The company's exposure to porphyries with significant mineralisation potential and diverse commodities, specifically at the Unicorn molybdenum project, adequate funding, and expected lower operational expenditures, has prompted the valuation.
The following is an extract from the report.
The company owns 100% beneficial interest in six tenements, which lie within the Lachlan Fold Belt (LFB). Geological studies in the area suggest the presence of molybdenum, copper, silver, zinc, tin and gold mineralisation associated with porphyry igneous intrusions.
Dart Mining's principal project is the Unicorn prospect. The company announced its maiden drill results in October 2011, with a JORC Resource of 105MMT.
In April 2012, the company commenced a resource upgrade drilling program (RC and diamond) from surface to 250m, and announced the results in September 2012.
The updated JORC Resource of 203MMT at 596MoEq at a cutoff of 0.04% MoEq includes Measured resources of 102MMT at 664MoEq and Indicated resources of 35MMT at 576MoEq. This translates into M&I in situ metal resource of 50.35kt Mo, 75.39kt Cu and 14.9kt.
The drilling also defined a high grade zone of mineralization of 54MMT Measured Resources at 809MoEq from surface, suggesting potential for additional higher grade stacked Mo horizons similar to Henderson primary Mo porphyry mine in Colorado, USA.
In October 2012, the company announced completion of a scoping study for the Unicorn project. The scoping study evaluated three production rate scenarios and indicated an initial mine life of 14 years, with a potential to increase to 20 years.
Based on the initial mine life period, the project is expected to have a NPV of AU$255MM, generating a pre-tax IRR of 27% (at 10% discount rate and 100% equity basis) and a payback period of less than 2.5 years.
The study also suggested that the Unicorn prospect would be in the lowest cost quartile with a cash cost of AU$3.58/lb (net of credits).
The company expects production to begin in mid-2016. The addition of a further six years of production would add approximately AU$50-70MM in NPV to the project.
Dart Mining's other projects, namely, Morgan, Mountain View, and Fairley's are relatively underexplored, with a strong potential to identify additional mineralised porphyries within Dart Mining's 2,000sqKm of tenements.
Dart Mining has adopted a unitary strategy of developing its prospects, with its current resources channeled principally into the Unicorn Prospect.
Arrowhead believes that Dart Mining benefits from porphyries with significant mineralization potential and diverse commodities, supported by a strong management team, adequate funding, channeled project execution, and expected lower operational expenditures.
These positives more than offset risks arising from regional concentration and adverse movements in commodity prices.
Given due diligence and valuation estimations based on a blend of Resource Based Valuation and Discounted Cash Flows, Arrowhead believes that Dart Mining's fair share value lies between AU$0.17 to AU$0.60.
Valuation is based on the company's flagship Unicorn project targeting Mo, Cu, and Ag, and does not factor in the potential value of the company's other projects.
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