SPEC BUY

  1. 1,452 Posts.
    Resource Weekly 22 May 2002
    G R AN G E S E C U R I T IE S
    B OND A ND STOCK B ROKERS

    Issued Shares (m) 49.4m
    Unlisted Options (m) 4.2
    Share Price $0.60
    Market Cap $32.6m
    Rolling 12 mth range $0.32 - $0.65
    NAV $0.91
    Valuation NAV $ 48.5m

    HER has numerous Australian gold projects including the prospective Gulgong JV in NSW targeting high grade quartz reefs and Cadia-Ridgeway style porphyry mineralisation. We foresee a substantial re-rating of the HER share price over the medium term with positive results from pre-feasibility and ongoing exploration at the Dairi Project to reach our initial price target of $0.90 per share.

    The recommencement of operations at the Coolgardie plant shall provide HER with sustained cashflow for ongoing exploration commitments in WA, NSW (at the Gulgong JV), Thailand and in Indonesia. Upon completion of the proposed clean up of IAX after shareholders meetings to be held in July, HER will be able to fast track a pre-feasibility study at Dairi which shall provide the medium term impetus for a re-rating of the HER share price to our initial target of $0.90 per share due to the quality of the project, despite sovereign risk doubts. HER have a total of $6.1m in cash which will include $3.5m from MPI for the rationalisation of the Coolgardie project.

    HER are currently in the process of acquiring control of its majority owned (73%) Canadian listed company International Annax Ventures (IAX) which controls 80% of the Dairi Project on the island of Samatra in Indonesia. The remaining 20% is held by PT Aneka Tambang, an Indonesian listed company with 51% Indonesian government ownership. The Anjim Hitam zinc-lead resource delineated to date totals 10Mt @ 15% Zn, 9% Pb &
    13g/t Ag and the area is shaping up to be of a world class potential with numerous exploration targets within an electromagnetic conductive zone with massive sulphide outcrop and anomalous rock and soil geochemistry. HER are preparing to take the project through a $5m feasibility study based on the Anjing Hitam deposit and are aiming to retain a full equity share of the project. Metallurgical test work on Anjing Hitam ore to date indicates 87% recoveries for zinc and 74% for lead.
    Herald Resources Limited

    HER have rationalised their 1.2Mtpa Coolgardie plant and exploration tenure in WA with MPI Pittston to form a 50:50 JV and are preparing to re-commission the operation in August 2002 to process 400,000tpa of JV ore and 800,000tpa from Mines and Resources Australia's White foil and Frog's Leg deposits, under a toll milling agreement. The JV is set to produce 50,000 ounces per year at an estimated cash cost of $377/oz. HER have taken 60,000oz of gold hedging at $606 per ounce. Ongoing exploration by MPI (operator and manager) shall test conceptual targets and the along strike extensions from the King Solomon and Brilliant mines as well as underground drill testing of the down dip and along strike extent of the Empress North high grade deposit (105,000oz).

    The Dairi Project is of world class potential with highly prospective exploration targets along strike within an EM conductor and zinc anomalous zone. HER have established a majority equity position in the highly prospective under explored Dairi zinc-lead project in Indonesia and are planning to progress the project towards development from initially the Anjing Hatim deposit over the next 2 years. HER are preparing to re-commission with MPI-Pittston the Coolgardie gold project in August 2002 for an equity share of production of 25,000 ounces per annum at forecast cash costs of $377/oz over 3 years.

    Speculative Buy



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