WITH Australasian Resources receiving the thumbs up from the Foreign Investment Review Board to go ahead with its second $28 million placement, analysts at Foster Stockbroking believe shares in the company will double over the next 12 months.
Australasian Resources managing director Darren Hedley overseeing drilling at the Balmoral Southern Block magnetite deposit in the Pilbara
Only one more hurdle – approval from shareholders – exists for the $28 million placement to proceed, and this is anticipated to be given at a meeting due to be held next month.
In an announcement in March, Australasian said Chinese steelmaker Shougang would invest $56 million through a share and option subscription agreement, with attaching options to raise a further $42 million on exercise.
Shougang will also provide total funding for the Balmoral South project, estimated at $US2.1 billion ($A2.6 billion) and will purchase all of the iron ore products from the project.
The Chinese state-owned company will hold a 12.8% stake in Australasian after subscribing for 56 million Australasian shares at $1 each.
Balmoral consists of 1.1 billion tonnes of magnetite at 31.3% iron and has reserves of 547 million tonnes for a 13-and-a-half year life.
Meanwhile, Australasian said the feasibility study at Balmoral is in "full swing" with two drill rigs onsite and two more coming over the next month.
In addition, up to 10 Shougang representatives will arrive in Perth soon to work with Australasian on the study.
"Environmental approval is progressing well and the target date for the completion of the study is March 2008," Australasian said.
The company expects to ramp up exploration across its suite of tenements, with $2 million budgeted over the next 15 months.
Analysts at Foster have recommended Australasian as a Buy and forecast a 12-month target of $2.75 per share.
"This is based on a 40% premium to Shougang's implied valuation of the project. Further announcements from development of the uranium prospects could see upside rise to our price target," Foster said.
ARH Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
