Microsoft Word - Toro Energy Research Report - October 2015
RealCap Uranium Research Report
Toro Energy Limited
RealFin Capital Partners 'REALCAP' Proprietary Limited
Toro Energy - Wiluna Project Resource Update
RECOMMENDATION: BUY TARGET PRICE: A$0.18
Toro Energy continues to be an exceptionally well‐managed pre‐mining uranium exploration company. The combination of a strong balance sheet, prudent financial management, institutional shareholder base and enviable reserves and permitting advancement will allow Toro Energy to participate significantly in a uranium price rerating.
Table of Contents
RECOMMENDATION: BUY TARGET PRICE: A$0.18 1
TORO ENERGY 3
RECENT ANNOUNCEMENTS 3
MINERAL RESOURCES 3
IMPACT ON VALUATION 3
CONCLUSIONS 4
OUTLOOK 4
RISKS 4
INVESTOR RECOMMENDATIONS 4
Toro Energy
Toro Energy (ASX: TOE) is a Western Australia, Perth‐ based Uranium development and exploration company focussed on being a leading mid‐tier global Uranium company. Toro Energy has a suite of development and exploration assets within their business structure - the key flagship project being the Wiluna Project.
Recent Announcements
On the 14th of October 2015, Toro Energy released a company announcement indicating a revision in their available uranium resources. Following on from extensive geological and geochemical work, the estimated total resources at the Wiluna Project site have increased by approximately 20%. In addition to the increase in total U3O8 resources, there is also an increase in the estimated grade of the deposit.
Mineral Resources
Listed mining and minerals companies in Australia and New Zealand are obligated as part of the exchange listing rules to comply with the JORC Code. 'The JORC Code provides a mandatory system for the classification of minerals Exploration Results, Mineral Resources and Ore Reserves according to the levels of confidence in geological knowledge and technical and economic considerations in Public Reports' (www.jorc.org).
Toro Energy, as a listed Australian entity complies with all aspects of the JORC code and as part of extensive geological work, has published an updated JORC resources schedule.
The estimation of the underground resources has been achieved through an extensive sample drilling programme funded by the some of the proceeds Toro Energy received from investment by the Sentient Group (please see earlier research publications for additional detail on this transaction).
A total of 66 sonic drill holes across the Toro Energy Centipede and Millipede tenements have been subject to a gamma ray probe. This geological sampling process in conjunction with geochemical laboratory work allows for the estimation in quantity and quality of the underground deposit.
In the case of the Centipede and Millipede properties, a significant difference between the gamma‐derived estimation of the U3O8 and the geochemical U3O8 has been observed since 2012. Based on the 2015 drilling programme just finalised in accordance with the mandatory JORC framework and guidelines, it has been concluded that there has been an underestimation in the true grade of the uranium. In other words, a positive dis‐equilibrium has been found. Toro Energy, together with independent consultants SRK Consultants have been able to update their estimation of the measured, indicated and inferred resources across the Centipede and Millipede properties to provide a total U3O8 resource of 15.4 MM lbs at an average grade of 1021 ppm U3O8.
The chart below indicates the change in resources at Centipede and Millipede based on the prior sampling work conducted in 2014 and the latest current results.
Centipede and Millipede Resources: U3O8 (MM lbs), 500ppm cut‐off
18
16
U3O8 (MM lbs)
14
12
10
8
6
4
2
0
Measured Indicated Inferred Total Prior Current
Impact on Valuation
An increase in resources, both in terms of quality and quantity allows Toro Energy to revisit the mining economics and mining schedule. Using the new resource information, Toro Energy have the ability to: