Western Desert Resources (WDR, $0.67, Mkt Cap $262M ) Awaiting debt funding as next catalyst. Trading Buy. Price target $1.00/share
•Two weeks ago, Western Desert Resources announced an off-take agreement with Noble Resources for its Roper Bar project, whereby Noble will purchase the entire product produced for up to five years after first shipment.
•Back then, we emphasised that the offtake agreement was as a key condition precedent of WDR securing its outstanding debt funding for Roper Bar. We are expecting the announcement of such a debt facility to be announced in the current quarter.
•We would expect a further re-rating of WDR upon conclusion of a debt package, as it will be the final jigsaw piece on the road to completing development and construction for Roper Bar, of which the road leading to the port comprises most of the capex.
•With a strong offtake partner, infrastructure solution, and impending financing, Western Desert will be set to become an iron ore producer by end 2013.The major blue-sky opportunity remains the commercialisation of the Roper Bar non-DSO resource component.
•We reiterate Western Desert (WDR) a Trading Buy, Price target $1.00/share.
