Treasure Chest | Oct 26 2011
By Greg Peel
What?
Stockbroker DJ Carmichael is tipping junior manganese explorer Spitfire Resources ((SPI)) to re-rate on a three month horizon. The potential upside is substantial.
Why?
New technology used is increasing chances for further exploration successes and this could have a commensurate impact on the share price. Investors should note this type of trading ideas is high risk and never guaranteed.
Background
During an exploration phase in 2010-11, junior explorer developer Spitfire Resources ((SPI)) discovered two new near-surface manganese ore bodies which it has named Contact and Contact North. A recent survey over the first part of the tenement at South Woodie Woodie in WA has yielded three new exploration targets.
The first anomaly, discovered last month, is to the south-west of Contact and is of a similar size to the Contact North anomaly. The discovery was made after conducting a Gradient Array Induced Polarisation (GAIP) geophysical survey, a technique broker DJ Carmichael notes has been used by other companies in the region focussed on manganese.
DJ Carmichael believes the new GAIP technology could enhance the chances of exploration success for Spitfire. Drilling has begun this month with the intention of expanding the program. The broker suggests drilling results from anomaly testing, maiden resource announcements and the discovery of further anomalies through the use of GAIP are likely catalysts for Spitfire's share price in the coming three months.
The broker has thus placed a three-month Speculative Buy rating on SPI and set a target price of 24c. Last trade 14c.
Find out why FNArena subscribers like the service so much: "Your Feedback (Thank You)" – Warning this story contains unashamedly positive feedback on the service provided.
