Daily ShareChat: Bathhurst Resources

By Jenny Ruth

Sunday 15th May 2011

Coal miner Bathurst Resources's decision to buy the neighbouring Brookdale property for US$12 million (NZ$15.2 million) plus 15 million shares and a life-of-mine royalty makes sense and provides strategic value without materially changing the project economics, says First NZ Capital.

Bathurst raised $55 million from an institutional placement at $1.05 per share earlier this month to pay for Brookdale and to provide funding for exploration.

"A key advantage Bathurst has over other development coal companies is the ability to use existing port/rail infrastructure," the broker says.

"The Brookdale acquisition provides potential operating synergies while keeping potential new infrastructure users out of the area."

Brookdale's most interesting feature is the three existing permits for underground and open-pit mining as well as a licence for the stockpile area and trucking permits, the broker says.

"If Bathurst can get access approvals there is potential to begin mining straight away." However, environmental approvals remain the crucial catalyst and risk.

First NZ Capital values Bathurst shares at $2.05. "Significant value remains despite the recent run in the share price and we see potential for further share price appreciation to our $1.50 per share target price and beyond as Bathurst moves towards first productions, possibly in calendar year 2011 (pending approvals)," the broker says.

Rating: Outperform

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