RIV to be long-term coking coal
WHAT THE BROKERS SAY: Sarah-Jane Tasker | October 06, 2008
Riversdale Mining (RIV); Fosters Stockbroking; Buy recommendation; Price target of $12.50; Last traded at $8.28
RIVERSDALE Mining is being listed as a buy by Fosters after the analysts visited the miner's Benga project and other leases in Mozambique. Fosters is confident RIV will be a long-life coking coal producer, producing significant positive cashflows over the commodity price cycle. The Benga lease (RIV 65 per cent, Tata Steel 35 per cent) has a resource of 2.1 billion tonnes, half of which is in the measured and indicated category.
The coal is contained in a number of coal seams, most of which outcrop and are gently dipping, making them amenable to open-pit mining. Scoping studies envisage mining 20mt of run-of-mine coal, producing 6mt of hard coking coal and 6mt of thermal coal.
The Benga project, along with a number of RIV's other coal leases, is next to the lower Zambesi River, which runs at a steady rate most of the year. While bathymetric studies on the river are continuing, initial indications are that the depth, width and flow rates are all amenable to barging coal from RIV's projects to the river mouth. Fosters also viewed RIV's other leases surrounding the town of Tete. Lease 946 to the west of Benga displays all the same geology as the Benga lease with coal outcropping in several areas. However, Lease 946 is close to five times the surface area of Benga.
"Given the size of RIV's exploration licence footprints and known coal seam thickness, we believe RIV's resources in the area will ultimately be greater than 10 billion tonnes," Fosters said in a note on the project.
Current resources of 2bt are on less than 2percent of RIV's tenement package in Mozambique.
http://www.theaustralian.news.com.au/story/0,,24450376-5018038,00.html
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