re: new ni find.......update still the pick of the Ni...

re: new ni find.......update still the pick of the Ni miners..........\

"Jubilee Mines (JBM) has bucked the recent sell off in resources in recent months on the back of increasing tightness in the nickel market, and continued speculation regarding the possibility of M&A activity in the stock. The company’s share price has gained over 39% in the last 3 months, and Macquarie Research Equities (MRE) analysts believe the stock still offers further upside – MRE have a $10 price target. On the London Metals Exchange (LME) on Friday, nickel closed a hefty 9.1% lower following a 3% fall on Thursday, as light trading volumes pushed the metal lower. Weakness in the nickel market may see JBM sold off today, offering an opportunity to buy into the stock at lower prices.



Advertisement

To further reinforce MRE’s outperform recommendation on JBM, the company on Friday released an initial inferred resource estimate for the Sinclair deposit, located approximately 100km south of its existing Cosmos nickel operations. The Sinclair deposit is part of JBM's Bannockburn nickel project (100%), near Leonora. JBM has previously stated that Sinclair is set to become either satellite feed for the Cosmos plant or potentially a new standalone mine development.

The initial resource estimate stands at 756kt at 2.9% Ni for 22.1kt contained nickel. Crucially, the high-grade component of the resource totals 250kt at 4.7% Ni for 11.8kt contained nickel. Roughly half the resource is transitional material and the other half primary.

Strong potential exists to increase the size of this initial resource with recent drilling up-plunge reported to have intersected wide intervals of transitional and oxide mineralisation. In the short-term, exploration and project development activities at Sinclair will focus on increasing the JORC confidence levels in the initial resource estimate in parallel with resource extensional drilling, and permitting and various project evaluations (including metallurgy). The objective of this programme is to have an initial reserve estimate and mining plan completed during the March 2007 quarter.

The anticipated development of the Sinclair deposit serves to highlight a key driver of our sustained positive view on JBM – the prospectivity of its tenements coupled with its ability to quickly add value by rapidly advancing high-grade discoveries through the feasibility/development phases and into production.

MRE maintain their outperform recommendation and $10ps price target. JBM remains MRE’s preferred nickel exposure due to its high operating margins, healthy dividend yield and first class exploration track record leveraged into an aggressive drilling programme. While trading multiples remain stretched (1.4x P/NPV), this valuation differential is quickly closed with the anticipated discovery of further 40kt+ high-grade nickel deposits on JBM's highly prospective tenements. MRE see further share price catalysts to include further high-grade exploration success around Cosmos combined with an expected expansion to 17–20ktpa nickel in high-grade concentrate.