CHN has released preliminary test-work on three low grade composite samples from Gonneville. The results of the test-work have suggested that acidic pre-treatment of ore and adding the collector reagent earlier in the process flowsheet could yield significant improvements in recoveries. Further work is required to deliver the improved recovery rates and we have left our forecasts unchanged at this stage. Our development scenario generates an IRR of 21% using Argonaut commodity price forecasts and 9% at current spot prices. Advancing the pre-feasibility on the smaller scale starter project presents a key catalyst for CHN and we reiterate our SPEC BUY rating but lower our price target 8% to A$2.20 to reflect recent declines in CHN’s core commodity prices.
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