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Kasbah Resources: Achmmach becomes a strategic tin asset, broker raises target price

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KASBAH RESOURCESFull Kasbah Resources profile here

Kasbah Resources (ASX: KAS) is an advanced explorer and developer purely focussed on tin. Kasbah’s main focus has been to progress the Achmmach Tin Project in Morocco, having established a robust underground JORC resource.

Recent drilling results indicate that Achmmach is rapidly transforming into a asset with considerable potential for a substantial underground mine to be developed. Kasbah has built a presence in Morocco with strong relationships with Morocco’s Mines Department and the local Moroccan community.

Kasbah Resources: Achmmach becomes a strategic tin asset, broker raises target price

Friday, April 13, 2012 by Proactive InvestorsOngoing success at Kasbah Resources’ Achmmach Tin Project has prompted a broker to revise its 12-month target price upwards to A$0.55 and maintain a buy recommendation.Ongoing success at Kasbah Resources’ Achmmach Tin Project has prompted a broker to revise its 12-month target price upwards to A$0.55 and maintain a buy recommendation.

Kasbah Resources (ASX: KAS) has been fundamentally changed, according to a broker, following the recent milestone announcements of a 150% increase in the JORC Resource at the Achmmach Tin Project in Morocco and Toyota Tsusho acquiring a 20% interest in the project.

As a result the broker has increased its 12-month price target by 14.6% to A$0.55 and maintained a buy recommendation.

The following is an extract from the report.

Achmmach becomes a strategic tin asset

Kasbah Resources (Kasbah) has made two major announcements in the past fortnight that have fundamentally changed the company and its Achmmach Tin Project .

These announcements were:

– Toyota Tsusho to acquire a 20% interest in the project for a total cash consideration, which we currently estimate as A$28 million, and

– A 150% increase and upgrade of JORC resources at Achmmach to 135,000 tonnes contained tin.

Toyota Tsusho is a subsidiary of Toyota Group and Asia’s foremost tin trading house and among the largest trading companies in the world. Toyota Tsusho trades approximately 8% of the global tin market and over 50% of all tin consumed in Japan.

The investment by Toyota Tsusho fundamentally underwrites the project not just financially but as an economic and valuable asset to the tin industry worldwide. We view it as a major tick of approval for the project.

The resource increase and upgrade announced last week was exceptional. It is rare in the resources industry to see not only an increase in tonnes but also in grade. The new resource is more than double the tonnes of the previous resource and this is compounded by a more than 12% increase in the grade of tin.

With 135,000 tonnes of contained tin in a resource of 14.6 million tonnes at greater than 0.9% the Achmmach Tin Project is now a top 5 tin resource worldwide with one of the highest grades. We contend this has made the project a strategic asset in the tin industry and therefore not only has a quantifiable value but also a strategic value for tin players such as Toyota Tsusho.

Overall we were surprised on the upside by the size of the increase in resource and following our recent site visit expect the resource at the project to continue to grow over the next 12 months as 5 drill rigs continue to operate around the clock.

The pre-feasibility study is due to be released in mid-April and a further resource upgrade is due in August.

Our base case valuation of Kasbah has been revised following the Toyota Tsusho deal and along with the resource increase. Our base case has increased by 28% to $0.41 per share (previously $0.32) with an upside valuation of $0.67 per share (previously $0.61).

We maintain our Buy recommendation for Kasbah with a revised 12-month price target of $0.55 per share (previously $0.48).

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