Bauxite project developer VBX Ltd (ASX: VBX) earlier this month updated its mineral resource estimate for its Wuudagu project, resulting in a 108% increase in contained ore, with the new figures piquing the interest of the analyst team at Morgans.
VBX only listed on the ASX in the middle of last year, and its shares have performed well since, currently changing hands for $1.02, not far off their record highs of $1.20. This compares with lows over the period of 34 cents.
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Project scope coming together
The company is expecting to release a definitive feasibility study into the Wuudagu project in the Kimberley region of Western Australia in the first quarter of this year, and the most recent exploration results support an extended mine life at the project, the company said, with a processing rate of 8 to 9 million tonnes of ore per year.
The company said last week that new bauxite discoveries had been made at the D, E, and F prospects, with the mineral resource now standing at 131.9 million tonnes at a grade of 40.2% aluminium oxide.
The company added:
The Wuudagu mineral resource estimate is reported on an in-situ basis and the reported grades do not take into account the significant quality improvements that are achieved at Wuudagu through simple, industry standard beneficiation methods.
Managing Director Ryan de Franck said the exploration drilling had delivered a good result.
The 2025 drilling program has led to a more than doubling of the measured and indicated mineral resource estimate at Wuudagu. This is an exceptional outcome …The Wuudagu D, E and F deposits are thicker and have less overburden than the Wuudagu B and C deposits. They are also higher in alumina and lower in silica which has resulted in an improved, higher grade total Wuudagu mineral resource estimate.
Mr Franck said the expanded resource base removed the key constraint that had previously limited the mine life to 10 years, and mine planning was already underway to rescope the mine life and production profile as part of the ongoing definitive feasibility study.
Mr Franck said there was also further exploration prospectivity at the project.
Shares looking cheap
The analyst team at Morgans have run the ruler over the new exploration results, and they like what they see.
As they said:
Pure plays in bulk commodities are rare – pure plays indicative of 1st quartile cost production and low capex are rarer and drive significant economic returns for investors. We are attracted to VBX for the former, plus: 1) significant capital upside; 2) premium indicative product specification; 3) rapid payback period; 4) clear M&A appeal; 5) structurally changing commodity market; and 6) expansion potential.
Morgans has a 12-month price target of $2.10 on VBX shares, which would be a 105.9% return if achieved.
