Latest Research

Metro Mining (MMI) - First Shipment Amidst Strong Bauxite Macro

Metro Mining LogoMetro Mining (MMI) is on the cusp of its first shipment from the Bauxite Hills Project in Northern Queensland. Product is currently being stockpiled with barging and ship loading to commence from the 18th April. MMI’s first sales are fortuitously timed amidst positive macro factors, such as US Sanctions on Russian global major Rusal and Chinese refinery restarts, which are pushing up alumina and aluminium prices. MMI will ship at an initial 2Mtpa rate then ramp up to 6Mtpa over four years, making it the largest Australian bauxite exporter after RIO.

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Myanmar Metals (MYL) Awakening A Giant - Initiating

Myanmar Metals LogoMyanmar Metals (MYL) holds an option to acquire a majority stake in the Bawdwin Mine in Myanmar, which we regard as the best under-exploited polymetallic asset globally. Large scale mining at Bawdwin ceased during WWII leaving intact a high-grade core resource of 41.4Mt at 5.7oz/t silver, 11% zinc & lead and 0.33% copper. MYL is scheduled to exercise its option on Bawdwin in May and gain a 51% majority stake and operatorship of the mining concession which incorporates the resource, a 38km2 land holding, hydro power, and access to strategic transport routes and water. SPEC BUY recommendation.

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OZ Minerals (OZL) - Avanco Takeover - A Regional Play In Carajas

OZ Minerals LogoOZ Minerals (OZL) has made an off-market takeover offer for Avanco Resources (AVB, not covered) comprising 8.5¢/sh cash and 0.009 OZL shares for every AVB share (50:50 cash/scrip). This values AVB at 17¢/sh or $418m which is a 119% premium to the company’s 1-month VWAP. While this represents a significant premium to the last price of 7.7¢/sh, OZL is buying a large portfolio of complementary copper/gold assets and will attain a foothold in a proven IOCG district of Carajás in northern Brazil. Our modelling indicates that OZL can fund the acquisition from existing cash whilst still funding the remaining $808m for the Carrapateena project and maintaining dividends. BUY recommendation.

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Pacific Energy (PEA) - Contract Power Acquisition

Pacific Energy LogoPEA has acquired Contract Power, one of its key competitors in remote power supply. The $90m acquisition ($85m cash and $5m scrip) will be debt funded with the acquisition price implying a 6x EV to FY19f EBITDA multiple which, in our view, is fair for a business with the sort of long term earnings visibility that Contract Power offers. On our numbers we forecast the deal will be ~10% EPS accretive in FY19. We believe PEA is now very well positioned to capitalise on a strong growth pipeline and maintain our BUY recommendation on a revised $0.80 valuation (previously $0.70).

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Threat Protect (TPS) - Well Connected

Threat Protect LogoThe $8m acquisition of SA-based Security Alarm Monitoring Service (SAMS) adds 55% more connections, diversifies and boosts revenue, increases capacity across the group, and provides organic growth opportunities to leverage infrastructure. Our forecasts are upgraded on an assumption SAMS adds to group margin and, given debt funding, delivers earning accretion. Upgrade to Spec Buy (prior Hold) on a $0.225 valuation (prior $0.170).

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