Independent investment research house RaaS (Research as a Service) has flagged a bright future for nickel-cobalt play Galileo Mining (ASX: GAL) citing significant potential at its Norseman cobalt project in Western Australia.
Despite Galileo Mining currently trading at 16.5c, largely due to cobalt price uncertainty (which has dipped from highs of $US94.50/kg twelve months ago to current price of US$29/kg), RaaS has flagged a risk-adjusted DCF valuation of 36c/share (30c ex cash and corporate costs) on the stock and a Net Asset Value (NAV) of A$43 million.
RaaS notes the current share price understates the potential JORC resource upgrade and progress that can be delivered at its wholly owned Norseman project over the next six months.
In terms of positives, RaaS believes there is potential for Galileo to consider a smaller scale, higher grade, shorter-lead time development than modelled with resource potential significantly expanded on continuing positive exploration outcomes.
However, the negatives are that capital, operating and financing assumptions potentially being higher and more dilutive than modelled while timing of start-up could be later than modelled, particularly given the still early nature of the evaluation program.
Another risk is the cobalt price remains significantly lower than has been modelled for the Norseman project through the medium to long term.
Norseman is the Company’s most advanced project with a new JORC complaint cobalt resource at Goblin prospect boosting the global resource base at Norseman to 25.1Mt @ 0.11% cobalt (at a 0.06% cobalt cut-off) for 26,600t cobalt and 122,400t nickel and further drilling planned at Mission Sill and testing of further exploration targets on the horizon.
Meantime, anomalous nickel and copper results have recently been returned from aircore drilling at Galileo Fraser Range drilling campaign.
Aircore drilling at the Lantern prospect has returned best assay results of 21m at 0.05% nickel and 0.04% copper from 63m, 16m at 0.06% nickel and 0.02% copper from 63m and 6m at 0.04% nickel and 0.05% copper from 63m.
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