Resource Capital Research December Quarter, 2010 0.03 Debt (A$m) - Dec 10F Enterprise value (A$m) Avg monthly volume (m) Cash (A$m) - Dec 10F * Price/Cash (x) Cash (A$m) Price/Book (x) Company options: Net asset backing (Ac/share) * Forecast cash assumes US$1.5m Obi option payment made in Dec '10. *Gold prospective tenements only, both held and under application. Quarters stated on calendar year basis. Mineralised Material (est., non compliant with JORC) Contacts Directors Mr Tom Dukovcic Managing Director Tel: 61 (0) 8 9225 9000 P Bradford (Non Exec) 51%/85% Priv Ore Au 0.01 to 22 0.03 0.0 Major shareholders: R Crabb (14.1%), JP Morgan Noms (7.4%), Market capitalisation (undiluted) (A$m) Fully diluted (m) 15.2 591.5 koz 0.60 166 3.20 0.2 koz Au Eqty 2011F Cu, Zn Early Expl Aus (NSW) Code for reporting mineral resources - Australian: 0.0 Equity Mt 0.0 g/t t Project Cut Off 0.5 Classification 0.8 0.8 0 Cash backing (Ac/share) 0.7 Au Au Ashburton Minerals Limited ATN is now Indonesia-focused, having secured an option to farm into an unexplored high grade epithemal arisanal goldfield in the Halmahera arc, which hosts Newcrest's 5moz Gosowong Project. ATN will commence drilling 1Q11, to confirm style and scope of mineralisation. 0.25 0.20 1.57 YEAR END: June Exploration and evaluation (A$m) 1.95 Options and warrants (m) 0.2 1.5 Funding duration at current burn (years) 0.11 0.9 65 82 0.11 67 ATN.AU 7.5 Production and Financial Forecasts Sep-10a Dec-10F 2010a 2012F Gold, Copper 0.78 0.44 166 - 70 Corporate (A$m) Exploration/(Expl.+ Corporate) (%) 0 509.0 584.0 Drilling - Other/Diamond (m) Convertible notes (m) 0.0 Indonesia, Australia (WA) Early-Mid Exploration Number of shares (m) 584.0 Capital Profile Exchanges: ASX:ATN 52 week range (A$/share) Share price (A$) Land holding ('000 ha)* Tenement costs ($k per year) Capital Raisings (A$m) 159 - Drilling - RAB (m) 15.2 1.2 0 1.5 Funding from JV partners (A$m) 0 0.0 0.8 Shares on issue (pr end) (m shares) 0 0 - - 166 984.0 0 0 14,000 4.5 0.3 0 0.8 3,500 501.5 6,500 - 734.0 1.0 P Bradford (5.6%), Macquarie Bank (4.2%) Obi Gold Project West Perth, WA, Australia R Crabb (Chairman) Ownership/ T Dukovcic (MD) No Exploration program ~A$2-3mpa, now to be mainly directed towards gold in Indonesia. Obi (Indonesia - option to earn 85%) - large unexplored active goldfield with numerous drill ready targets - potential for large scale epithermal gold deposit. Artisanal production is from a rich epithermal vein system that could extend ~10km in unexplored ground. Obi is on the Halmahera arc which hosts the 5moz Gosowong deposit (Newcrest - ASX:NCM). Extensive sampling of Obi artisanal ore currently being mined has indicated average grade of 16g/t Au. Samples 3km from workings graded up to 12.15g/t Au. Obi diamond drilling campaign to start Jan '11. Mt Webb, WA: Prospective for IOCG deposits (246m @ 0.22% Cu). ATN is looking for a JV partner. Project Reserves g/t 0.0 Au Au,Cu Aus(Vic) A$ 0.03 Process na Mid Expl 0.0 0 epithermal Target Partner Type JV (JORC) 5.0 Project 2.4 1.8 0.0 0.0 0.0 0.0 1.9 Company Comment 0.9 0.3 0.4 Gold Resources 100% na Au,Ag,Cu,Pb Early Expl Aus (WA) Yea na qtz vein 0.0 100% IOCG-U Route Location Key Projects Option Metal Mt Webb na Analyst: Dr Tony Parry [email protected] www.ashburton-minerals.com.au Spring Valley 80% J. Slade VMS na Mid Expl 10 December 2010 13.2 Investment Points 3.8 1.2 Reserves and Resources/Mineralised Material Status Indonesia na 6,000 159 84 - ATN ? Ashburton Minerals Limited 0 0.005 0.01 0.015 0.02 0.025 0.03 0.035 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Share Price ($/Share) Source: Bloomberg Overview: Ashburton Minerals Ltd listed on the ASX in 1994. Until 2009 it was primarily focused on the exploration and development of advanced gold projects in Brazil, which it has since sold. Obi Gold Project (Indonesia): (77km2) ATN has secured an option to earn up to 85% (see below for details) in an Exploration Licence on the Indonesian island of Obi. ATN has targeted this project because it considers that it fits its key criteria: having extensive evidence of mineralisation, under-explored, large tenure and potential to yield a significant discovery. The island of Obi is just south of Halmahera Island, which is home to the Newcrest?s (ASX:NCM) 400kozpa Gosowong Project, which has produced over 2.1moz to date and boasts a current resource of 2.8moz at a grade of 19g/t. The ATN geologists consider Obi is a structural continuation of the Halmahera magmatic arc (which hosts Gosowong). What?s more, the project area is largely unexplored, but covers an epithermal vein/breccia style Au-Ag mineralisation system being worked by ~1,000 miners as an artisanal goldfield (~1km2 area). ATN recently took 15 random samples of run-of-mine artisanal ore, which averaged 16g/t Au (lowest 4.3g/t, highest 42.3g/t) plus significant Ag, Cu,Pb,Zn credits. Further sampling 3km away from the main workings in unexplored ground gave an average grade of 7.8g/t Au. It appears the potential mineralised trend extends over 10km in ATN?s ground. Next Steps: ATN intends to immediately commence a deep diamond drilling program (~10 holes, 3,000- 4,000m) in Jan ?11, to test the epithermal vein system at the existing workings over a 500m strike. Obi Option Agreement: The tenement is held by a private Indonesian company, PT Eka Samudra Nusantara (ESN). ATN has paid ESN US$0.1m deposit and must pay US$1.5m by 10 December 2010 to secure an exclusive 12 month option. ESN will use the funds to remove current mercury-based artisanal production and install a gravity concentrator. ATN can then earn 51% by spending minimum US$1.0m on exploration and paying US$2.0m (and issuing ESN 30m shares) by Dec ?11. Subsequently ATN can increase to 85% by spending a further US$2.5m and then paying ESN US$2.9m (and issuing 30m shares). In summary, to earn 85% within the next four years, ATN will pay a total of ESN US$6.5m, issue 60m shares (current value US$1.2m) and spend a total of at least US$3.5m on exploration. Australian exploration: Mt Webb: (1,270km2, 100%): IOCG targets in WA, Cu mineralisation confirmed over 4km, (one hole 246m @ 0.22% Cu) appears promising ? early stage. ATN may JV it. Yea (300km2) ? historic Victorian goldfield, high grade old workings, stalled due to landowner access issues. Spring Valley (~20km2, option 80%) NSW, early stage, low order Cu-Pb-Zn anomaly, EM survey planned. Corporate: ATN recently (30 Nov) completed a placement of 75m shares at A$0.02/share to raise A$1.5m. Macquarie Bank took up 25m shares (now 4.2% shareholder in ATN). Funds will be used for initial Obi purchase payments and initial exploration. Investment Comment: After concluding its South American foray, ATN has been looking for a serious flagship gold project, and now may have it with Obi in Indonesia. If it can show that the high grade epithermal system extends further along a projected 5-10km strike, then there may be plenty of upside for ATN shareholders. Capitalised at ~A$15m, an obvious model to look to would be Kingsrose Mining (ASX:KRM), currently capitalised at ~A$290m mainly due to its Way Linggo high grade (670kt @ 8.4g/t Au, 129g/t Ag) epithermal deposit (described as a Gosowong ?look-alike?) on the Indonesian Island of Sumatra, currently commissioning (45kozpa production forecast). That status is a long way off for ATN, but the upside potential is there if ATN can confirm a major high grade epithermal vein system. Resource Capital Research December Quarter, 2010 Disclaimer and disclosure attached. Copyright? 2008 by Resource Capital Research Pty Ltd. All rights reserved. 2 ATN?s Indonesian Project is on Obi Island, along the Halmahera magmatic arc which hosts Newcrest?s 5moz Gosowong Project to the north, on Halmahera Island itself. The Obi tenement (left hand graphic) contains a mineralised corridor in the north currently being worked by artisanal miners (right hand graphic). ATN will be drilling under current workings in 1Q11 to determine the style and scope of the epithermal vein mineralisation. The mineralised zone extends to the SE as indicated by ATN?s surface sampling 3km south of the main workings. Disclosure and Disclaimer Resource Capital Research December Quarter, 2010 Disclaimer and disclosure attached. Copyright? 2008 by Resource Capital Research Pty Ltd. 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ATN Price at posting:
3.1¢ Sentiment: Buy Disclosure: Held
