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EAR echo resources limited

0.00%

32.5¢

Really interesting at the low end of the market, page-3

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philh9

11,883 Posts.

612

03/05/18

09:53

Post #: 32849665

Originally posted by copperroad ↑

This was out from Euroz yesterday. They tend to be very good as WA based mining specialist brokers.
45c price target. They are saying exactly what many of us have been saying for some time. NST clearly worked it out a while back. Current price is an opportunity.

Column 1 Column 2 Column 3 Column 4 Column 5

1

Column 1Echo Resources Ltd (EAR $0.26) Speculative Buy

Column 1Analyst

[/table]| Date| Price TargetAndrew Clayton| 2/5/18| $0.45/sh[/table]
Orelia Northern Extension
Key Points
· Drilling north of the Orelia pit has intersected ore grade mineralisation with better results of
-17m @ 5.68 g/t Au from 84m
-8m @ 8.42 g/t Au from 40m
-28m @ 1.13 g/t Au from 64m
· Potential for additional near surface oxide ore at Orelia with ore grade intersections down to a depth of 80m. The main Cumberland shear zone continues to the north through the historical Lotus open pit/underground (387koz @ 5.5 g/t Au).
·
· The DFS is due this Q and we expect results to be broadly in line with the data released in Nov’17 on the its maiden reserve announcement. We do see potential for some modest cost creep but remain attracted to EAR as a very low capital development scenario (<$30m).
· The Stage 1 which envisages production of ~ 375koz @ AISC of ~$1,050/oz is based on a 2 g/t Au mill grade and a strip ratio of 5:1. The soft oxide Julius ore at 2.1 g/t Au will be the first deposit mined. Whilst the Stage 2 is higher costs as grade falls and strip ratio increases, the key is the cashflow is very much front ended with capital payback of 6-9 months.
· We estimate EAR has a fully funded capital intensity of ~ $380/oz – well below its peer average of ~ $1,400/oz.
Investment Case
We continue to like EAR as a low capex, emerging producer with excellent exploration upside. The DFS should demonstrate a robust development with reserve of ~ 850koz and annual production of >90koz ( Yrs 1-4 @ 105koz) at AISC of ~ $1,200/oz. We rate the exploration potential highly and expect further high margin ounces will be added over time. The recent Ramone discovery by NST just to the north of EAR’s tenement boundary has opened a new area of interest. Our valuation remains at $0.45/sh which is risk adj by 80%. Corporate action can’t be ruled out NST holding a 19.2% interest and its share price close to record highs.

[/table]

Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11

1 Echo Resources Ltd (EAR)
Share Price
0.26

A$/sh

Price Target
0.45

A$/sh

Valuation
0.45

A$/sh

Shares on issue
488

m(dil)

Market Capitalisation
126

A$m

|

Column 1 Column 2 Column 3 Column 4 Column 5 Column 6 Column 7 Column 8 Column 9 Column 10 Column 11

1
Enterprise Value
115

A$/m

Debt
nil

A$/m

Cash
11

A$/m

Largest Shareholder
NST 19.2%

[/table]

Expand

Excellent info @copperroad

Thumb up!

Cheers
Phil.

EAR Price at posting: 26.0¢ Sentiment: Buy Disclosure: Held

1 Upvote

0 Great analysis

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Really interesting at the low end of the market, page-3

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