Broker FoxDavies retains its "hold" recommendation on gold and copper company KEFI Minerals
KEFI Minerals’ (LON:KEFI) due diligence work on the Tiouit gold-copper mine and tailings project in Morocco could lead to a re-rating for the shares, according to Fox-Davies Capital, which currently has a ‘hold’ recommendation for the stock.
The broker says it will be looking for results of the due diligence as soon as possible as a possible-trigger for the re-rating.
In a note today, the broker highlighted that last week’s deal to sell the Artvin project signalled KEFI’s intent to withdraw from Turkey and focus on North Africa.
And last month, KEFI entered an exclusivity agreement over Tiouit as a pre-cursor to acquiring the Moroccan project.
Fox Davies analyst Peter Rose describes the Tiouit agreement as “interesting”, adding: “Although the potential resource is small (we estimate, based on the RNS, that there is approximately 50,000 oz of gold and another 8000 oz of gold equivalent silver), it has the potential to generate cash in the short term which can be used for exploration of its other assets.”
The analyst added: “Tailings re-processing projects such as these can be very profitable because operating costs in such projects are generally low due to the mining and crushing already having been done. Also, grades are often higher than historical records indicate.”
KEFI paid Moroccan company Roche Invest SARL US$250,000 for five months of exclusivity over Tiouit and an associated tailings retreatment project.
During the period, KEFI will conduct a definitive feasibility study to evaluate the retreatment of gold and silver and initiate a pre-feasibility study on restarting underground mining operations.
Depending on the outcome of the studies, KEFI will decide whether to enter a joint venture agreement with Roche over either or both projects.
Rose said: “We retain our “hold” recommendation on the company but will be looking to the results of the due diligence as a possible trigger for re-rating the stock.”
http://www.proactiveinvestors.co.uk/companies/news/32267/kefi-minerals-due-diligence-in-morocco-could-lead-to-re-rating-fox-davies-32267.html
