Kasbah Resources receives buy recommendation and $0.41 price target

Kasbah Resources (ASX: KAS) has received a buy recommendation from Ord Minnet with a 12 month target of $0.41, which is around double the last traded price of the company.


The following is an extract from the Ord Minnet report.

Kasbah Resources has announced a number of assay results from drilling of the Gap zone at the Achmmach Tin Project in Morocco. Two sets of results have been released in consecutive weeks and with 5 operating drill rigs on site we expect drill results to be announced regularly up to a resource increase in March.

Three holes AD108, AD116 and AD117 have extended mineralisation further into the Gap zone. These holes are 80m along strike from the outstanding results released last week (11 January 2012) and 240m along strike from the existing JORC resource of 7Mt @ 0.8% tin.

Results include 26m @ 0.96% tin from 249m, (including 10m @ 1.63% tin from 249m) in hole AD108, and AD116 with 31m @ 0.63% tin from 259m, (including 7m @ 1.60% tin from 276m).

The results are quickly on the back of outstanding holes AD115 and AD112 (released last week) with respective intersections of 38m @ 1.63% tin and 43m @ 2.01% tin. These intersections are the best results to date from the Achmmach tin project.

The mineralisation is showing good continuity through the last two reported sections and is accompanied by above average tin grades in both sections.


Summary

In summary the results announced over the past week have significantly enhanced the likelihood of a sizeable resource increase which is due in March.

Furthermore the tin mineralisation intersected is becoming more prevalent, such as hole AD117 where tin assays were reported over various intersections, spanning 180 metres down hole. Importantly the tin tenor of multiple intersections is well above the current resource grade of 0.8% tin.

We remain very positive on the outlook for tin in general and Kasbah in particular. OML’s base case valuation of Kasbah has been revised to $0.30 per share (previously $0.43) with an upside valuation of $0.53 per share (previously $0.59).

The valuation changes incorporate changes to our project capital estimates as well as changes to forecast equity capital requirements and associated project finance.


Buy recommendation maintained

We maintain our Buy recommendation for Kasbah with a revised 12-month price target of $0.41 per share (previously $0.50).

Originally published at: http://www.proactiveinvestors.com.au/companies/news/24513/kasbah-resources-receives-buy-recommendation-and-041-price-target-24513.html