Investors stand to triple their money in emerging WA iron ore junior CZR Resources, according to a new research report by experienced analyst Andrew Pedler of Matau Advisory.

Pedler values CZR, which owns the Robe Mesa project in the Pilbara, at 3c a share based on it shipping through Port Hedland. But he says the value rises to 4.5c in the event that its plan to ship through the closer port of Onslow is successful.

CZR is currently trading at 1.3c for a market capitalisation of just $40 million.

In his report, Pedler says that Robe Mesa is a low-cost, direct shipping iron ore deposit which, based on the pe-feasibility study, has potential to generate strong financial returns.

The PFS put the pre-production capital cost at A$51m and life-of-mine C1 cash operating costs at A$65/t, with total cash costs of ~A$72/t.

The PFS was based on an assumed conservative iron ore price of US$90/t, well down on the current benchmark price of around US$230/t.

Pedler says his initial modelling is based on the PFS assumptions, including the US$90/t price and shipment through the Utah Point facilities in Port Hedland, which is a 420km trucking distance.

“Since reporting the PFS, CZR discussions with the port of Onslow (trucking distance of 180km) have brought forward agreement between the Onslow Marine support base to consider shipping from Onslow,” Pedler says.

“The PFS assumes road haulage costs of A$35.10/t. Matau assumed the same unit haulage rate to Onslow, which gives a haulage rate of A$15.20/t, a marked saving.

“Based on the PFS inputs, Matau derived an unrisked discounted cashflow value of 3.7c a share and a 12-month price target of 3c a share.

“If the Onslow port consideration can be achieved, the unrisked DCF increases to 5c and the 12-month forward price target increases to 4.5c a share.”



This article was developed in collaboration with CZR Resources, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.