TNG (ASX: TNG) is focused on the exploration, evaluation and development of a multi-commodity resource portfolio in the Northern Territory and Western Australia. TNG’s main focus is the evaluation and development of its 100%-owned Mount Peake Vanadium-Titanium-Iron Project, located in the highly prospective Arunta Geological Province some 80km north-east of Alice Springs in the Northern Territory.
Discovered by TNG in early 2008, the Mount Peake Project comprises a current JORC Indicated Resource of 140 million tonnes grading 0.3% V205, 9% Ti02 and 35% Fe, making it one of the largest of the known vanadium projects in Australia. TNG Ltd has $0.27 target share price from Old Park Lane Capital Friday, October 14, 2011 Old Park Lane Capital has maintained its aggressive rating of TNG (ASX: TNG).
The following is a summary.
TNG has reported a JORC-compliant resource update for the company’s flagship Mount Peake vanadium-titanium-iron deposit in the Northern Territory of Australia.
The new resource represents a 15% increase in total resources to 160Mt, but crucially 70% of the resource has been upgraded to the Indicated category which amounts to 112Mt.
We view this result as encouraging as the Indicated resource should provide the basis for conversion into ore reserves. The deposit remains open to the east and new targets have been identified. TNG has also identified a high-grade zone running through the deposit. Resource upgrade.
TNG has increased the total resource at Mount Peake to 160Mt at 0.27% V2O5, 5.3% TiO2 and 23% Fe, representing a 15% increase over the previous total resource of 139Mt.
Crucially 70% of the resource (112Mt) now sits in the Indicated category, whereas the whole of the resource previously lay in the Inferred category. Thus TNG has increased the level of geological confidence and the Indicated resource will form the basis for the future conversion to Ore Reserves.
TNG has also managed to increase the ore envelope and magnitude of the resource, without a reduction in grade. New high grade zone. As part of the new resource update, Snowden (TNG?s consultant) notes that the deposit is horizontally zoned with a higher grade zone running through the length of the deposit with grades of up to 0.7% V2O5, 12% TiO2 and 38% Fe, some of the highest grades seen to date.
Resource potential remains open. In our view, one of the most intriguing aspects is that the new resource calculation work indicates that the deposit remains open to the east – where the deposit was previously assumed to be closed off and new targets have been identified, alluding to the potential for resource growth. Approaching crunch time. We await the release of the upcoming PFS in November before we revisit our valuation.
TNG is now approaching a time of heightened activity including; PFS completion, FIRB approval and completion of the ECE transaction, completion of metallurgical test-work and commercialisation of the company?s TIVAN™ process. All these events have the potential to re-rate the stock.
We maintain our conservative target price of A$0.27 per share and a BUY recommendation pending the release of PFS results in November. The resource upgrade is a welcome event and sets the scene for strong news-flow over the coming months. All eyes now turn to the Mount Peake PFS!
TNG Price at posting:
10.5¢ Sentiment: ST Buy Disclosure: Held
