Below is taken from Hartleys 7 May 2010 Broker Research available at hazelwood.com.au Going by the history of these reports it looks like Hartleys should be putting out a new report soon which should be a good read considering the change in Tungsten demand over the past 5 months.
Whilst the outcome of the prefeasibility study was positive, the development of both Big Hill and Stage 2 of the ferrotungsten plant are reliant on higher prices. The prices as modelled by the CRU are moderately higher than current prices, but are not unrealistic, though are dependent on Chinese and world economic growth. We consider the development of both Big Hill and Stage 2 of the ferrotungsten plant as our Upside Case, with a valuation of $253m.
By way of comparison, we derive a value for the ferrotungsten plant remaining at Stage 1 levels, but using CRU prices, of $147m. However, we do not see this as a relevant valuation, as if prices were at CRU levels, both Big Hill and the Stage 2 upgrade would be developed.
The CRU W and FeW prices used in the above valuation >US$225/mtu current price US$260/mtu *steady rise of late >US$35/kg (stage 1) current price US$36/kg *recent quick rise >US$46.70/kg (stage 2)
Tungsten market is strong. APT prices are up again today. Concentrate & FerroTungsten should follow. All looks good for HAZ. Volume and break of 20c needed. Please DYOR.
HAZ Price at posting:
13.1¢ Sentiment: LT Buy Disclosure: Not Held
