Latest Research

Doray Minerals (DRM) - Treading Water

Doray Minerals Limited LogoDoray Minerals (DRM) reported its FY17 result with operating cashflow of $59.1m (vs Argonaut $62.8m, -6%) on production of 102koz and 4.6kt Cu in FY17. The Company recorded a net loss of $71.7m after non-cash impairments of $69.5m. DRM had previously flagged ~$46.9m impairments in the 1H result in February 2017, with a further $22.6m of impairments incurred in the 2H as a result of mine plan revisions at both Andy Well and Deflector. Overall, the top line result was broadly in-line, but was muddied by the non-cash impairments following the notice of closure of Andy Well. We revise our forecasts to include the updated Deflector mine life and the closure of Andy Well. As a result, we move to a HOLD recommendation and revise our target price down to $0.23ps (prior $0.43ps).

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Berkeley Energia (BKY) - Retortillo Fully Funded

Berkeley Energia LogoBerkeley Energia (BKY) has secured funding for the second stage of development for the Retortillo uranium mine and processing centre, part of the greater Salamanca Project in Spain. The Company has entered into an agreement with the sovereign wealth fund of the Sultanate of Oman (State General Reserve Fund ([SGRF]), who will issue BKY an unsecured interest free loan to the value of US$65m which can be converted into ordinary shares at £0.50 (A$0.82), an 11% premium to the 10-day VWAP. In addition, SGRF will be issued 50.4m unlisted options with a weight average exercise price of £0.85 (A$1.39) over three tranches. The loan will fund final development of the Retortillo uranium mine and processing centre and the options will largely fund the second mine, Zona 7, located ~10 km from the Retortillo plant. Argonaut maintains a BUY recommendation with a $1.70 target price. BKY is the only listed uranium developer globally with near term, large scale production capability. We regard this funding agreement as a creative, low dilution (relative to current pricing) and unencumbering financing solution.

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TOX Free Solutions (TOX) - Working Off A lower Base

TOX Free Solutions LogoWhile FY17 EBITDA of $82.8m was in line, the guidance for FY18 was well below our prior expectations. As a result, although we believe TOX has a solid, diversified base off which to grow, this base is lower than we had previously thought. Our FY18 and FY19 EBITDA forecasts are 7% and 12% lower than prior, and this has impacted our valuation and recommendation. We downgrade to hold (prior buy) on an amended valuation of $2.15 (prior $2.50).

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CTI Logistics (CLX) - WA Barometer

CTI Logistics Limited LogoCLX’s FY17 results came in largely in line with our expectations, reflecting the weakness in WA over the last year. However, some recent positive economic signs and more upbeat commentary from a number of Perth-based businesses are worthy of notice. We anticipate a medium-term recovery in CLX’s earnings in the west to add to a stable performance from GMK on the east coast, and believe that FY17 will prove to be the trough year in this cycle. It is appropriate looking beyond the near term, in which case we believe CLX offers compelling value. Buy maintained on a $1.50 valuation.

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Pacific Energy (PEA) - Waiting On Pipeline Conversion

Pacific Energy LogoPEA’s FY17 result of $40m EBITDA was in-line with guidance and forecasts. Growth into FY18 is underpinned by current contracts in hand, and the Company has given guidance for FY18 EBITDA of $43-44m (representing ~9% growth). However, longer-term growth is less certain with intensifying competition, a broader shift to gas (for which PEA has less competitive advantage), and a lack of progress in Africa. We peel back long-term growth forecasts pending evidence of pipeline conversion. Until then, and given our reduced valuation of $0.70 per share, we downgrade to a HOLD (prior BUY on $0.80 valuation).

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