YTC Resources: Hartleys places $0.89 price target, maintains "Buy"

Following recent high grade drilling results at Nymagee, Hartley’s Research have written a new broker report on YTC Resources (ASX: YTC) and have placed a $0.89 share price target, maintaining its "Buy" recommendation. Below is an extract of the report.

Company data

Share Price (last): 0.570
Valuation: 0.78
Price Target: $0.89
Issued Capital: 248.4 million
Market Cap: $141.6 million
- fully diluted: $145.6 million
Cash (est): $$28.6 million
EV: $113.0 million

Attractive Open Pit Mining Opportunities at Nymagee

YTC Resources (ASX: YTC) continues to intersect significant copper mineralisation from shallow drilling at the northern zone, Nymagee project (YTC 90%), located ~100km southeast of Cobar, NSW. Some of the latest drill results include supergene-oxide and fresh copper mineralisation from the Main Lens and Footwall Zone positions with some very high-grade copper grades up to 6.7% Cu reported.

The extensive shallow drilling program (~7,000m) is designed to allow for the estimation of a shallow copper resource, with the results providing further encouragement that YTC will be able to establish an open pit operation prior to the development of the higher grade underground mine.

To date, the company has completed close to 5,000 metres of drilling with three rigs drilling on site providing a steady flow of news.

Shallow copper at good widths and grades continuing to extend

The latest drilling has returned very strong copper results over good widths within a broad envelop of copper mineralisation at shallow depths. Some of the high-grade copper results reported include 10m at 6.7% Cu and 13g/t Ag from 15m; 10m at 4.3% Cu, 16g/t Ag and 0.27g/t Au from 102m; and 17m at 2.1% Cu and 12g/t Ag from 149m.

The Nymagee copper system remains open at depth and along strike, with the copper mineralisation continuing to extend in the northern zone.

The company has also intersected a shallow zone of oxide gold enrichment which has not been previously identified at Nymagee with 2m at 3.47g/t Au, 1.0% Cu intersected from a depth of only 5m. The potential for shallow gold mineralisation needs to be evaluated with YTC proposing follow-up work.

Still early days for deep drilling but broad copper intersected

YTC has completed its second deep diamond drill hole at Nymagee below the historical mine to test the continuity of the Nymagee copper system at depth.

The second hole drilled reached the targeted position and visual logging estimates a broad zone (~100m) of copper mineralisation (<0.5%) from ~450m down hole; assays are pending.

The intersection of broad copper mineralisation is encouraging, however, it would appear the lode positions for the blind high-grade copper lodes found vertically above are yet to be intersected but assays are required to confirm.

The third deep drill hole is underway and has been position ~50m north of the first hole with over 450m of strike to test for mineralisation. It is still early days for the deep diamond drilling program with first assays expected in ~2-3 weeks.

Nymagee still evolving into a significant copper deposit

The shallow high-grade copper mineralisation intersected in the northern zone, provides further encouragement for a significant shallow copper resource that will be extractable via open pit mining methods.

The Nymagee deposit remains open (at depth and along strike) implying good resource growth to come, with a maiden resource release expected in late September 2011.

The Hera DFS release is still a few weeks away but we expect that the start of construction of the Hera decline will be before the end of the year. We have a price target for YTC of 89cps, and we maintain our Buy recommendation.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/19017/ytc-resources-hartleys-places-089-price-target-maintains-buy-19017.html