Rio Tinto (RIO) has disclosed the maiden Inferred Mineral Resource at the 100% owned Winu copper-gold project and revealed the discovery of a new zone of gold dominant mineralisation approximately 2 km east of the Winu deposit in the Paterson Province of Western Australia.
The Inferred Mineral Resource, reported at a 0.2% copper equivalent cutoff, is 503Mt at 0.45% copper equivalent (CuEq). This includes a higher grade component of 188Mt at 0.68% CuEq at a cutoff grade of 0.45% CuEq.
According to Rio, study work to date indicates that the copper mineralisation supports the development of a relatively shallow open-pit mine, and the company is targeting first production from Winu in 2023, subject to securing all necessary approvals.
The discovery of a new zone of gold dominant mineralisation as well as a number of other encouraging drilling results nearby suggests potential for the development of multiple ore bodies within one system, says RIO.
“We’re… working on the studies for a small-scale, start-up operation focused on Winu’s higher-grade core as we take another step towards commercializing this deposit” commented Rio Tinto’s Stephen McIntosh.
He continued: “The additional exploration results reported today support our view that there is potential to develop the Paterson region into a large-scale operation over time… We’ve so far carried out exploration activity in just 2% of our tenements in the region and we’re building on this discovery at Winu with further encouraging results.”
Shares in RIO have climbed 5% year-to-date, but analysts have a cautious Hold consensus on the stock. That’s with an average analyst price target of $68 (8% upside potential). (See RIO stock analysis on TipRanks).
“We rate RIO Sector Perform on valuation grounds, with the strong balance sheet and high-quality growth projects already factored into the current share price” explains RBC Capital’s Tyler Broda.
“Our forecasts for FY20 fall by 2% at EBITDA level (5% for HY20) following lower realised pricing than expected in iron ore and aluminium, offset by better volumes in copper and aluminium” the analyst told investors following RIO’s recent operational update.
For RIO’s half-year 2020 results he is now forecasting EBITDA of $8.7bn and adj EPS of $2.38 .
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