K2P 0.00% 18.0¢ kore potash limited

extra exceptional drill results at kola, page-33

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    Here's the upgraded Analyst report from NBF. Initial price target revised up from $1.10 to $1.25. Estimated OPEX cut by 10%.

    Elemental Minerals Limited
    ELM (T) $0.75
    Stock Rating: Outperform
    (Unchanged)
    Target: $1.25
    (Was $1.10)
    Risk Rating: Above Average
    WOW! New High-Grade Potash Seam Expands
    Four Holes in “Hangingwall” Reveal 30+%
    K2O Less Than 250 m Deep – Raising Target

    HIGHLIGHTS

    Two more holes at Sintoukola reveal impressive potash
    grades. The last two holes of the latest drill campaign for the Kola deposit (of the Sintoukola project) revealed unusually high potash grades in what management is calling the “Hangingwall” seam. These holes grade 37.8% K2O (3.1 m
    thick from 222.6 m depth) and 34.2% K2O (3.8 m thick from
    196 m depth.) The first two holes of the seam were also
    robust, grading 30.6% K2O (2.5 m thick from 210 m depth)
    and 33.1% K2O (2.2 m thick from 214 m depth.) Note that
    typical grades in Canada’s world-class SK basin are
    ~18%-26% K2O, though most of the potash lies 1+ km deep.

    ? Hangingwall seam offers significant opportunity to
    enhance project economics. The potash grade of this seam
    appears to be at least 50% higher than the previously
    highest-grading Upper seam around which management has
    been building a Pre-feasibility study (PFS) due in the coming months. Management has indicated that the Hangingwall seam is ~3 m thick, appears to be laterally extensive and is flat to gently dipping, suggesting it will be a relatively simple conventional mining target. To date none of the Hangingwall seam drill hole results have been incorporated in the Kola deposit resource estimate.

    ? We expect the PFS due circa Q3/12 to help de-risk
    Sintoukola and provide a solid foundation for the FS
    expected to be completed circa H1/13. The PFS is
    expected by Q3/12 and is apt to help de-risk the project and positively re-rate ELM shares. Management also aims to
    deliver a Feasibility Study (FS) by H1/13, which should allow the Company to meet our H2/16 initial production assumption.

    ? Raising DCF-based target to $1.25 from $1.10 on lower
    assumed opex; OP maintained. We cut assumed opex
    ~10% to ~$105/tonne presuming the Hangingwall seam will
    cost less to mine. This reduces our calculated fully diluted, fully financed share count to 719 mln from 762 mln previously.

    Our NAVPS (fd, ff; 13.5% cost of capital) estimate is
    Cdn$1.58, implying 0.24x EV/NAV, in line with peers at 0.20x.

    52-week High-Low $1.69 - $0.59
    Shares Outstanding - Fully Diluted (mln) 243.8
    Shares Outstanding - Fully Diluted, Fully Financed (mln) 719.3
    Market Capitalization (mln) $183
    Year End: December 31
    Key Asset (93% owned) Sintoukola Project, Republic of Congo
    Measured & Indicated Resource (sylvinite) 413 Mt @ 20.4% K20
    Inferred Resource (sylvinite) 261Mt @ 19.2% K2O
    Annual Design Production (KCl) 2.0 Mt
    Estimated Start Date H2/2016
    Opex (estimated per tonne, incl. transport, USD) $105
    Capex (estimated - mln, USD) $1,992
    NAV13.5% (estimated - mln, USD) $1,135
    NAVPS (fd, ff) $1.58
    All amounts in Canadian dollars unless otherwise noted
    Financial Data: As at March 31, 2012
    Estimated Cash with ITM Warrants and Options (mln) $30.1
    Total Debt (mln) none
    Enterprise Value (mln) $153

 
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