Ok well I have modified my research to include the potential of Cobalt,
however due to the uncertaintiy of the quantity contained I can't really factor any value into pricing, and before anyone says it, conservative, yes yes yes I know.
AAR
Mkt Structure
Shares = 500m
Mkt Cap @9.5c = $47.5m Current
Cash
$9.5m + I think more from upcoming treatment of some remaning stockpilled Ore
Projects
Mandilla Gold, 100%, W.A.
What Mandilla West has done is given AAR its first ever profit of $5.6m last year,
Now with this batch treatment, I'm betting they will be able to announce another profit this year of around $5m, more if they treat Mandilla East
Now they have announced a
JORC at Mandilla Est of 356Kt's@3g/t Au = 35Koz's Au, should Net $5m
However Mandilla East has the potential to host much higher grade gold as evidenced by previous drilling
"High grade bedrock intersections achieved at East Mandilla including
1m @ 14.58g/t Au
1m @ 9.23g/t Au
1m @ 13.98g/t Au[/B]"
As I mention earlier on, Mandilla is actually 2-5kms East of
RMS's Wattle Dam gold operation, a quick histroy lesson on RMS, shows that it too was developing its Wattle Dam gold mine as a simple cash cow project, ie it was never meant to be a company maker, however some deep holes below the base of the open pit operation intersected some amazing hits of gold
So given the proximity of Manidilla to Wattle Dam (ie 2-5kms) and given the fact that in the past AAR has had the following drill intersections at Mandillia
a spectacular result of 3m @ 250.07g/t Au (inc. 1m @ 739.76g/t Au).
This exceptional intersection is accompanied by other significant intersections
such as 1m @ 13.2g/t Au, 1m @ 11.2g/t Au, 1m @ 10.17g/t Au and 1m @
6.7g/t Au at depths of only 16 to 19 metres below surface. 3m @ 71.82g/t Au (inc. 1m @191.75g/t Au),
2m @ 38.95g/t Au, 2m @ 9.15g/t Au and 1m @ 11.8g/t Au
And these were all shallow holes, I firmly believe the
potential exists for deep drilling at Mandilla to uncover a
possible high grade gold section that would transform Madilla into the Jewel of AAR's projects, as it did with Wattle Dam to RMS.
In any event, the cashflows generated for this project should ensure that for the foreseable exploration future no fund raisings (ie Dilution) will be required.
Koongie VMS style Base Metals, 100%, W.A.
JORC 4.7Mt's@ 5.2%Zn + 1.2%Cu + 0.8%Pb + 30g/tAg
This project is made up of 2 parts, 1 appears to be shallow enough to be open pittable, the other which appears to be the bulk would best be accessed via underground mining.
The company has been undertaking metallurgical testing as well as Pre-Feasibilty Studies on the project.
To highlight the value of these VMS style deposits, the company has put a comparison of Koongie to other deposits and I believe the deposit is easily comparable to
TZN's Angas or PDZ's Prairie Downs
Also the company has now announced an
In-Situ value of $1.2Billion for Koongie, now the usual rule of thumb is to give a company a 10% EV (Enterprise Value) of the total IGV (In Ground Value) or In-Situ value of the deposit,
@ 10% = $120m however I do acknowledge there are some metallurgical/processing risks with Koongie and will thus
discount this by 50%
This still gives an EV of $60m = 12c
The deposit also has a very exciting Colbalt potential as evidenced by the following drill hits
6.2m @ 2.14% Cu, 462g/t Ag
41.6m @ 10.89% Zn
29m @ 0.6% Cu 621g/t Co
42m @ 0.7% Cu, 1.76%Pb, 15.68%Zn, 146ppm Co, 109g/t Ag (125 - 169m)
13m @ 1.93% Cu, 1.81%Pb, 13.46%Zn 143ppm Co, 146g/t Ag (178 – 191m)
9m @ 0.56% Cu, 5.3%Pb, 7.65%Zn, 126ppm Co, 104g/t Ag (206-215m)40.1m @ 1.31%1.31%Pb, 4.89%Zn, 154ppm Co, 85g/t Ag (245.9 – 286m)
18m @ 0.41%Cu, 1.66%Pb, 5.59%Zn, 20 ppm 65g/t (293-311m)
Victoria Downs Zinc/Lead Base Metals, 100%, W.A.
The company continues to announce an
exploration target of
50Mt's-100Mt's@10% Zinc
Now I don't know about you, but I don't think the guys running this company are rampers, if anything they're too quiet and say too little, so for them to have this target says to me there is a good chance they may have something big at Victoria Downs,
Now
50Mt's-100Mt's@10% Zinc would be
worth $12B- $24B Insitu at current prices,
however it is just that a target
I think
$5m-$10m exploration upside is fair to price into AAR's share price
Feysville Gold/Nickel, 100%, W.A.
The Feysville Project consists of all mineral rights attached to two mining leases located 16km SSE of Kalgoorlie. The project is situated in the geological / structural corridor, bounded by the Boulder Lefroy Fault that hosts the world class deposits of Kalgoorlie and St Ives as well as other substantial deposits in the New Celebration, Kambalda and Hannans
South areas. The project also contains an extensive strike length of an ultramafic unit which may correlate with the ultramafic horizon that hosts nickel sulphide deposits at Kambalda 30km to the south.
Pinnacles Gold, 40%, W.A.
The wholly owned exploration licence of 4 sub-blocks is located immediately east of the Pinnacle workings 20km east of Cue. The area is interpreted to contain portion of the felsic unit that hosts most of the mineralisation at the Tuckabianna mine. Alloy Resources Limited may earn a 60% interest by expenditure of $150,000 over a three year period.
Valuation
Cash = $9.5m = 2c (approx)
Mandilla East JORC = $5m = 1c
Mandilla bonaza exploration upside = $5m =1c
Konngie @ 5% EV (ie discounted by 50% of Mkt Norm) = 12c
Victoria Downs potential $5m - $10m = 1c-2c
Total = 17c - 18c
Now
I am not a financial advisor and this is not a formal valuation or anything, its just my opinion, but at under 10c AAR seems cheap, if they bring Koongie in it could be worth many multiples of the current share price, gold is strong and this ensures profitability for Mandilla East (albeit less than Mandilla West)
The exploration potential of Mandilla and Victoria Downs is large, especially Victoria Downs
Most important for me, the company has succefully mined Mandilla and generated strong cash flows,
as a result they have not had to dilute the capital of AAR with SPPs or placements