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Newfield Resources Ltd (NWF): DMS Plant commissioned
Newfield Resources Ltd NWF), $0.76, Recommendation: Speculative Buy, Valuation: $0.91
Analyst: Paul Adams
Date: 31/03/15
Event: DMS plant commissioned
After a quiet 3 months NWF has announced the completion of commissioning of their recently installed Dense Media
Separation (DMS) plant at Golu at their Allotropes Diamond Project in Sierra Leone. Simultaneously, a larger gravel pump
was installed to reduce potential bottlenecks in the future. The DMS plant will be used as an exploration and bulk
sampling tool to determine grade and economic viability of a number gravel horizons within the project area.
Key Points
DMS plant commissioned: NWF has successfully commissioned its DMS plant at Golu. This completes 9 month’s work to
establish the infrastructure required to enable NWF to undertake resource definition of a number of gravel horizons within the
project area and subsequently to becoming a diamond producer. Sign-off has been obtained by the plant manufacturer for the four
containerized units with a series of ex-factory commissioning tests and X-ray unit test, which have confirmed the plant recovery
rates are operating within design specs
Capacity increased: NWF has simultaneously overcome a potential bottle-neck by increasing the size of the gravel pump. This will
ensure that optimum feed rates can be maintained. The DMS circuit has a design capacity of 10tph of concentrate from a head feed
of approximately 20 – 40 tph, dependent on the gravel facies type.
Set up for resource definition: NWF are now set up to undertake a series of tests on a number of gravel horizons within the
project area. Numerous pits have been dug over the immediate project area which will be the source of bulk samples which are to
be processed through the plant. NWF is also in the final stages of a Small Scale Mining License application, which will cover an
area of previously defined diamondiferous gravels. NWF expect the granting of the license shortly. Once this has been granted
NWF will be in a position to generate cash flow to aid in the resource definition work
Currently well funded: NWF had $3.75m worth of options exercised over the previous month and as at 19 March, had a cash
balance of approximately $4.6m. A further 11.7m options can be converted before 15 June 2015, realising an additional $2.9m. We
would expect that, together with the ability to realise operating cash flow from small scale mining, the company will be reasonably
well funded over the short to medium term.
Our View
After a quiet 3 months, we are pleased to see this announcement. It is obvious that that management team has been getting the job
done and moving the project forward, under what must have been difficult operating conditions given the outbreak, and subsequent
spread, of the Ebola virus in the region. Travel restrictions would have hampered operations to some degree. The installation of a
larger gravel pump before operations begin will also de-risk the potential for operational issues moving forward. Management
continue to operate conservatively and have a deliberate strategy to build the project without risking large amounts of capital
The ability to generate a cash flow from small scale mining operations will also help fund the testing of the Lake Popei kimberlite
targets, which will require drilling, and other exploration activities as they arise.
We make no change to our recommendation of a Speculative Buy or our valuation of $0.91 per share at this stage. We look
towards the granting of the Small Scale Mining License and first results from the bulk sampling programs. Activity and news flow
should now ramp up and NWF will be very active over the next 6-9 months.
Contacts
Research
Paul Adams | +61 9263 5234 | padams@djcarmichael.com.au
Michael Eidne | +61 9263 5213 | meidne@djcarmichael.com.au
D J Carmichael Pty Limited ABN 26 003 058 857 AFSL 232571
Telephone: 08 9263 5200 Facsimile: 08 9263 5283 Email: info@djcarmichael.com.au Webpage: http://djcarmichael.com.au
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D J Carmichael Pty Limited ABN 26 003 058 857 AFSL 232571
Telephone: 08 9263 5200 Facsimile: 08 9263 5283 Email: info@djcarmichael.com.au Webpage: http://djcarmichael.com.au