Regency Mines’ (LON:RGM) resource increase, reported yesterday, for the Mambare project in Papua New Guinea, points to the potential upside of continuing exploration in the area, says Edison.
The new resource alone more than supports the current share price (1.85 pence), says analyst Charles Gibson, who added that the market appeared to ascribe no value to the significant potential resource upside – valued at 174 pence a share.
Regency yesterday unveiled a 67 per cent increase in the contained nickel resource compared to its maiden estimate at the end of April.
The new JORC inferred and indicated estimate is 162.5 million tonnes at 0.94 per cent nickel and 0.09 percent cobalt.
That compares to April’s 95.1 million tonnes at 0.96 per cent nickel, using the same cut-off grade of 0.6 percent nickel.
Gibson said the new Mambare resource was now valued at $57.1 million, equal to 2.8 pence a share for the company’s 50 per cent interest in the joint venture (with Direct Nickel).
Subject to financing for a drill programme, the analyst said he expected a significant upside to this resource estimate and noted that, to date, the company had drill tested only 2 sq km of the 80 sq km target (2.5 per cent).
Assuming the mineralised zone thickness is consistent across the plateau and the inferred grade of 0.94 per cent is also constant, Gibson said this could total 61 million tonnes of contained nickel, which Edison values at $2.4 billion.
Edison’s forecasts for Regency remain under review. – by Giles Gwinnett