Broker places $1.15 price target on Resource Generation

Australian stockbroker Shaw Research has released a company report on Resource Generation (ASX: RES).
It placed a 12 month share price target of $1.15 on RES.
Shaw said, "plans to develp the Boikarabelo coal project in the Waterberg area of South Africa has progressed following completion of a prefeasibility study (PFS).
Planned output is now 11mtpa of ROM coal producing 4mtpa of domestic and 3mtpa of export thermal coal by 2013.
The larger export tonnage, higher export coal prices and reduced capex have considerably improved our project NPV to A$873m (100% basis).
RES is hopeful of obtaining coal contracts and mining rights within 12 months so that mine construction can commence.  Completion risks remain significant but the stock offers considerable upside for the patient and risk-tolerant investor.   Reserves of 603mt and resource of 1.7bt have been identified and both categories are expected to increase.  Listing on the Johannesburg stock exchange is planned by mid-2010.
Shaw values RES's 74% of Boikarabelo Project at $646m, equivalent to $3.86/share, unfunded and based on the company's preliminary feasibility (PFS).
The broker said its target price of A$1.15 per share has been derived using a 75% discount to account for risk relating to timing and possible production and cost variations prior to completion of a BFS.  The value of cash and land has also been taken into account.
The target valuation was in anticipation of likely significant share price appreciation assuming completion of key milestones relating to offtake contracts, obtaining mining rights and arranging adequate funding for project development.

http://www.proactiveinvestors.com.au/companies/news/5991/broker-places-115-price-target-on-resource-generation-5991.html