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Australasian Resources Ltd (ARH, $1.15)

Four reasons to buy ARH: The newest force in iron ore

1 billion tonnes of magnetite iron ore! ARH's Balmoral South Iron Ore Project has in excess of 1.1bt resource. 346Mt of this is classified as a reserve, with significant upgrades expected in the near term.

Project funding guaranteed. On the 21st March, ARH announced a deal with the Chinese steel giant Shougang Corporation. As well as raising AUD$56m, with AUD$42m in attached options, Shougang will provide approximately US$2.1b for the development of the project, in the form of an interest free loan. Shougang will also take a 50% share in the project.

Proven Technology. ARH will produce pellets and HBI. The HBI plant technology is proven with in excess of 25 plants operating around the world.

Guaranteed buyer for 100% output, at market prices. Shougang has guaranteed it will purchase all the iron ore products from the project for 25 years, based on world benchmark iron ore prices, pursuant to off-take agreements in an agreed form.

Tiny market cap. Prior to this raising, the company had a diluted market cap of $475m. We believe the company will undergo a significant re-rating once it is reinstated to trading on the ASX.



RECOMMENDATION: Buy