🕐28.01.13 - 10:27 Uhr

FERREX, IRON & MANGANESE IN AFRICA - FINNCAPS INITIATION COVERAGE WITH A 10.
4P TARGET PRICE (512% INCREASE TO CURRENT SP OF 1.7P)



Please see FinnCap’s initiation coverage on Ferrex Plc with a 10.4p target price (current sp 1.7p). Ferrex offers exposure to a portfolio of iron and manganese exploration and development assets in South Africa, Togo and Gabon.

The Malelane iron project supports around 80% of FinnCap’s target price, although it expect this to reduce when it’s able to assign a value to the assets in Gabon once exploration begins.
- FinnCap has derived a valuation for Ferrex using DCF methods for the more advanced projects and a nominal value for the other assets.

It’s calculated an unrisked value for Ferrex of £147m, equivalent to 19.1p per share.

FinnCap has then applied a subjective risk discount where appropriate to arrive at a target price of 10.4p per share. - In the near term, FinnCap see most of the upside coming from the newly acquired Mebaga project in Gabon.

If the historic resource and exploration target of 20 million tonnes grading 60% iron can be confirmed, this has the potential to add transformational value to the company. - The stock has started to react positively to recent newsflow and improving sentiment within the sector.

However, the present price is still well below the 12-month high of 3.625p, and FinnCap’s target price. Kindest regards Felicity [finnCap]
Monday 28 January 2013 Company Note
Ferrex* - Initiation of coverage (1.7p) FRX – CORP – TP: 10.4p.

– Market Cap: £10.8m Ferrex offers exposure to a portfolio of iron and manganese exploration and development assets in South Africa, Togo and Gabon.

The Malelane iron project supports around 80% of our target price, although we expect this to reduce when we are able to assign a value to the assets in Gabon.

We initiate coverage with a 10.4p target price. Martin Potts 020 7220 0544
[Download Report] [Institutional Sales] Please see important disclosure and disclaimer in the research report. 60 New Broad St London EC2M 1JJ Tel: 020 7600 1658 Fax: 020 7600 1659 Email: © finnCap 2011. www.finncap.com







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