Could junior MOD Resources be about to fly on takeover speculation?

UPDATE:  MOD Resources has requested a trading halt pending an announcement “regarding a capital raising” and to respond to the Sandfire Resources speculation.

Copper producer Sandfire Resources has confirmed media speculation that it approached junior MOD Resources “exploring a potential combination of the two companies”.

Cashed-up mid-tier miner Sandfire had contacted MOD (ASX:MOD) with a takeover offer which was far greater than the explorer’s current $55m market cap, according to the Financial Review.

MOD shares are temporarily paused pending an announcement of their own.

The MOD resources share price — which has been hammered over the past year — was fetching just 22c pre-open Monday.

Now with full ownership of the T3 copper-silver deposit and processing plant in Botswana, MOD believes it has laid the foundations to grow into a mid-tier copper producer.

A ‘base case’ T3 pre-feasibility study released January 2018 estimated annual free cash flow of $101m pre-tax, producing 23,000 tonnes of copper and 690,000 ounces of silver each year over an initial 8.8-year mine life.

Miners usually undertake up to four different types of studies to determine whether or not a resource can be mined economically.

These are – in order of importance — scoping, preliminary feasibility (PFS), definitive feasibility (DFS) and bankable feasibility (BFS).

A definitive feasibility on developing the $US155m T3 project is due in March.

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