The August 2020 update of the definitive feasibility study (DFS) for Vimy Resources’ wholly-owned Mulga Rock uranium project in Western Australia enhanced value further, according to Morgans. This is despite the broker using a lower long term contract uranium price of US$55/lb U308, previously US$60/lb.
The US$393m development is scheduled to produce 3.5mlbs per year U308 at an all-in sustaining cost of US$31.22/lb over the 15-year life from existing reserves, reports the broker. All primary approvals, including the Condition Environmental Management Plans are received.
Morgans believes another short-term catalyst could be the discovery of another high-grade deposit such as Angulari. The longer term valuation driver is considered to be the contract uranium price, with prices over US$50-60/lb expected to justify development of Mulga Rock.
The Add rating is unchanged and the target price is decreased to $0.17 from $0.38, due to increased issued capital.
Target price is $0.17.Current Price is $0.03. Difference: $0.14 – (brackets indicate current price is over target). If VMY meets the Morgans target it will return approximately 82% (excluding dividends, fees and charges – negative figures indicate an expected loss).