Buy Blencowe Resources #BRES says First Equity LtdThe securing of a $5m grant from the DFC is a commendable achievement for Blencowe and significantly reduces financing risks at Orom Cross. We have re-calibrated the PFS published last year from a NPV8 to NPV10 to reflect a higher cost of borrowing world (from $482m to $402m) and applied certain development/resource (30%), finance (12%) and country (25%) risk factors. The impact of the DFC grant and potential for it to lead to securing project construction funds has resulted in our finance risk being slashed from 40% to 12%. By applying all these risk factors to our NPV10, we calculate a valuation of $185.7m, an increase of 46% on our previous $126.5m estimate.
Using the current no of shares in issue and 100% project interest this would imply a price per share of 73p (prev. 59p). If we factor in the impact of possible share dilution over the next 24-months, we arrive at a 46p valuation