Cassini Resources cracking the Musgrave code: Ord Minnett Research

Cassini Resources Ltd (ASX:CZI) recently unveiled a positive pre-feasibility study (PFS) for the Nebo-Babel deposits within the West Musgrave Project.

The project is a joint venture between OZ Minerals Limited (ASX:OZL) (70%) and Cassini (30%) in Western Australia.

Ord Minnett Research has initiated coverage on Cassini with a speculative buy recommendation and a 30 cents per share target price.

Following is an extract from Ord Minnetts report:

We initiate research coverage on CZI with a Speculative Buy rec and A$0.30/sh target price. Weve taken a closer look at the recent Pre Feasibility study result for the West Musgrave nickel/copper project (30% JV with OZL) and now expect this to be OZLs next development. We conservatively value CZI at A$137m which offers a compelling risk reward compared to their A$34m Enterprise Value.

PFS Cracks the Musgrave code[hhmc]

Recent PFS result for the 30% JV with OZL appears to have cracked the economic and technical case for unlocking the West Musgrave province. We believe the update should give investors cause to rethink their assumptions around the project as it now boasts:

1) Significantly derisked (metallurgy, power, logistics).

2) Increased scale with a 26 year mine life (vs 8 previously).

3) Improved economics with 1st quartile cash costs (AISC ~US$2/lb Ni in con), 20% IRR, NPV of A$800m, producing 22ktpa of Nickel and 28ktpa of Copper annually.

Plenty of upside & Optionality[hhmc]

• Optimise High Grade: the implied mine plan does not appear to utilise the initial ~30mt of high grade ~0.65% Ni/Cu ore. We believe this factor could be holding back the lustre 6 year payback (aside from the $1bn capex) to 2-4 years (+NPV)
• Ni Concentrate Payabilties: OZLs 71% assumptions appear conservative in light of its high product quality and what peers get. Every +1% adds 2.5¢ to our valuation. Further, PGM/Co credits look underwhelming at 0-12.5%) and could cut costs by a further 11% if brought in liRead More – Source
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