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 | [email protected] Michael Eidne | +61 9263 5213 | [email protected] D J Carmichael Pty Limited ABN 26 003 058 857 AFSL 232571 Telephone: 08 9263 5200 Facsimile: 08 9263 5283 Email: [email protected] Webpage: http://djcarmichael.com.au Disclosure Disclaimer RCAN1250 This Research report, accurately expresses the personal view of the Author. DJ Carmichael Pty Limited, members of the Research Team; including authors of this report, its directors and employees advise that they may hold securities, may have an interest in and/or earn brokerage and other benefits or advantages, either directly or indirectly from client transactions in stocks mentioned in this report. DJ Carmichael Pty Ltd participated in an equity raising for Newfield Resources and was paid a fee for this service. DJ Carmichael Pty Ltd acted as corporate advisor to Newfield Resources and was paid a fee for this service. 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