Iron mineralization could bump net asset valuMoly Mines' iron mineralization could bump net asset value
A high-grade iron deposit at Moly Mines Ltd's (MOL/TSX) Spinifex Ridge molybdenum project could provide upside to the company's net asset value, according to Wellington West analyst Leonie Soltay.
On Monday, Moly Mines announced they had returned samples of high-grade iron mineralization, grading above 60% within 500 metres to 2.5 kilometres of the proposed Spinifex open pit.
"While the company continues to advance the flagship Spinifex Ridge molybdenum project, yesterday's announcement of high-grade iron mineralization provides opportunities for future expansion and diversification for the company," Ms. Soltay told clients in a note.
She added that the company's net asset value could increase by $6.04 per share as a result of an economic iron deposit.
Of course, first things first and Moly Mines Ltd. must now seek approval for an iron drill program to assess the quality and size of the mineralization. The initial program will target the identification of up to 5-million tonnes of iron ore.
As for the Spinifex Ridge project as a whole, the analyst said financing and permitting is expected to be completed by the first quarter of 2008 in order to meet target production by late 2009.
The project is forecasted to produce approximately 24 million pounds of molybdenum or 5% of global production and 27 million pounds of copper per year.
Ms. Soltay maintained her "buy" rating and left her $6 price target unchanged.
David Pett