attached broker note from Matrix London last night.Shortly after...

attached broker note from Matrix London last night.
Shortly after thos note was posted there was one buy of 820,000 at 7.9p (15c)

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8 September 2009

Matrix Daily Update
MINING & METALS
Forte Energy (FTE LN) CORPORATE
TP: 12.7p, SP:7.75p, Mkt Cap: £43m
• Most recent takeover transaction in Australia adds weight to valuation metric
• Takeover of Energy Metals (ASX:EME) to be completed at valuation of $6.30/lb U308
• Such a valuation justifies current FTE share price with no value given to upside from current drilling
The directors of Australian listed Energy Metals (ASX: EME) have today recommended a takeover offer by the China Uranium Development Company. The offer of A$1.02 per share, equates to an enterprise value of roughly US$100m (removing cash balances). EME currently has three Australian uranium projects at the resource stage; however two of these are small, low grade and in very remote locations, and thus unlikely to be uneconomic. We would then view the takeover to be aimed at securing access to EME’s 53.5% holding in the larger and higher grade Bigrlyi deposit, in which the company has booked an attributable resource of some 15.7Mlbs of U308. On this basis, the takeover is at an EV/resource lb valuation of some US$6.30/lb.
By drawing a direct comparison with FTE, such a valuation on the current resource base of 11.6mlbs, would equate to an FTE share price of roughly 7.5p (compared to a current share price of 7.75p), with no consideration given for any resource upside from the recently commenced drilling program and possible density recalculation.
We would also take the view that little or no premium should be applied for Australian assets on the basis of political risk. These projects are very remote and the issue of uranium mining remains in dispute in Australia. In all likelihood a project in Australia would cost more to develop and take longer than similar projects in Africa.
This is the first takeover transaction in the Uranium space for some time, and gives us comfort that out base case valuation of $5/lb is robust.

Brad George +44 20 3206 7184 [email protected]