Goldphyre shares forecast to double on back of major WA potash resource
Broker Hartleys sets 27c price target – more than twice Goldphyre’s current price of 11.5c
Goldphyre Resources (ASX: GPH) has today unveiled a major potash resource at its Lake Wells Potash project in WA – and a new research report from stockbroker Hartleys says investors stand to be rewarded handsomely.
Goldphyre, which has legendary prospector Mark Creasy as its biggest shareholder with a 19.9 per cent stake, has revealed its potash resource is equal to that of some of the more prominent ASX-listed potash companies.
But these other companies are worth two to three times more than Goldphyre, a valuation which Hartleys says creates an opportunity for investors.
Goldphyre’s resource shows that it has enough potash to meet its annual production target of 75,000-100,000 tonnes of premium-priced sulphate of potash for more than 50 years
Moreover, Lake Wells, which is 500km north-east of Kalgoorlie, is better-placed to access existing infrastructure than some of its more remote potash peers.
Hartleys notes that Goldphyre’s total in-situ resource compares very well to its peers, in particular to neighbour Salt Lake Potash (ASX: SO4), which has a market capitalisation more than double that of Goldphyre.
Hartleys also says that Goldphyre’s announcement shows it has a “drainable resource”, which is a measure that better reflects the likely amount of recoverable potash, of 18.4Mt at 8.05kg/m3. This includes a high-grade western zone of 10.5Mt at 9.03kg/m3.
“The only other ASX peer that has released a drainable resource is Agrimin,” the research report says.
“Agrimin’s trenching zone drainable resource is 9.7Mt at 8.31kg/m3, which is lower than Goldphyre’s western zone drainable resource in both size and grade.
“Agrimin currently trades at more than three times the market capitalisation of Goldphyre, although it is slightly more advanced (with higher category resources).”
Hartleys says the release of the maiden resource figure for Lake Wells paves the way for key development studies.
“At the current targeted production rates, a large mine life (+50 years) can be assumed, which could provide opportunities to lift operating rates over time,” the report says.
“Goldphyre is still cheap on peer metrics and should continue to be re-rated as the project is de-risked by development studies.”
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