Aussie stockbroker puts a rocket under Caravel Minerals after tipping 500% price rise
It was a big week for Perth-based copper junior Caravel Minerals (ASX: CVV), whose shares soared after leading Australian stockbroking firm, State One Stockbroking Ltd, valued the stock at7.4c-a-share on the back of a new research report on its Calingiri copper-molybdenum project near Perth.
Caravel shares touched highs of 2.3c during the week on huge turnover before settling back to close at 1.5c yesterday.
In a new research report, State One’s highly respected resource analyst Peter Kopetz says that Calingiri, which is located just 90 minutes’ drive north of Perth, has an underlying value of 37c-a-share – based on its conceptual forecast production and cash flows.
The headline value of 7.4c-a-share is derived after applying a further very conservative 80 per cent discount.
Caravel acquired 100% interest in Calingiri, which lies just 120km north-east of Perth, in 2013 from Kingsgate Consolidated (ASX: KCN), and has since gone on to define a major virgin copper-molybdenum discovery along a 30km long regional trend.
The company has announced a JORC Exploration Target for each of the Bindi and Dasher prospects, estimated at 170-260Mt grading 0.31% - 0.35% Cu with significant by-products of molybdenum and silver. State One say they expect tonnes to grow with further exploration at nearby targets.
“We are very surprised that CVV hasn’t received more attention, or at the very least attracted support, but that can be attributed to the fact that the project is somewhat unique to Australia and is more akin to large copper operations in Chile,” Kopetz says in the note.
“With time and successful progression of the project, we feel that Calingiri will gain more recognition….We expect CVV to partner up with a larger player given the nature of the conceptual mining scenario,” he adds.
It is the impressive parameters of that “conceptual mining scenario” which go to the heart of the Caravel investment proposition, given that the company has not yet reported JORC compliant resources and so can’t publish any production or financial forecasts.
Based on a detailed review of the Caravel data, Kopetz says Calingiri could support a profitable, large bulk tonnage operation at a consensus long-term copper price of US$3 a pound, based on a $300 million development and 15 million tonne-a-year operation initially targeting higher grade zones.
Such an operation would produce around 50,000tpa of copper metal with substantial molybdenum and silver credits, with a forecast total cost in the region of US$2.28 a pound and a mine life of greater than 10 years, he says.
“Large, bulk tonnage mining offers several advantages, such as a relatively simple flow sheet and lower cash costs associated with open pit mining (low strip ratios),” Kopetz continues. “Infrastructure and capital costs will be lower than normal due to the close proximity of Calingiri relative to Perth, some 90 minutes’ drive.”
“First Quantum Minerals (FQM) signed a LoI in December 2013 with CVV, in a move designed to get a foot in the door of a possible large bulk tonnage prospect. FQM took a 12.9% stake for $1.25M and both parties entered into a Technical Cooperation Agreement.
“FQM is a global diversified miner which has identified Calingiri as a possible large bulk tonnage project which could fit its investment criteria.”
Caravel is also currently drilling at its Wynberg copper project, located in the hot Cloncurry District of North Queensland – which Kopetz says “adds another dimension to CVV and de-risks the company somewhat.
“Wynberg is well situated and the recent nearby major polymetallic discovery of Minotaur Resources (MEP) has reignited interest in the area.
“Near-term catalysts include drilling at Wynberg, which could change priorities significantly if successful and Calingiri drilling in the latter half of 2014,” State One adds.
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