Analyst comments, maintain $3.00 targetCZQ-TSX:
.77
Target: $3.00
Update on Economic Scoping Study
* Continental Precious Minerals provided an update to the economic scoping study on its MMS Viken project in Sweden. The Company has set a timeline with a target of releasing the results of the study by the end of 2010.
* Focusing only on uranium, vanadium, and molybendum, bench-scale flotation, leaching, and roasting tests will be performed by EGA Engineering and Process Research Ortech to determine whether the preliminary recoveries achieved by Ortech in its preliminary tests are reproducible in a process plant environment. Results from this testing are expected by August 2010.
* As we have noted in the past, management has indicated that Alum Shale metallurgy "is complex", and that it does not respond well to pre-concentration processes such as flotation. Consequently, "the application of hydrometallurgical techniques and the integration of many unit operations to produce marketable products and environmentally acceptable residues" will be necessary.
* Upon completion of the tests, P&E Mining Consultants are expected to have the necessary information to complete an economic scoping study.
* The metallurgy of the deposit is challenging, and the ability of Continental to economically extract the three metals on a production scale will be key. That said, on a relative basis, CZQ continues to represent a deep value, as it ranks first in our Enterprise Value to In-Situ Pounds in the Ground Relative Valuation Model ("EV/LB RVM") among all uranium-focused companies with known resources. We reiterate our SPECULATIVE BUY recommendation and target price of $3.00 per share.