Why Bezant Resources has just doubled

Bombed-out Bezant Resources clawed back a little of this year's losses after doubling in value in less than an hour on Wednesday morning. A heady 69p less than four years ago, the copper-gold explorer's share price sank as low as 3.65p last week. But is this rally sustainable?

Well, improving the economic feasibility of the Mankayan Project copper/gold project in the Philippines is certainly good news. A financial and technical review by Mining Plus of the historic conceptual study, and using a 12 million tonne per annum (Mtpa) production schedule, has resulted in a total cost saving of $307 million and a total unit cost of $1.7/lb including gold credits.

Revisions to the mine design, materials handling and schedule improved the project net present value (NPV) from $300 million to $333 million, at an 8% discount rate and at the current spot prices ($3 per pound of copper and $1,250 per ounce of gold). At 20Mtpa, that NPV jumps to $739 million.

An increase in overall cave column height could also contribute an extra four years full production life to the project at a production rate of 20Mtpa. Then, the project's NPV hits $859 million.

"The generation of these revised cost estimates and updated financial model in respect of the 2011 scoping study will facilitate our ongoing potential sale/JV discussions with third parties interested in progressing our Mankayan project," says Bezant chief Bernard Olivier.

"Mankayan has both scale and robust economics in terms of its potential copper output and its pre-existing resource estimate, with JORC compliant Probable Ore Reserves of 189 million tonnes grading at 0.46% copper and 0.49g/t gold, serves to considerably reduce the project's exploration risk."

What Bezant actually needs is a partner, or, more likely, a local buyer because of possible changes to mining laws in the Philippines. There are plans to introduce a revenue-sharing scheme which would rake in much more from foreign companies than the Philippines government currently receives.

Crucially, Bezant does have cash. It had £3 million in the bank at the end of last December, and a source reliably informs Interactive Investor that the company still has a couple of million left. That should last a couple of years as Bezant only has to cover admin costs. Hopefully, a deal will be struck in that time.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.