Syndicated shares tipped to triple as it closes in on production
Perth-based Syndicated Metals has been rated as a Speculative BUY with a valuation of 8.5 cents per share – nearly three times its closing share price yesterday of 3.2 cents – in a new research report released by Melbourne-based independent research and advisory firm Beer & Co.
In the report, respected Beer & Co resources analyst Pieter Bruinstroop, says Syndicated’s cornerstone project, the Barbara copper-gold project in North Queensland, is “ready to go” with nearly 6 million tonnes in JORC resources, containing 83,000 tonnes of copper, to be developed and production expected before the end of next year.
Barbara, located 60km from Mt Isa and 110km by road from Cloncurry, is one of the few remaining undeveloped high-grade copper resources in the world-class Mt Isa-Cloncurry mineral province.
Key to the company’s fortunes has been a landmark deal unveiled earlier this year with CopperChem Limited, a leading North Queensland copper producer and subsidiary of the ASX-100 national conglomerate, WH Soul Pattinson (ASX: SOL).
CopperChem has taken up a cornerstone 18.9 per cent stake in Syndicated and has formed a joint venture with Syndicated to evaluate and develop Barbara. CopperChem is funding the current Feasibility Study which is targeting development next year.
Bruinstroop notes that CopperChem operates the Great Australia Mine near Cloncurry, where it has made a substantial investment in a 1.2Mtpa plant and infrastructure and currently produces around 7,000tpa of copper in concentrate.
“While the Great Australia Mine still has significant resources, remaining resources are of lower quality than those which have been exploited to date,” Bruinstroop says.
The plan is for Barbara ore to be mined and carted to the CopperChem plant for treatment, with the partnership effectively unlocking the deposit and creating a pathway to evaluate and develop other opportunities in the region, as well as conducting exploration to extend the Barbara resources.
“Beer & Co estimates that this project, including crushing and roads, should have a capital cost of, at most, $20 million,” the report says.
Based on projected production and cash flows from the project, Beer & Co’s estimated valuation for Syndicated is 8.5 cents per share.
Bruinstroop concludes: “The key investment decision criterion is whether SMD will be able to invest its increased capital in exploration in the nearby district to generate further value….We rate investment in SMD as a Speculative Buy as it should provide a good return, but there is an element of faith in this regarding the exploration prospectivity of the region.”
To read Beer & Co’s new research report on Syndicated Metals (SMD), click here.
SMD Price at posting:
4.5¢ Sentiment: Buy Disclosure: Held
