Analyst update

Imo David Coates is a very good analyst. Here is his update hot off the press:

Aeon Metals Limited
First step-out assays confirm the deposit but miss the copper – this is ok
Assays returned 4.6km west of current Resource
AML has released the first assays from the wide step-out holes drilled to the west of the current Resource at its 100%-owned Walford Creek copper-cobalt project in Queensland. Hole WFPD273 was one of three step-out holes reported to the market to have intersected the targeted PY3 mineralised horizon:

• Hole WFPD273 (4.6km along strike): 21m PY3 interval from 248m (April 24th)
• Hole WFDD278 (7.4km along strike): 16m PY3 interval from 132m (May 3rd)
• Hole WFPD292 (2.5km along strike): 20m PY3 interval from 390m (May 17th)

The returned assays from hole WFPD273 reported 22m @ 5.70% Pb, 1.20% Zn, 0.08% Co, 0.1% Cu and 57g/t Ag from 247m.
While only minor copper was reported (0.10% Cu) in the interval this remains consistent with the style of mineralisation and local zonation and variation of grades in the existing Resource. The high lead and zinc grades reported in this intersection are typical of those seen in the peripheral mineralisation and contiguous to the high grade copper-cobalt mineralisation that makes up the copper-cobalt Resource at Walford Creek.

Results confirm stratigraphic continuity and high grade mineralisation
As we pointed out upon the release of the initial drilling reports from these holes, prior to assaying,
1) the structural setting has been confirmed and the continuity of the key mineralised units PY1 and PY3 along strike demonstrated; and
2) this is a strong endorsement of the geological model, which has successfully targeted the deposit as far as 7.4km along strike.

While it would have been a bonus to have reported a high grade copper assay, these two key points remain. And although the hole missed the copper the assays have returned very high grade lead and zinc and the reported intersection, at current spot prices, equates to 4.0% Cu equivalent in-situ. We have often seen high grade peripheral mineralisation reported proximal to high grade copper and cobalt intersections in previous rounds of drilling.  We also note that the announcement references logging from the current nearest hole (WFPD304) as intersecting 19m of chalcopyrite dominant sulphides (more copper rich) – also consistent with zonation in the deposit varying from lead-zinc rich to copper-rich. It has to be remembered that this is a single result, drilled 4.6km from the current Resource and part of a 30,000m drill program being undertaken at the project this year. The model for the deposit remains very much intact.

Investment thesis – Buy, (Speculative), valuation $0.54/sh
In our interpretation the key takeaways from this assay result are that the stratigraphic continuity has been confirmed, the system continues to host high grade mineralisation and grade zonation is within expectations and explained by the geological model which also remains a powerful targeting tool. We reiterate our view that AML has entered an exciting period of cost effective discovery and growth and that there are well-founded expectations news flow from this program may deliver strong, positive catalysts for the share price. We expect a steady stream of newsflow over the next six months as assays begin to be reported more regularly. We have an NPV-based valuation of $0.54/sh and AML remains one of our Top Picks for 2018.