OBM has released some impressive drilling results from the Little Gem discovery. The best result of 22.7m @ 5.0g/t included a high-grade core of 6.2m @ 10.8g/t. These results have significantly enhanced the Little Gem target in our view. OBM will now complete a 16-hole program designed to test the 4.7km strike from Little Gem through to Sunraysia, which has a shallow resource already defined. A successful drilling program could eventually deliver a resource that dwarfs Riverina and Sand King in our view. We have upgraded our exploration target for the Little Gem – Sunraysia trend from 500koz to 1.9moz, which drives a 30% increase in our price target to A$1.30. Given the potential for further positive news flow on Little Gem, we upgrade our recommendation on OBM from Hold to BUY. We note that our bullish view on OBM is now heavily dependent on further exploration success at Little Gem, with exploration potential accounting for ~30% of our valuation.
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