One Small-cap Resource Stock to watch – Tawana Resources NL

Tawana Resources NL

TAW Details

Bald Hill Project is on Track: Tawana Resources NL (ASX: TAW) recently announced about the spodumene concentrate haulage that has commenced from its jointly – owned Bald Hill Lithium and Tantalum Mine in the Eastern Goldfields region of Western Australia. At the beginning  of this month, the Group disclosed a potentially money-spinning merger with Singapore-based Alliance Mineral Assets Limited (AMAL), aiming to enhance the financial capacity of the Merged Group and improve the Merged Group’s balance sheet, to fund future exploration and growth initiatives. This merger is expected to close during the fourth quarter of calendar year 2018, subject to SGX regulatory processes. Moreover, Joint venture partners Tawana Resources and AMAL declared that an initial shipment of 3,250 tonnes of spodumene would reach the berth at Esperance on May 2. Further, Management mentioned that the completion of the logistics around the initial shipment of lithium concentrate represents another key milestone for the mine. At present, there is around 4,000 tonnes of the high-grade concentrate at Bald Hill site. The second larger shipment of Bald Hill concentrate would be sent from Esperance in May month of this year.


Bald Hill Project (Source: Company Reports)
 
On the financial front, the loss of the Group for the year ended 31 December 2017 after providing for income tax amounted to $8,139,652 from the loss of $1,759,935 in FY16. This loss after tax is majorly driven by rise in share-based compensation, high employee benefit costs and impairment of exploration & evaluation asset during the year. On balance sheet front, the Group had cash and cash equivalents of $16,375,096 with debt free status as at 31 December 2017. Weier Antriebe Und Energietechnik GmbH ("WEIER"), a substantial holder of Tawana Resources, changed its substantial holding and now holds 13.75 per cent of the voting power from 11.35 per cent. On the other hand, Canaccord Financial Group (Australia) Pty Ltd and Its Associates (“CFGA”) ceased to be the substantial holder of the Group since 17 April 2018. Bald Hill, a joint venture project between Tawana and AMAL, is the first Australian mine to commence spodumene production since 2016. The share price was down by 17.0% in the past three months, and it dropped by about 3.6% on April 26, 2018. Given the exposure to lithium sector and looking at the recent weakness in view of the trading levels and performance, we put an “Expensive” recommendation on the stock at the current market price of $ 0.400

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