Astaire reflects on Baobab Resources’ Tete project in light of strengthened iron markets

In a note to investors, Astaire Securities highlighted that Baobab Resources (AIM: BAO) is positioned to take full advantage of the recent strength in iron markets and the expectation of sustained prices from Chinese demand. The stockbroker noted that the junior exploration company is partway through a two-year development plan at the Tete iron-vanadium-titanium project in Mozambique, which has the potential for a large resource.

Baobab resumed drilling at the Tete in March, focusing on the Chimbala prospect which comprises the central zone of the 8km long Massamba Group trend. The company said that drilling aims to improve confidence in its exploration target of 400-700Mt (million tonnes) estimated in 2009.

Astaire commented that Baobab’s management will be looking to increase the resource size and to achieve average magnetite mass recovery of c.25%, and that the subsequent results from the drilling program will be key.

Additionally, the broker highlighted that low-tariff electricity and cheap locally produced coking coal, make the Tete Project an attractive location for an integrated steel facility. Consequently, Astaire believes that the Tete project offers excellent M&A potential.

http://www.proactiveinvestors.com.au/companies/news/6490/astaire-reflects-on-baobab-resources-tete-project-in-light-of-strengthened-iron-markets-6490.html