CEB Resources (CEB.L, 0.78p) - Speculative BuyYesterday, CEB...

CEB Resources (CEB.L, 0.78p) - Speculative Buy

Yesterday, CEB Resources announced that it had exercised its option agreement with Balamara Resources over the Peelwood zinc-copper project in Australia. The company acquired 20% interest into the project for AU$400,000. The company expects to start an airborne time-domain electromagnetic and aeromagnetic survey at the project soon in order to identify new exploration drilling targets. As per the option agreement, CEB Resources can earn up to 49% interest in the project with a total cash commitment of AU$1.2m.

Beaufort Securities view:
The Peelwood project is an attractive investment opportunity for CEB Resources. The project has combined indicated and inferred resource of 895,000 tonnes with 3.94% zinc, 0.8% copper, 0.73% lead and 16 grams/tonne (g/t) silver. CEB Resources expects that the Peelwood deal can deliver up to AU$20m cash flow per year for five to ten years of mine life from a low capital expenditure of AU$15-20m. CEB Resources and its partner, Balamara Resources, are keenly working towards the new exploration programme for the project. The recent successful raising of £369,750 was a significant step towards ensuring availability of required funds for the purpose. The experienced management team is an added advantage. Therefore, our rating on the stock is retained as Speculative Buy.