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TNG Limited Receives A$0.45 Share Price Valuation From UK Broker

TNG Limited (ASX: TNG) is the subject of a broker note which has placed a price target of $0.45 and a buy recommendation on the company.

The following is an extract from the report.

FIRB approval and completion of $13.4m funding

TNG Limited (ASX: TNG) has received the long awaited approval from Australia's Foreign Investment Review Board (FIRB).

This key approval paves the way for the completion of a $6.8m investment by Ao-Zhong, a subsidiary of Chinese group ECE, which is the final component in the wider $13.4m transaction with ECE.

With all key approvals including those from TNG shareholders received, the transaction will be completed shortly, and funds deployed to TNG's Mount Peake VTi-Fe project in the Northern Territory, Australia. The Chinese groups will emerge with a combined 30% stake in TNG.

- Thank FIRB! The receipt of FIRB approval is a huge relief, having been a thorn in TNG's side since Ao-Zhong's application to FIRB was lodged in November 2011.

TNG initially anticipated approval to be granted in Q1, but the FIRB process is extremely comprehensive and the timeline has slipped somewhat. However, the delay in FIRB approval has not impacted the development of Mount Peake due to the first $6.6m funding tranche being received in January 2012.

- Funding in place. TNG is now fully funded to complete the full Mount Peake PFS and pilot plant metallurgical test-work programme.

Adding the $6.8m investment to TNG's cash position of $4.9m at the end of Q1 equates to a cash balance of over $11m according to our estimates. This stands the company in good stead to embark on a Definitive Feasibility Study.

- Strategic partners. On closing the transaction, the total subscription of shares to ECE and related parties is 122m, giving the Chinese groups (ECE + Aosu) a combined 30% stake in TNG and two non-executive seats on TNG's Board.

- Wings unclipped. We have viewed the drawn-out process of the $13.4m (122m shares at 11¢) investment as a major overhang on TNG's share price, effectively constraining the stock below the 11¢ level in our opinion.

With cash in the kitty and new strategic partners on board, we now expect any further progress in the development of Mount Peake to translate more readily to share price performance.

Clearly, a long road to developing Mount Peake lies ahead, with significant testwork and optimisation required. However, the completion of the ECE deal moves TNG a large step closer to development.

- Time to get stuck in. Whilst TNG has progressed a number of corporate opportunities on other projects (Rio-Bauxite, Toro Energy - nickel/copper), the focus remains Mount Peake.

TNG expects the full PFS for Mount Peake to be delivered at the end of Q2 2012 once the pilot plant results and subsequent commercialisation of the TIVAN™ process are completed. This represents the definitive test of the project's potential to produce commercial-grade vanadium, titanium and iron products.

In addition, a 1,100m RC drill programme has commenced at Mount Peake targeting high priority magnetic targets with the potential to increase the project's resource base - a busy year ahead.

We view FIRB approval as a major tick in the box and the end to the diversion away from the main event. With the landmark Chinese transaction set for imminent completion, our attention returns to the development of Mount Peake.

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