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Tuesday, 21 August 2012
Mackie Research says Rathdowney Resources poised to benefit from zinc shortfall
Rathdowney Resources (CVE:RTH) was mentioned in a new report issued by Mackie Research Capital into a forthcoming zinc supply shortfall expected around 2014.
Mackie Research has initiated coverage of Rathdowney with a "Speculative Buy" rating and a 12-month target price of $1.25 per share saying that "...at current levels, the stock offers good value."
"We see additional upside past $1.50 per share as the Olza project moves through feasibility and expands the resource further, and as the company makes a deal for the Pomorzany smelter," Mackie Rsearch analyst Matt O'Keefe wrote in the note.
According to the report, "amongst the base metals, zinc is staging for its day in the sun due to very strong fundamentals, growing demand, and stagnating supply". Mackie Research said that central to this thesis is the significant amount of supply coming offline within the next two years, creating a shortfall that should become quite material by 2014.
Rathdowney Resources was amongst five zinc-levered explorers/developers that "show excellent value in the base metals space" and offered a number of near-term catalysts that should drive their stock prices up in 2012/2013.
"As a basket, this collection of top names offers good potential for near-term production, attractive valuation, take-over potential, and re-ratings as they move past exploration, development, and production milestones," the Mackie Rsearch analyst wrote.
Rathdowney Resources is building out a classic Mississippi Valley deposit within the zinc orefields of southern Poland.
Its Olza project is strategically located close to the operating Pomorzany mill and mine, which is near depletion and in search of new ore or a new owner.
"Rathdowney’s project stands out for its ease of access, established mine infrastructure, and proximity to markets. As part of the Hunter Dickinson group of companies, Rathdowney has strong marketing, financial and legal resources to draw upon," Mackie Research's O'Keefe wrote.
"The experienced management team, with the strong financial and technical backing by Hunter Dickinson is well on its way to achieving the short-term goal of a resource update by the end of 2012.
"The strategic location in an established zinc-lead district provides easy access and key infrastructure and the opportunity to acquire an operational mill and tailings site that could provide a fast and efficient way to bring new resources at Olza into production with significantly lower capex than going with a greenfields operation."
The Mackie Research report also mentioned Trevali Mining (TSE:TV), Canadian Zinc Corp. (TSE:CZN), CHieftan Metals (TSE:CFB) and Foran Mining (CVE:FOM).