RFC Ambrian Comment: Metal Tiger plc

FROM THE BROKING DESK

METAL TIGER* — Major Drilling Campaign at the T3 Dome in Botswana

Metal Tiger (MTR : LN | 2.2p | US$33.0m) has announced the start of a major drilling campaign at its T3 Dome complex in Botswana, which up to this point had been largely unexplored. This follows the interpretation of a successful airborne electromagnetic geophysics programme that identified seven target dome structures to drill over a 1,000km2 area. Approximately 60 diamond drill holes will be drilled in Phase 1. The targets are suggestive of similar structures to those seen at the T-Rex Dome that underlies the T3 deposit, with each dome generally >5km long and 1-2km wide. Any additional discoveries will complement the resource update issued last August (36Mt @1.14% Cu and 12.8 g/t Ag for 409,000t of contained copper and 14.8Moz Ag).

Metal Tiger announced the results of a positive pre-feasibility study into the development of the T3 Project at the end of January. It owns a 30% JV interest in this, with the ASX-listed MOD Resources owning the remaining 70%. The JV now aims to complete a definitive feasibility study on the project by the end of 2018, with a view to taking a decision to mine by the end of the year. The PFS produced a ‘base case’ operation to produce 203,000t of copper over a nine-year life, with attractive AISC of US$1.36/lb. It also pointed to a possible expansion case of increasing copper production from 23,000tpa to 32,000tpa in Year 4, raising the project NPV from US$281m to US$402m with additional capex of just US$37m.

We maintain our Buy rating and target price of 3.6p. We updated our valuation for the actual PFS parameters and increased our long-term copper price assumption by 10% from US$5,995/t to US$6,612/t in this piece. We consider that the results of the PFS reflect an interim stage of the project’s development and note that drilling has been ongoing since August and that a resource update is planned for 2Q18. We also observed that drilling of many high-quality regional exploration targets was planned to be undertaken this year and that this work has now started.

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