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Main ForumAlkane Net Present Value $4.80 Petra Capital

  • The prediction by Petra Capital reproduced below is featured in today's MiningNews.net and several other resource focused newsletters.


    Petra indicates a net present value on Alkane of $A4.86 a share, compared to Friday 3/2/2012 1.30pm price of $1.185 up from last Friday's close of A$0.94.

    Alkane Resources Set for significant re-rating
    BUY
    Alkane is on the verge of becoming a significant player in the zirconia and rare earths markets with its Dubbo Zirconia Project (DZP) – 100%.

    Having operated a demonstration plant for over 3 years, the company has a proven flowsheet and is confident of a transition to commercial scale.

    The DFS was completed in September 2011 with an initial mine life of 20 years from Q2 2014.

    Upside also exists from the Tomingley gold project which is targeting ~50kozpa from Q1 2013. We recommend buying ALK with 373% upside to our NPV of A$4.82/share.

    MiminingNews.net: The valuation includes, of course, Alkane’s gold projects in NSW. But it (Petra) likes the stock because 70 per cent of the Dubbo deposit comprises heavy rare earths, some 60 per cent of Dubbo’s overall production will consist of zirconium and niobium (metals that will provide a hedge against any fall in REE prices), and because Alkane has done its project estimates based on REE prices well below present levels and even Petra’s conservative forecasts.

    Previous Alkane posts

    I hold ALK

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