Rathdowney Resources (CVE:RTH) shares moved higher Tuesday as the zinc explorer starts to grab investors' attention, with more upside expected from the company's Olza project in Poland.
Its stock gained more than 6.5% to 49 cents on the TSX Venture Exchange this afternoon, up more than 11% in the last six months.
The Vancouver-based company was last month added to Dundee Securities' watch list for this year, with a buy rating and no set target price, citing further resource potential in Rathdowney's Polish properties.
Of note, the Dundee analysts say Rathdowney holds highly prospective land positions in "world-class" zinc mining jurisdictions in Poland and Ireland.
"The company's prospects are supported by substantial nearby infrastructure and easy access to smelting facilities," they take note, adding that Rathdowney also has a partnership with Teck Resources (TSE:TCK.B), which recently invested in the junior zinc play through a $350,000 non-brokered private placement. The companies had been cooperating in exploration efforts in Ireland.
Vancouver-based Rathdowney, which is associated with the Hunter Dickinson Group, has its main focus on its Olza project - a 150 square kilometre property in Poland. Olza is located within 20 km from the ZGH Boleslaw smelter complex, which hosts a concentrator and tailings facilities with additional capacity that Rathdowney could potentially benefit from.
The report also highlights that the Pomorzany Mine - the only major feed-source for Boleslaw - is scheduled to shut down in 2014, meaning that the refinery needs feed. The junior explorer could also benefit from the workforce that will be available when Pomorzany comes offline.
"Historic work in the area shows significant potential for a noteworthy lead-zinc discovery as the region has a long history of production from shallow sulfide deposits," Dundee says.
"Given that past production has been carried out using antiquated soviet-style methods, we believe that there exists a strong possibility for modern exploration and mining techniques to unlock considerable value."
Currently, Olza boasts an inferred resource of 21.2 million tonnes grading 5.88% and 1.54% lead, for a total of 2.75 billion pounds of zinc and 720 million pounds of lead. Rathdowney holds three exploration permits, on the Zawiercie, Rokitno, and Chelcho.
"We believe that this estimate is only a preliminary representation of the potential that RTH could realize at Olza," the analysts write, adding that the company last November released drilling results from Poland that were "impressive", with "some of the best grades and widths experienced to date".
Notable drill results included 27.3 metres of 7.2% zinc+lead in hole 147, 5.3 metres of 9.2% zinc+lead in hole 189, and 2.2 metres of 36.1% zinc+lead in hole 194
Dundee estimates that the company has roughly $8 million at its disposal, after current obligations are accounted for, and given Olza's capital requirements, the broker believes that Rathdowney will continue to raise funds as they are needed to progress exploration activities in Poland.
Goals for 2013 include about 20,000 metres of drilling to increase the confidence in the resource base for mine planning, and preliminary metallurgical testwork. Further environmental and feasibility work will also be a priority.
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