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GBM Resources Given A$0.35 Price Target By RM Research

GBM Resources (ASX: GBZ) has been rated a Speculative Buy and been given a $0.35 price target by RM Researchfollowing the release of a Scoping Study for its Milo IOCG-REE Project in Queensland that points to a viable, economic project.

The following is an extract from the report.

Milo IOCG-REE Project progresses to pre-feasibility stage

GBM Resources Limited (ASX: GBZ or the "Company") has released its "Scoping Study" for the 100% owned Milo Project in the Cloncurry district of far northwest Queensland.

The details of the study point to a viable, economic project with a base case cash flow of A$702m which gives the Company's directors the confidence to progress directly to the next milestone in the development of the project, the pre-feasibility study.

It is evident from the exploration to date that the Milo Project is a hybrid multi-commodity IOCG (iron-oxide/copper/gold) resource containing copper (Cu), gold (Au), molybdenum (Mo) and uranium (U) that has been overprinted and enveloped by widespread value adding rare earth elements (NYSEMKT:REE) and yttrium (NYSE:Y).

This means that the resource does not neatly fit into a classification as just a Cu resource or a REE resource. It is both. And GBM is much more than a single project company given the potential of its other projects. its other projects with potential resources too.

Since RM Research's last research report (April 2012), the Company has:

- published an inferred resource statement for the Milo Project of 108,000 tonnes total REE and yttrium oxide (TREEYO) and a maiden Cu inferred resource of 88 million tonnes containing 97,000 tonnes Cu and 14 million pounds of uranium oxide (U308)

- drilling has extended the Milo resource to the north and south

- delineated three significant soil anomalies with potential to significantly increase the overall Milo resource

- the Pan Pacific/Mitsui JV partners have committed to a budget of A$3.8 million through to March 2013 for the Bungalien IOCG Project

- discovered new Au/Cu mineralisation near the Mt Morgan Mine, Central Queensland

- appointed Mr Sunny Loh as a Non-Executive Director (April 2012)

- successfully raised A$0.5 million capital via a share purchase plan (July 2012) and A$2.1 million in placements (A$1.1 million April 2012; A$1.0 million October 2012)

Price Catalyst

The immediate term share price drivers should be announcement driven given the "Scoping Study" shows that the Milo Project is economically viable.

Henceforth, market updates on the progress of the Milo Project towards the next major step, the pre-feasibility study should be positive for the share price.

Additionally, progress on securing a funding and/or development partnership would be positive.

Significant exploration and drilling results for the stable of other projects should also be viewed positively by investors.

Action and Recommendation

Speculative BUY. Price Target: 35 cents.

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