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Cradle Resources Receives Tremont Funding For Panda Hill Niobium

Cradle Resources (ASX:CXX) has received its next round of equity funding from Tremont Investments, which is an African focused mining platform backed by Denham Capital.

Denham has over US$7.9 billion of invested and committed capital in the metals and mining, oil and gas, and power sectors.

Tremont has exercised its right to acquire a further 12.5% of the Panda Hill Niobium Project in Tanzania for a further US$5 million (AUD$6.25M) investment, taking it to 37.5% in total.

To date Tremont has invested US$10 million in two separate tranches.

This investment has been used to de-risk the project through an in-fill and extensional drilling program, extensive metallurgical work and a Preliminary Feasibility Study.

Panda Hill is the most viable undeveloped niobium project world-wide, and has the potential to become a producing mine.

There are only three existing niobium producers world wide, and no new mines since 1976.

At current niobium prices, production generates in excess of $1 billion in operating profits per annum.

Niobium is a strategic metal, and is a steel alloy making harder, lighter steel products.

Grant Davey, managing director of Cradle, commented:

"Tremont's further investment in Panda Hill follows a positive Pre-Feasibility Study and demonstrates its ongoing confidence in the project.

"The Cradle team has enjoyed working with the Tremont team over the last 11 months and is looking forward to driving successful development of this world class niobium project jointly with Tremont."

Rob Still, director of Tremont, commented:

"Tremont is satisfied with the project progress to date and continues to believe that Panda Hill will be successfully brought to production thereby adding diversity of supply to global consumers of niobium."

Tremont can go to 50%

Under its agreement with Cradle, Tremont has the right to contribute a further US$5 million to acquire a further 12.5% interest in the Panda Hill Niobium Project (taking Tremont to 50% in total).

Definitive Feasibility Study in Q4 2015

The mandate from Tremont is to proceed with the Definitive Feasibility Study (NYSE:DFS) which is expected to be completed in the 4th quarter of 2015, after which a decision to mine will be made.

The DFS is underway with a 70 tonne metallurgical pilot test at SGS Lakefield in Canada, which is due for completion in July 2015.

The engineering and environment teams have commenced the field work and the initial detailed planning phase of the DFS.

Tremont is also coordinating the project financing process, which has already commenced.

Panda Hill resources

Panda Hill has Measured and Indicated Resources of 68.8 million tonnes at 0.53% for 362,000 tonnes of contained niobium, enough for mine life of 32 years for a 2 million tonnes per annum operation.

There is a high grade component of 57 million tonnes at 0.70% niobium (at a 0.52% cut-off) with 26 million tonnes at 0.72% niobium.

This allows for Definitive Feasibility Study optimisations to target 0.70% mineralisation initially.

Analysis

The next round of equity funding from Tremont Investments has further de-risked the Panda Hill Niobium Project, with a further US$5 million (AUD$6.25M) investment, taking it to 37.5% in total.

Panda Hill is the most viable development project in niobium in 39 years, with an open cut Resource equivalent to 15 million ounces at 2.6g/t gold.

The resource has growth potential being open at depth and along strike.

The Pre-Feasibility Study demonstrates an NPV (after tax) of US$460 million and an IRR of 57%, with Capex under US$200 million.

Niobium is a rare strategic commodity with limited substitutes, and is a high margin business with a stable commodity price.

A peer analysis is with Niobec, an existing niobium producer with a 2Mtpa underground operation located in Canada.

Niobec has the same flow sheet as Panda Hill, except underground mining, similar geology, and was recently sold by its parent IAMGOLD for US$500 million to an Asian backed consortium.

Cradle Resources has a market valuation of just $16 million, and is one of our top picks for 2015.

On our initiation, we have arrived at a price target of $0.32 - $0.46.

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