TNG Limited receives BUY recommendation from Old Park Lane Capital with A$0.27 price target

TNG Limited (ASX: TNG). The following is an extract from Old Park Lane Capital which has initiated coverage on TNG.

The short term price target of $0.27 by Old Park Lane Capital for TNG is over three and a half times the last traded price of $0.079.

TNG Limited (ASX: TNG) is a rapidly growing exploration and development company focused on the Northern Territory of Australia.

TNG has a multi-commodity portfolio of projects ranging from early stage exploration to pre-feasibility.

TNG’s flagship and main focus is the Mount Peake vanadium-titanium-iron deposit which is currently undergoing pre-feasibility with the focus on metallurgical test-work.

Mount Peake is the company maker

TNG discovered the deposit in 2008 and holds a 100% interest in the licence. Mount Peake is primarily a vanadium deposit, hosted by a large magnetite-rich gabbro body.

TNG has outlined a 139 Mt JORC resource at 0.29% V2O5 and is pursuing an exploration target of 500-700 Mt.

Metallurgy is the opportunity

Mount Peake could be enhanced by the development of a revolutionary new hydrometallurgical process.

The process promises to deliver significant capital and operating cost savings and higher vanadium recoveries over the usual salt-roast method. This is also the biggest risk for the project.

Infrastructure

The downfall of many new Australian projects is lack of infrastructure.

Mount Peake does not have this problem as the deposit is exceptionally well located with the “holy trinity” of power, road and rail on the project’s doorstep.

This represents a key strategic advantage for TNG over other potential producers.

Vanadium is used primarily (90 %+) as an alloy to strengthen steel

A new growth area for vanadium is use in batteries for electric / hybrid vehicles and for grid-scale mass energy storage.

Blue sky exploration upside

Long term option value is available through TNG‟s suit of early stage exploration and resource development projects.

These projects are largely being worked by JV partners who are ploughing exploration expenditure into the ground to earn in to TNG‟s assets.

Key catalysts

Include completion of the pre-feasibility study (Oct 2011), pilot plant test results for the TIVAN™ process (late 2011), JORC update (Q4), news on infrastructure opportunities and exploration results.

We initiate coverage on TNG Limited with a short-term target price of A$0.27 per share (fully diluted) and a BUY recommendation.

We believe there is material upside if TNG is successful in developing the project according to current plans and we have been highly conservative in our valuation.

We acknowledge that key news flow on metallurgical test-work or infrastructure may cause our target to be breached rapidly.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/17721/tng-limited-receives-buy-recommendation-from-old-park-lane-capital-with-a027-price-target-17721.html