Mtonya were reported in November 2007. Seven of nine holes returned grades in excess of 100 ppm, and three had grades exceeding 300 ppm. Intercepts were generally 3-6m. Deeper holes at Moysten returned interval less than 4m but as high as 1,140 ppm. Investment Perspective: WMT has proved that it has significant uranium bearing structures in Tanzania. It is now in the processes of qualifying what it has. Whilst there are some high-grade zones, the significance of these in a mining situation may not be enough to lift the average above 500 ppm. By the end of this year we should know better whether there is a consistent structure that may be mineable, as opposed to ground with plenty of good trench and drill results. Making it all hang together in a mineable orebody is what it is all about. The diversification into the copper/zinc project in Wales is likely to see WMT graduate to the status of a legitimate miner faster than one could expect with the Tanzanian uranium projects, and it requires a different perspective. The Company will now have to demonstrate that project’s economics to the market, as it will consume all of its cash, and some.
WMT Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held