SA Mines and Energy Journal : Dec09-Jan10
DECEMBER 2009/JANUARY 2010 SA MINES & ENERGY JOURNAL 34 BROKER'S REPORT The ties between South Australia and the Northern Territory have been close since the earliest days, with the Northern Territory being part of South Australia for almost 50 years (from 1863-1911). On the junior exploration front, it is interesting to see that these links with our northern neighbour are still strong and very active, with a number of Adelaide-based exploration companies reporting recent successes in the Northern Territory. Western Desert Resources Limited (WDR) -- Speculative buy Iron ore at Roper Bar and iron-oxide-copper-gold-uranium (IOCGU) targets in the Tennant Creek region After a spectacular run based on results from its Roper Bar iron ore project, the WDR share price is holding steady as people await more news. Drilling is continuing at the project. This is an early-stage, large-scale project and we do not expect overnight mine development to occur, but are confident the current resource base (90 million tonnes at 37.2 per cent iron) will increase significantly, with scope for higher-grade, direct-shipping ore reserves to be delineated. Also in the WDR portfolio is a package of ground in the prospective Rover Field (60km south-west of Tennant Creek). The tenements held by WDR sit to the east of the discoveries made by Westgold Resources (WGR) and Adelaide Resources (ADN). WDR is working on gaining land clearances for some of the more prospective ground. We are keenly watching developments at this site. Adelaide Resources Limited (ADN) -- Speculative buy Copper and gold in the Tennant Creek region Also in the Rover Field of Tennant Creek are the tenements held by Adelaide Resources. Adelaide Resources has been working its Rover 4 prospect for some time, but following the announcement that WGR intercepted mineralisation at Rover 1, located right on the tenement boundary, ADN decided to move its drill rig to the test Rover 1, with immediate success. As of the time of writing, ADN was still awaiting assays from its first drill hole, which reported 46.5m of visible copper sulphide mineralisation. Toro Energy Limited (TOE) -- Speculative buy Defined uranium resources and also exploration upside potential The recent successful capital- raising undertaken by Toro will position the company well to develop its flagship uranium deposit in Western Australia and also advance its Napperby deposit, located 175km north- west of Alice Springs. A scoping study at Nappperby is currently underway. In addition, Toro has an extensive portfolio of exploration tenements targeting uranium in various geological settings. The experience of the exploration team and current cash position is a strategic advantage that Toro has in the region. Mithril Resources Limited (MTH) -- Speculative buy Exciting nickel and copper in central NT Based on material presented to the market to date, the exploration targets currently being drill-tested by Mithril, at its Huckitta Project, are some of the most exciting seen in recent times. The extent of surface mineralisation discovered is remarkable, considering the level of exploration that has gone on in Australia over the past 100-plus years. Drilling to date has reported low-grade copper, cobalt and nickel grades from the early-stage reconnaissance program. However, there is still a high level of risk associated with this and any exploration play. It is no fait accompli that a discovery will be made, but we are prepared to back the team at Mithril. Uranium Equities Limited (UEQ) -- Hold Narbalek uranium project and Cameco JV We are not deterred by the recent lack of success at the Nabarlek Project during the last drilling campaign, as there are still targets remaining to be tested. Also, the ground surrounding the mine lease, currently in JV with Cameco, has yielded some interesting first-pass results. However, given that field activities have been suspended until the second quarter of 2010 in the NT and that Greenfields exploration in SA could start early in 2010, we see that news flow will be slow and that the price could soften. A significant announcement on the development of the Phos Energy project could help, but this project seems to have been dragging its heels for some time now. Disclaimer: Warning (general advice only): Past performance is not a reliable indicator of future performance. The recommendation in this column is made without reference to its appropriateness to your investment objectives, financial situation and particular needs. Before acting on this general advice, you should discuss with your investment adviser its appropriateness to your own specific circumstances. In respect to MTH, in June 2009, Taylor Collison were lead manager in a Placement to raise $1.5m. In respect to TOE, Taylor Collison were a participant in the September 2009 Placement and received a fee. SA explorers in the top end The Northern Territory holds plenty of allure for SA's junior explorers, writes Taylor Collison analyst Andrew Shearer.