UPDATE - Tertiary Minerals boosted by positive scoping study for Lassedalen

Fluorspar group Tertiary Minerals (LON:TYM) rallied strongly today after a positive scoping study of its Lassedalen project in Norway.
Consultant Wardell Armstrong indicated that an underground mine and processing plant at the site would be commercially viable, sending the shares over 20 per higher.
Broker Seymour Pierce said that with this study, Tertiary has two potentially viable fluorspar projects, in attractive Scandinavian locations that could produce an annual total of 200kt for western markets.
The company's Storuman project has more attractive NPV (US$80m, 39p/share - post tax on our numbers), but the initial valuation of Lassedalen, equating to 15.4p/share, could be enhanced by extending the life of the mine, the broker said.
Tertiary is planning further drilling aimed at increasing the size of the orebody.
The scoping study for Lassedalen suggested that with a production rate of 100,000 tonnes of acid grade fluorspar concentrate each year, revenues could reach US$325 million over a six year mine life.
The initial capital cost is put at US$78 million with 34 months to pay that back.
The project has a net present value with a 10 per cent discount rate of US$ 31.6 million and a pre-tax internal rate of return of 20.2 per cent, said the study.
Lassedalen currently hosts a 4 million tonne JORC resource grading 25 per cent fluorspar and an upcoming drill programme, scheduled for the autumn, aims to expand this resource.
At Storuman, Tertiary is looking to establish a 100,000 tonne per year ‘acid grade’ fluorspar mining operation.
Operations director Richard Clemmey said the scoping study further strengthened the implementation of Tertiary's strategy to become a leading fluorspar producer.
Lassedalen and Storuman will have a combined production target of 200,000 tonnes of acid grade concentrate per year.
"The results of the study, coupled with firm fluorspar prices and the declining supply of fluorspar from China, gives the company confidence to progress the Lassedalen project to the next stage of development with further drilling now planned."
Seymour Pierce maintained it buy recommendation on the shares, adding that the share price discount to discount to overall NPV is now even greater following the latest news.
Shares rose 23 per cent to 6.13 pence.


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