Aeon Metals Limited (AML)Emerging as one of Australia's top...

Aeon Metals Limited (AML)Emerging as one of Australia's top copperprojects.
RecommendationBuy (unchanged)Price$0.29Valuation$0.58 (previously $0.53). 
RiskSpeculativeAnalystDavid Coates 612 8224 2887AuthorisationStuart Howe 613 9235 1856GICS SectorMaterialsExpected ReturnCapital growth 100%.
Dividend yield 0%Total expected return 100%Company Data & RatiosEnterprise value $182.2mMarket cap $170.4mIssued capital 587.5mFree float 67%Avg. daily val. (52wk) $297,00012 month price range $0.205-$0.45Price PerformanceBELL POTTER SECURITIES LIMITED. 
Page 1(1m) (3m) (12m)Price (A$) 0.25 0.28 0.25Absolute (%) 16.0 3.6 16.0Rel market (%) 11.5 -4.3 13.4 Resource update underpins base caseAML has released an updated Resource for its 100%-owned Walford Creek copper cobalt project in Queensland. The new Resource increases both the size andconfidence of the copper and cobalt Resources. It also includes a maiden Resourceand Exploration Target for the Amy Zone (the 5.7km strike extension of the previousResource). The Copper Lode portion of the Resource has been increased by 24% to19.4Mt @ 1.17% Cu +0.86% Pb + 0.72% Zn + 28g/t Ag + 0.13% Co, containing 228ktcopper and 26kt cobalt, plus lead, zinc and silver. For the first time, progress onmetallurgical test work has enabled the estimation of a copper equivalent grade(Cueq., on a recovered basis) of 2.11% Cueq (for 409kt Cueq). The combined CopperLode and Cobalt Peripheral Resources include 26.9Mt in the higher confidenceMeasured and Indicated categories (up from 13.3Mt) and as such are available forconversion to Ore Reserves. Ore Reserves are required for a Feasibility Study mineplan and this tonnage alone would imply a potential mine life of 18 years (at 1.5Mtpa).Exploration Target points to high confidence upsideIn addition, an Exploration Target of 6-13Mt @ 1.0-2.0% Cu + 0.11-0.20% Co (+Pb,Zn, Ag for 1.7-3.2% Cueq.) has been estimated for the Amy Zone. In our view thepotential of achieving this target is high, given a 1.8Mt Inferred Resource has alreadybeen defined across four points in the Amy Zone and the demonstrated predictabilityand consistency of the current Copper Lode Resource. Taking the Target’s midpointimplies a further 9.5Mt of ore and ~230kt Cueq. for a potential Copper Lode Resourceof 28.9Mt @ 2.22% Cueq (for 640kt Cueq.). This points to Walford Creek emerging asone of Australia’s largest and highest grade undeveloped copper projects.Investment thesis – Speculative Buy, valuation $0.58/shUpdating our assumptions for the new Resource and our new mining assumptionsincreases our valuation by 9% to $0.58/sh. We retain our Speculative Buy rating andview that 2019 will see significant further Resource growth at Walford Creek.