foster stockbroking coverage 3.70 price target

14-Mar-2012

Morning Report
Elemental Minerals Ltd (ELM.ASX, $1.11/sh, Mkt Cap $272m) – Drilling indicates potential to double current resources. BUY PT $3.70/sh.

Today’s Top Picks

Elemental Minerals Ltd (ELM.ASX, $1.11/sh, Mkt Cap $272m) – Drilling indicates potential to double current resource. BUYPT $3.70/sh.

•ELM recently announced further impressive assay results from its phase 2 drilling program at its Sintoukola project in the ROC, with hole EK_23 highlighting the resource footprint at Kola remains open on the eastern boundary identifying mineralisation with grade (37.29% KCI), thickness (4.04m) and depth (296m) consistent with the current resource. To date 14 of the planned 19 holes for resource infill and extension have been completed with results released on 5 of the holes.

•Phase 2 drilling illustrates the mineralisation at Kola remains open to the north, east and west boundaries of the existing deposit, providing us with confidence that a resource upgrade at the upper end of the stated 300mt-1.1Bt target and likely to double the current 804Mt resource.

•Near term catalysts include ongoing assay results from phase 2 drilling and a significant resource upgrade early 2QCY12 which we estimate to be in the vicinity of ~2Bt. This level of tonnage and grade confirms ELM’s ranking in the top quartile of undeveloped potash deposits in the world.

•PFS remains on target for 2QFY12 and in our view will de-risk the project, highlighting strong economics and no technical impediments to progress the project and commence the process for the conversion from an exclusive exploration license to a mining license by the end of the year.

•We will be marketing with management through Sydney and Melbourne 28/29 March and reiterate our BUY recommendation and PT of $3.70/sh.