Hi Vintage, I am not sure how to post PDF files. I did not see any copyright, so here it is. I have enclosed an extract that I tried to tidy up enough so that it is readable. Enjoy the reading and good luck with your investment/interest in MTN. I think MTN still has a long way to run before we see the finish line as far as the sp goes ;-). Cheers, Dratoz
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Trading note
Marathon Resources (MTN)
Buy
A long way to run
Marathon Resources is an advanced exploration company, which is developing projects in 3 areas:
o The North Flinders Ranges in South Australia,
o The Gawler Craton in South Australia, and
o The Moyston Fault in Western Victoria
Its most advanced project is the Paralana Ore System in the North Flinders Ranges.
o MTN has targeted three initial areas of interest within the Paralana system- Mt Gee, Hodgkinson and Armchair-Streitberg.
o The most advan ced of these areas is Mt Gee. 3,000t JORC resource at Mt Gee deposit
o MTN has used historic drilling at the Mt Gee tenement to calculate a JORC Resource of 33,000t U3O8 at Mt Gee.
o There is an indicated resource of 4.0Mt ore at an average grade of 0.094%, giving 3,800t U3O8, an inferred resource with a 500ppm cut-off of 30.0Mt ore at an average grade of 0.073% giving 21,000t U3O8, and a further inferred resource with a cut-off grade of 300ppm of 22.7Mt ore at an average grade of 0.037% giving 8,400t U3O8.
o There are opportunities for this resource to be upgraded, as the historic drilling indicates the ore body extends beyond the area under which the resource has been calculated.
Recent drilling results at Mt Gee support the resource estimate.
o MTN has recently completed a drilling program comprising 5 diamond drill holes and one RC hole at Mt Gee.
o It has released the full results for one of the diamond drill holes, and partial results for two others.
o Highlights include 3m @0.164% U3O8 and 6.44m @0.137% U3O8 in the first hole, as well as 4m @ 0.099% U3O8, and 3m @ 0.095% U3O8 in the other two.
o These initial results lend support to the current resource estimate.
Strong Uranium Price
o As at May 15, the spot uranium price was US$43.00/lb (source: UxC Consulting Company), continuing its trend of rising steadily. The long term (contract) price is US$43.50/lb.
o We are forecasting a peak uranium price of US$61.00/lb in 2009, and a long term price of US$35.00/lb from 2013.
Favourable regulatory environment o Marathon’s lead uranium projects within the Paralana Ore System are located in South Australia.
o Excluding the Northern Territory, where the Federal Government controls mine development, South Australia is the most uranium-friendly state in Australia. Two uranium mines currently operate in SA, and the State Government is open to new mines being developed.
We recommend Marathon Resources as a trading buy with a price target of $2.00.
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Marathon Resources’ tenements
Source:Company
Further positive drilling results at Hodgkinson
o MTN has also released drilling results for the Hodgkinson deposit, which is part of the Paralana Ore System.
o The highlight at Hodgkinson was 23m @ 0.15% U3O8, which included 1m at 1.15% U3O8.
Gawlor Craton Projects
o MTN also has tenements covering four areas of interest in the Gawler Craton, namely
· Co ondambo,
· Mulga Well,
· Mabel Creek, and
· Woorong Creek.
o The Gawler Craton area includes Olympic Dam and Prominent Hill.
Moyston Fault Zone Projects
o MTN is also exploring the gold and copper potential of two sites, Kalymna and Glenlyle, along the Moyston Fault
Zone in Western Victoria.
o Recent drilling by MTN produced low grade gold intersections at Kalymna and Glenlyle.
o The company is awaiting the results of petrological samples before it refines the exploration strategy for the sites.
Back of the envelope approximation
o We are yet to initiate coverage on MTN so at present we do not have a DCF model.
o A simple approximation of how much MTN’s known resources are worth, ignoring project risk and the time value of money, can be calculated by valuing MTN’s current total resource at US$5/lb.
Resource=72.75Mlbs
Total value excluding time value of money and project risk
=US$5.00/lb*72.75Mlbs
=US$363.76m
=AUD$519.66m or
=$10.65/diluted share, using a conversion rate of USD:AUD $0.70
o In order to incorporate the uncertainties involved in the reasonably early stage of this project, the need to complete a bankable feasibility study, and the capex involved in developing the mine, we place an 80% discount on this value, and set a price target of $2.00 for MTN.
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