BMR’s Zambian project should transform BMR into a much bigger company – soon 

Berkeley Mineral Resources (LON:BMR) is in the final stages of due diligence to acquire assets in Zambia which promise substantial profits – starting in only a few months time – in return for what some might think is a cost that is too good to be true. The company has just conditionally raised another £2m (at 1.5p) to add to the £1.8m it has already raised over the past year, to enable completion of the purchase of  the high quality zinc and lead tailings dumps at the old Kabwe mine. For a total outlay which (with borrowings) will have totalled only around £11m, BMR is developing a business that should earn revenues approaching £250m over the next eleven years, at margins that should generate over £80m of profits. Once its $3m option to acquire the last of the dumps and their IP is exercised (BMR says by the end of August), it should be able to start selling unprocessed material from one of the dumps at little cost to give it an £200,000 per month net income and, after modest further spending on the required beneficiation plant to process the bulk of the resource, will be able to earn some £1m pre-tax each month (at current metals prices) from about 15 months later. At a current market cap (at 2.0p) of only £11.7m, the fully diluted PER by then will be less than 2 times.

‘Tailings’ are sometimes sniffed at by mining investors. But these are very high quality metals residues in waste material from the mine workings at Kabwe, built up during 90 years when it was Africa’s largest producer of zinc and lead, and so inefficient were the methods used before the mine closed in 1994 that large amounts (over 9% by volume) of zinc and lead are still in the dumps. Modern processes to recover it are well understood and relatively simple, so that BMR can sell the product at much higher margins than can those who have to get raw zinc and lead out of the ground by traditional mining methods.

BMR has been able to acquire the dumps cheaply because their existing owner (S African listed Metorex Ltd) after financial problems wants to concentrate its remaining resources on its other African businesses. Not least another reason is that…

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