🕐18.01.11 - 01:00 Uhr
Exco Resources - Fox Davies Capital - Buy Recommendation - Upgraded Price Target: A$0.88
17 January 2011
Exco Resources (EXS AU)
BUY Price: A$0.52 Target Price: A$0.88
Market Cap (M): A$178.4 EV (M): A$168.4
Event
Exco has announced a resource update for the Vertigo deposit that has
resulted in a 50% conversion from Inferred to Indicated resource for a
total of 2.45Mt grading 1.04g/t containing 82,100oz of gold.
Comment
The last time the resources at Vertigo were calculated was 2007 and at that
time the Inferred Resource was 2.53Mt grading 1.07g/t and containing 87k oz
of gold.
There are now 1.22Mt of Indicated Resource grading 1.18g/t
containing 46.2k oz of gold.
However, theres a further 1.229Mt of Inferred
Resource grading 0.91g/t and containing 35.9k oz of gold.
Overall, the
total resource figure is little changed but the degree in confidence in the
figures has increased with the upgrade from the Inferred to the Indicated
category.
A Mining Lease application for the Vertigo deposit has been submitted to
Primary Industry and Resources South Australia for approval.
The approvals
process is expected to be completed through the second quarter of 2011.
Metallurgical column testwork is ongoing and will be completed early in the
second quarter 2011.
The reserve definition and detailed pit designs will
be undertaken on completion of the metallurgical testwork.
Final mine
scheduling and planning is targeted for the second quarter of 2011 in line
with the mining lease approval.
Although the quarterly figures were not presented, the accumulative figures
for the year to date until the 31 December were quoted and by subtraction
we calculate that the December quarter was the best one to date for White
Dam.
On a 100% basis, 22.84k oz of gold were produced, some 30% more than
in the September quarter, partly due to a modestly higher grade and a
higher tonnage was also treated.
This is indicative of an annual production
rate of around 80,000oz on a 100% basis.
Whilst the operating costs were not released, it was stated that operating
costs remain well below A$600/oz and the average selling price has been
A$1,363/oz.
The new target price incorporates the new copper, and gold prices and a
revises A$ exchange rate that were published in the daily on Tuesday.
Recommendation
We retain the Buy recommendation with an increased target price of
A$0.88/share, formerly A$0.85/share.
To download the full note, please click here:
http://www.uploadlibrary.com/foxdavies/ExcoFlashnote17Jan2011.pdf
Fox-Davies Capital Contact Details
Research: +44 (0)20 3463 5030
Sales: +44 (0)20 3463 5050
Media Enquiries:
James Harris
Professional Public Relations
Tel: + 61 (0) 8 9388 0944
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