Alecto Minerals

Alecto’s acquisition of the Matala and Dunrobin gold mines was a genuinely transformational transaction. Alecto is now a Zambian focused mine developer with
a 760Koz decent grade resource and a 25 year mining lease. Its West African projects are no longer the operational focus and will be progressed by JV
partners such as Randgold. The plan is to build an oxide mining operation with average production of 28Koz per annum over 5 years. Management expects the
mine life to double, we believe 250Koz of production over 8 years is a reasonable target, with potential for significantly more. Importantly management plans
to fund the mine with minimal new Alecto equity. Mining will be contracted-out, while c$15m of debt should be sufficient to fund the plant and other surface
infrastructure. Our valuation is based on a cashflow model of the 150Koz oxides start-up operation. We have also included G&A; costs and a 20% risk factor. We
calculate a 0.31p price target and recommend a SPECULATIVE BUY. – 22/07/16

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