Bell Potter Independent Research Note - April 2014

1. 1 April 2014
Walkabout Resources (WKT)
Trans Kalahari Railway signing points to
potential to unlock significant coal value
Recommendation
Buy
Price
$0.011
Target (12 months)
$0.028 (previously $0.025)
Risk
Speculative
Analyst, Retail Research Services
Peter Arden 613 9235 1833
Authorisation
Damien Williamson 613 9235 1958
Expected Return
Capital growth 155%
Dividend yield 0
Total expected return 155%
Company Data & Ratios
Enterprise value $8.0m
Market cap $8.8m
Issued capital 799m
Free float 73%
Avg. daily val. (52wk) $0.01m
12 month price range $0.004 - $0.019
GICS sector Materials
Disclosure: Bell Potter Securities
acted as lead broker to the $4.8M
placement in March - April 2012 and
the $0.54M placement in March 2014
and received fees for that service.
Price Performance
BELL POTTER SECURITIES LIMITED
ACN250063907721
AFSL 243480
DISCLAIMER AND DISCLOSURES
THIS REPORT MUST BE READ WITH THE DISCLAIMER
AND DISCLOSURES ON PAGE 6 THAT FORM PART OF IT.
Page1
1mth 3mths 12mths
Price ($A) 0.006 0.007 0.014
Absolute (%) 83.3 57.1 -21.4
Rel. Market (%) 83.8 56.4 -29.7
Focused on unlocking value from Takatokwane coal deposit
African focused exploration and development company, Walkabout Resources Limited
(WKT), is continuing its efforts to unlock significant value from its 67% owned and
huge Takatokwane coal deposit, Botswana’s largest coal deposit.
A Bi-Lateral Agreement between the governments of Botswana and Namibia for the
construction of the Trans Kalahari Railway (TKR) Line Project was signed
recently. Construction of the TKR is planned to get underway later in 2014 and is
expected to go until 2019. The Project is expected to be developed as a private-
public-partnership at a cost of about $US10B, which is expected to come from the
private sector. The process to obtain the funding for the TKR has started and a
dedicated project office is to be established in Walvis Bay, Namibia, which is where the
proposed commodity terminal will be built with an expected capacity for about 65Mt of
coal per annum plus capacity for other commodity exports.
Absolute Price Earnings Forecast
Year end
Sales (A$m)
EBITDA (A$m)
NPAT (reported) (A$m)
NPAT (adjusted) (A$m)
EPS (adjusted) (¢ps)
EPS growth (%)
PER (x)
FCF Yield (%)
EV/EBITDA (x)
Dividend (¢ps)
Yield (%)
Franking (%)
ROE (%)
SOURCE: IRESS SOURCE: BELL POTTER SECURITIES ESTIMATES
$0.00
$0.01
$0.02
Apr-13 Jul-13 Oct-13 Jan-14 Apr-14
WKT Share Price
S & P Resources Index (rebased)
Trans Kalahari Railway agreement is a very significant step
We see the TKR agreement as a very significant step following many years during
which various railway developments have been envisaged but never actioned. The
TKR is expected to be a 1,500km long railway line between Mmamabula in Botswana
and Walvis Bay. Although the route of the TKR has not yet been published, WKT
expects that it will be close to the existing Trans Kalahari Highway and Export Corridor,
which means the TKR would go near the planned mining area of its Takatokwane
thermal coal project. Because of its central location, WKT’s coal may only have a
haulage distance of about 1,250km to Walvis Bay. The Takatokwane coal project has
a current resource of about 7Bt and is planned to be developed as a multiple mine
operation given the huge size of the coal deposit and its relatively flat, shallow and
wide coal seam. The company is currently carrying out a Pre-Feasibility Study (PFS)
into development of the deposit. WKT is considering a multiple mine configuration of
several large open pit mines with multiple production units to produce a washed coal
and a direct shipping coal product giving the project total capacity of over 20Mtpa of
export thermal coal. In addition to supplying coal for export, WKT is currently
assessing the viability of a suitably sized modular coal-to-gas (CTG) process, which
will initially produce electricity and syngas and later, through an integrated gasification
combined cycle process, selected liquid fuels for domestic consumption.
Increased price target of $0.028 reflects TKR agreement
The TKR is being proposed on an aggressive time-line and WKT is planning to
synchronise its Takatokwane mine development to deliver the first shipment of coal
onto the TKR line as it represents the major way to monetise the huge Takatokwane
coal deposit. After a recent placement and despite some slippage with the coal-to-gas
arrangement, we have increased our base case and upside valuations to $0.028 and
$0.107 per share respectively and we regard WKT as being inexpensive relative to its
peers. We have increased our target price for WKT to $0.028 per share reflecting the
TKR agreement. We retain our Buy with Speculative risk recommendation.

2. Page 2
Walkabout Resources (WKT) 1 April 2014
Trans Kalahari Railway (TKR) expected to go near WKT’s Takatokwane deposit
The governments of Botswana and Namibia signed a Bi-Lateral Agreement on Thursday
20 March 2014 for the construction of the Trans Kalahari Railway (TKR) Line Project.
Construction of the TKR is planned to get underway later in 2014 and is expected to go
until 2019. The Project is expected to be developed as a private public partnership at a
cost of about $US10B. The process to obtain the funding for it has started, and it is
expected that the funding will come from the private sector. A dedicated project office is to
be established in Walvis Bay, Namibia, which is where there will be a major new export
port facility established to enable a range of exports of which coal is clearly the major
one. The proposed Walvis Bay Commodity Terminal is expected to have a capacity of
about 65Mt of coal per annum.
Figure 1 - Map showing location of Takatokwane Coal Project and proposed route of TKR
SOURCE: WALKABOUT RESOURCES LTD
WKT expects that the route of the TKR, which has not yet been published, will be close to
the existing Trans Kalahari Highway and Export Corridor, which means the TKR would go
near the planned mining area of WKT’s 67%-owned Takatokwane thermal coal project in
Botswana. The TKR is expected to be a 1,500km long railway line between Mmamabula
in Botswana and Walvis Bay (Figure 1), however due to its central location, Walkabout coal
would only have to be hauled some 1,250km along the route.
The Takatokwane coal project has a current resource of about 7Bt and is planned to be
developed as a multiple mine operation given the huge size of the coal deposit and its
relatively flat, shallow and wide coal seam. The company is currently carrying out a Pre-
Feasibility Study (PFS) on development of the deposit. WKT is considering a multiple mine
configuration of several large open pit mines producing a washed coal product with coal
quality specifications around 6,000kcal/kg and a direct shipping coal product at about
4,800 kcal/kg. The mines are planned to produce from multiple production units of around
6Mtpa each, giving the whole project the capacity to produce over 20Mtpa of export
thermal coal. As well as supplying coal for export, WKT is currently assessing the viability
of a suitably sized modular coal-to-gas (CTG) process, which will produce electricity,
syngas and later, through an integrated gasification combined cycle process, selected
liquid fuels for domestic consumption (Botswana has no liquid hydrocarbon production).

3. Page 3
Walkabout Resources (WKT) 1 April 2014
Finalisation of Coalswana deal delayed
The company announced a limited on-site coal off-take agreement for Takatokwane coal
with technology company, Coalswana (Pty) Ltd (Coalswana), which is a Botswana-based
ecological coal based industrialisation company, in November 2013. Coalswana had
agreed to fund WKT’s pre-feasibility study (PFS) and Bankable Feasibility Study into the
development of an integrated mine and an ultra-clean coal energy fuel beneficiation facility
at the Takatokwane deposit at an estimated cost of around $US10M. The initial focus of
this is expected to be on coal-to-gas (CTG) output. WKT and Coalswana continue to work
towards finalising a Long Term On-site Off-take Agreement (LTOOA) by May 31, 2014.
WKT retains sole export rights after satisfying the LTOOA requirements. WKT recently
reported that it had granted Coalswana an extension to the commitment date, which we
understand is so Coalswana can complete the necessary financing arrangements.
Lindi Coal Prospect under consolidation discussions
The Lindi Coal Prospect is located on the east coast of Tanzania within 50km of the deep
water port of Mtwara. The Lindi area has had relatively little modern exploration.
Reconnaissance exploration by the company recently discovered an outcrop of coal about
6km to the southeast of an outcrop of good quality thermal coal that was discovered earlier
in 2013 on an adjacent tenement held by others. Analytical results of WKT’s coal are
awaited. Discussions are underway to consolidate WKT’s area and the other party’s
tenement area and then undertake further exploration and investigation on a joint basis.
Kigoma Copper Project now focused on sulphide targets
The company has been actively exploring its Kigoma Copper Project for about a year.
High grade oxide copper mineralisation occurs extensively but somewhat erratically in
amygdaloidal basalts and flow-top breccias at Kigoma where it is locally exploited by
artisanal miners. Sulphide copper mineralisation is also quite widespread but has only
been mined on a relatively small scale to date. WKT has negotiated several low-cost joint
ventures with exploration rights holders in the Project area, which is located about 80km
south of the town of Kigoma on the shores of Lake Tanganyika in western Tanzania.
These agreements give the company interests of between 75% and 100% in the
exploration tenements.
WKT had divided the exploration targets into two types – one being in a localised area for
copper oxide and the other one being for more of a regional focus on sulphide copper. The
company’s reconnaissance reverse circulation (RC) drilling program of the copper oxide
mineralisation achieved disappointing results leading to the recent decision to relinquish 55
of the 111 PMLs it held at Kigoma and to focus on the sulphide copper mineralisation. It
has been encouraged by the discovery late last year of several shear-hosted sulphide
mineralised quartz stockworks. Drilling by WKT in December 2013 intersected separate
narrow intercepts of copper, silver and zinc mineralisation, representing the first significant
sulphide occurrences in the area. WKT is well underway with planning for the 2014 field
season due to start after the long wet period in April 2014 and which is likely to involve
ground magnetic surveys to help define drill targets in the Malagarassi North Zone and
close to a large shallow magnetic high.
Seeking partner for the Makete Platinum Group Metals Project
The company has not conducted any field work on its Makete Platinum Group Metal (PGM)
Project for several months as it seeks a partner to fund exploration. The major ultramafic
complex at Makete contains PGM-gold enrichment that has previously been explored by
others and particularly Lonmin, which drilled a zone of PGM mineralisation in 2007
containing numerous intercepts including an intersection of 1.67m averaging 26.8g/t
2PGMs+gold and another of 17.6m averaging 4.9g/t 2PGMs+gold.

4. Page 4
Walkabout Resources (WKT) 1 April 2014
Valuation
We have increased our assessed value of the company’s Takatokwane coal interests to
reflect the impact of the recent signing of the agreement for the TKR and taken account of
the recent $0.54M (90M shares at $0.006) placement to fund the Takatokwane PFS.
Our base case valuation is based on completion of the Takatokwane PFS which shows
that the deposit warrants further development studies because it would have potentially
significant value. We have reduced the valuations for the Kigoma Copper Project after
disappointing results from the recent drilling of the copper oxide mineralisation but we note
WKT will now solely focus on the sulphide project. The base case valuation only has a
notional value for the CTG, Lindi and Makete Projects. Our upside case valuation
assumes that the BFS is completed for Takatokwane and a starter mine is established that
demonstrates technical and financial viability for larger scale development and that
significant results are obtained for the CTG, Kigoma and Makete Projects that warrants
further more detailed development and /or exploration and evaluation.
Table 3 - Summary of valuations of WKT
Assets
Base Case Upside Case
$ M
1
¢/share
1
$ M
1
¢/share
1
Takatokwane Coal (40 - 75%)
2
22.5 2.8 78.7 9.8
Kigoma Copper (Earning 75 – 100%) 0.7 0.1 2.7 0.3
Other Exploration Assets (CTG, Lindi, Makete Platinum) 0.7 0.1 5.9 0.7
Total Exploration Assets 23.8 3.0 87.2 10.9
Corporate (2.4) (0.3) (2.4) (0.3)
Net Cash
3
0.8 0.1 0.8 0.1
TOTAL ASSETS 22.2 2.8 85.6 10.7
SOURCE: BELL POTTER SECURITIES ESTIMATES NOTES: 1. MAY NOT ADD DUE TO ROUNDING AND DILUTION EFFECTS
2. WKT CURRENTLY OWNS ABOUT 67% OVERALL
3. BASED ON BALANCE AT 31 DECEMBER 2013 LESS ESTIMATED EXPENDITURE
PLUS NET PROCEEDS OF RECENT PLACEMENT
WKT has the majority interest in a very large coal deposit in Botswana that makes the
company particularly well placed to take advantage of the proposed TKR development.
We note that WKT’s market capitalisation of around $9M is still very modest and
significantly less than its comparable peers. We believe that even our upgraded valuations
for WKT are relatively modest in comparison to its peers and to what a successful full scale
development of its proposed plans for the Takatokwane deposit would yield.
Recommendation
WKT is an African focused mineral exploration company. It is targeting particular mineral
deposits that can rapidly be developed to meet current market needs. The company is
leveraging its management’s expertise in Africa and across a range of commodities and
has used their experience (from having run successful major mining operations) to identify
a number of high quality exploration projects that have been overlooked by others but have
potential to become successful mines.
The majority owned large Takatokwane coal deposit in Botswana is WKT’s principal focus
as WKT is well positioned to benefit from the proposed TKR. We have increased our base
case and upside valuations by 65% to $0.028 per share and by 47% to $0.107 per share
respectively. From this we have increased our target price for WKT by 12% to $0.028 per
share on the basis of the company achieving a very positive PFS on the Takatokwane coal
deposit and advancements in its other exploration and development projects.
Accordingly we retain our Buy with Speculative Risk recommendation.

5. Page 5
Walkabout Resources (WKT) 1 April 2014
Risks and Drivers
We identify the following as the main risks:
 Changes to government policy and in particular any major variations to the planned Bi-
lateral agreement to build the Trans Kalahari Railway
 Inability of the proponents of the Trans Kalahari Railway to obtain adequate funding for
its construction and operation
 Commodity prices and foreign exchange rates that are different to our forecasts
 Lack of exploration success and/or greater than expected geological complexities
 Lack of funding to carry out adequate exploration and development
 Adverse weather and operational issues
 Adverse environmental and other regulatory issues
 Cost overruns or operational delays
 Adverse acquisitions of other assets that divert management effort and yield
inadequate returns
We identify the following as the main share price drivers:
We have identified many upcoming events that could be significant share price drivers over
the next year or so:
 Positive outcomes from the PFS and BFS for Takatokwane Coal Project indicating it is
capable of being developed in ways that will generate strong economic returns, which
may include establishment of a “starter” mine to demonstrate those outcomes and
provide valuable test samples of coal for further evaluation in a potentially wide range
of applications such as the coal beneficiation (CTG and potentially coal-to-liquids)
arrangement with Coalswana
 Tangible positive signs of progress with the funding and construction of the proposed
TKR and associated export port facility at Walvis Bay in Namibia
 Development of other possible new export rail infrastructure for coal such as to South
Africa and/or Mozambique (with an associated port option)
 Exploration success at its Kigoma Copper Project that validates the company’s revised
focus on the sulphide mineralisation and leads to the discovery of significant amounts
of potentially economic copper and other forms of valuable sulphide mineralisation
 Initial exploration success at the company’s Lindi Coal Prospect establishing the
presence of significant coal deposits that warrant detailed exploration and evaluation
 Achievement of a satisfactory joint venture arrangement that leads to exploration
success at the company’s Makete Platinum Prospect which includes validation of the
previous exploration results and extension of them to define further high grade
intersections of PGM – gold mineralisation that has potentially economic significance
 Identification of additional significant occurrences of mineralisation within its current
exploration projects such as Norilsk-style mineralisation at the Makete Platinum Project
 Establishment of early earnings and cash flow generation from one or more of the
company’s projects using low capital expenditure

6. Page 6
Walkabout Resources (WKT) 1 April 2014
BellPotterSecuritiesLimited
ACN250063907721
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Telephone+61292557200
www.bellpotter.com.au
Recommendation structure
Buy: Expect >15% total return on a
12 month view. For stocks regarded
as ‘Speculative’ a return of >30% is
expected.
Hold: Expect total return between -5%
and 15% on a 12 month view
Sell: Expect <-5% total return on a
12 month view
Speculative Investments are either start-up
enterprises with nil or only prospective
operations or recently commenced
operations with only forecast cash flows, or
companies that have commenced
operations or have been in operation for
some time but have only forecast cash
flows and/or a stressed balance sheet.
Such investments may carry an
exceptionally high level of capital risk and
volatility of returns.
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