Numbers round off Epsilon's dayKevin Andrusiak | May 21, 2008 IF...

Numbers round off Epsilon's day

Kevin Andrusiak | May 21, 2008

IF anything, a gain of exactly 300 per cent is a nice round number for Epsilon to step in and call for a halt to trading in its securities.

Mind you, the Australian Securities Exchange was right on the company's hammer calling for a please explain.

And it was all because of another nice round number from Epsilon which caused the buying spree on the share market.

A 1,000,000,000 (1 billion) iron ore target in the Pilbara.

That figure was what Epsilon was using in a brief to investors when explaining the potential for its Mardie Iron Ore project in the WA Pilbara.

Epsilon recently picked up a 250 square kilometre package of tenements in the Pilbara from a private operator.

Company managing director Matt Gauci reckons the ground was “as good as you can get” in terms of location. He explained that there would the project did not need a major railway for export and that there was plenty of water in the Robe River delta while access to energy wouldn't be a problem.

Interestingly, the ground was once considered prospective for salt mining. Epsilon was thinking more along the lines of uranium and magnetite mineralisation.

Epsilon also notes now that there is also high grade hematite potential at Mardie with Brockman and Marra Mamba formations “interpreted to occur within and to the north east of the tenement”.

“Independent report suggests magnetite signature to be the Brockman Formation and of comparable magnetite quality to Mineralogy's Balmoral Deposit (around 31 per cent iron) given the geology and location,” Epsilon said in its investor presentation.

“(There is) potential for hematite in the north west trending fault that intersects and disrupts main magnetic body.”

This is all very conceptual by nature and about as far as you can get from a JORC resource as is possible.

But you only have to mention 1 billion and iron ore in the same sentence and even the world's most boring sharemarket punter is bound to get excited.

Epsilon founders, including Gauci, hold around 30 per cent of all stock while Brazilian giant Vale pops up on its register with a stake of around 4 per cent.

Anyway, with the massive run on Epsilon shares Wednesday morning the company's market capitalisation pushed out to $28.6 million.

That's still a touch shy of its listing capitalisation of $35.4 million, but nevertheless speaks volumes for where the company is at.

Gauci, in his investor presentation, reckons that the company's market cap would drift around the $20 million mark for the next couple of years in Epsilon's five-year plan.

In years two to five, the value should “steadily increase” to $50 million on the back of resource drilling and a scoping study.

One final note of interest regarding Epsilon: just before the shares went on a big run, the creatively titled Chaos Investments sold 3434 shares for a lowly $790.

They would have been worth three times that based on Wednesday's rampant run by Epsilon shares.

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