"Resources offer mines exploration opportunities" ? FLOAT WATCH: Tim Morris ? From: The Australian ? June 01, 2011 12:00AM SINCE the start of last year, the Australian Securities Exchange has played host to almost 150 floats, the average return of which stands at just more than 30 per cent.
Kimberley Metals Ltd (ASX code: KBL) ranks as one of the better success stories, with its share price more than 50 per cent higher than its initial public offering. One of the drivers of its performance has been the Mineral Hill project located in NSW, 50km north of Condobolin. Acquired three years ago, the asset was accompanied by a small copper-gold resource and a processing plant placed under "care and maintenance" by previous owner Triako Resources. Its closure was brought about by declining grades and mineral prices. However, a new precious metal discovery adjacent to the processing mill and a surge in commodity prices have prompted Kimberley Metals to restart mining following a six-year hiatus. Production from the refurbished facility is due to begin in coming months, but as the existing mine plan is limited to five years there is a strong impetus to expand the resource base. The coming float of Exalt Resources aims to support the mine's renaissance with its Mineral Hill South project. "Nearology" is the company's attraction. Mineral Hill South is a grassroots exploration project. However, the economic threshold for any future discovery is significantly lowered by its location directly adjacent to Kimberley Metal's Mineral Hill operation. Drilling is planned for three untested prospects within the licence, although regional activity could also drive interest in the stock. Oz Minerals (ASX: OZL) has acquired large exploration rights either side of Mineral Hill, while adjacent licence holder Kidman Resources (ASX: KDR) has encountered significant copper mineralisation in recent drilling. The unknown potential of Exalt's Mineral Hill South licence renders the float very speculative. However, as its capital structure is appropriate given the risks, the company offers a solid platform for growth in the event of exploration success.
