Company Overview - Altura Mining Limited is an Australia-based company engaged in the supply of lithium raw materials. The Company is engaged in the exploration and development activities, including completion of a feasibility study at its Pilgangoora Lithium project in the Pilbara region of Western Australia. The Company's segments include coal mining, exploration services and mineral exploration. Its coal mining segment is engaged in the sale of coal. Its exploration services segment provides a range of drilling services to its customers, primarily mining and exploration companies. Its mineral exploration segment is engaged in exploration activities. The Company also has interests in producing Delta Coal project in Indonesia, which produces medium energy thermal coal, and the Tabalong Coal project, a thermal coal deposit located in South Kalimantan, Indonesia. The Tabalong Coal project consists of approximately five mining licenses

 

AJM Details
Positive milestones in the March 2017 Quarter: Altura Mining Ltd (ASX: AJM) has achieved a major project milestones in the March 2017 quarter as the company brings its world class Pilgangoora Lithium Project closer to production. In the March quarter 2017, AJM has got the approval by the WA Department of Mines and Petroleum (DMP) of the Mining Proposal and the Project Management Plan making the way for the construction of the mine to commence. The mining contract was awarded to NRW Holdings Limited (NRW). The construction of the mine infrastructure commenced on March 13, 2017. Moreover, AJM has finished the purchase and recommissioning of former Rail Camp 2 from Roy Hill Infrastructure, and re-occupied since early February 2017. AJM revised the Ore Reserve estimate of 30.1 million tonnes @1.04% Li₂O (which is an increase of 9.8 million tonnes as compared to the earlier estimate). Further, AJM has revised the Indicated Mineral Resource estimate of 40.3 million tonnes @1.00% Li₂O. The group reported for cash of $36.994 million as of March quarter of 2017 (including full proceeds of the J&R Optimum equity investment). Net cash used in operating activities was $1.283 million in the March quarter of 2017 and $12.397 in this year to date (nine months till March 2017). Net cash used in investing activities was $8.262 million in the March quarter of 2017 from $13.059 million in this year to date (last nine months till March 2017).
 
Approval from the Department of Mines and Petroleum (DMP):The Western Australian Department of Mines and Petroleum (DMP) has approved the Project Management Plan for Altura’s 100% owned Pilgangoora Lithium Project. This additional approval after getting the Mining Proposal approval has marked a further significant milestone, and constitutes formal approval from the DMP’s State Mining Engineer to commence mining operations. The commencement of on-site work brings AJM closer to unlocking significant strong cash flows in early 2018 through sales of spodumene concentrate. Moreover, as all the regulatory approvals are in place, AJM intends to immediately commence mobilization of its own personnel to site as well as those of NRW, its appointed Mining Contractor.
 
AJM awarded a five-year contract to NRW Holdings Limited:The group has awarded the contract to provide mine development and mining services for a five-year period to NRW Holdings Limited. NRW would use the current equipment that is available after the completion of another project and is therefore able to be mobilized for a rapid start-up to meet with AJM’s requirements. Mobilization is expected to commence in March 2017. Up to 60 NRW personnel will be employed on site, and NRW would work with the local Njamal indigenous communities to offer employment and subcontract participation.
 
Subscription and Cooperation Agreement with Shaanxi J&R Optimum Energy Co.: AJM signed a Subscription and Cooperation Agreement with Shaanxi J&R Optimum Energy Co., Ltd (J&R Optimum) for raising over $41.6 million before costs through a Share Placement. J&R Optimum are currently one of China’s leading lithium battery producers focused on lithium iron phosphate (LiFePO₄) power battery systems for commercial and domestic applications, which is now having the strategic alliance with AJM. After the completion of the Share Placement, J&R Optimum would have a 19.9% shareholding in AJM. As per the agreement after the finishing of the Share Placement, J&R Optimum would have a right to participate in any new issues of shares in AJM on the same terms and conditions as other participants in that share issue up to such additional number of equity securities sufficient to maintain their ownership percentage in AJM. However, these anti-dilution rights are subject to the maintenance of an interest of not less than 15% of AJM, and will be granted after fulfilling all the required regulatory and other approvals.
 
Altura Pilgangoora Revised Ore Reserve Estimate:AJM has announced a revised Ore Reserve estimate of 30.1 Mt @1.04% Li₂O and the latest estimate represents an increase of 9.8 million tonnes on the previous estimate. The increase is due to the additional deep drill hole data and improved confidence in the drilling and sampling data after the completion of a closely spaced infill drilling program from June until October 2016.

Altura Pilgangoora Ore Reserve Estimate (Source: Company Reports)
 
Upgraded Indicated Mineral Resource Estimate: AJM’s upgraded indicated Mineral Resource is of 40.3 Mt @1.00% Li₂O, which is an increase on the previous indicated Mineral Resource of 30.6 Mt @1.04% Li₂O. Moreover, the revised Inferred Mineral Resource estimate of 2.3 million tonnes at 0.90% Li₂O is lower than the previously reported 8.6 million tonnes at 0.95% Li₂O due to the improved confidence in the data after the recent infill drilling program.

Altura Pilgangoora Mineral Resource Estimate (Source: Company Reports)
 
Agreement with Roy Hill Infrastructure Pty Ltd:The group made an agreement with Roy Hill Infrastructure Pty Ltd for the purchase of a 324-rooms camp, which is former Rail Camp 2 and is located just 20 km from the Pilgangoora mine site. AJM in January 2017 has finished all of the necessary approvals with regards to the final transfer of ownership of the camp from Roy Hill. Moreover, AJM is currently completing the recommissioning activities to enable occupation by its initial mining and construction workforce in early February 2017. The facility has been renamed “Pilgangoora Village”, which would offer quality accommodation during both the construction and operational phases of the project. Additionally, the village is strategically located on the Western side of the Turner River and therefore will not be cut off from a supply or evacuation point of view during the cyclone season.
 
Started bulk earthworks on site at its Pilgangoora Lithium Project: AJM has advised that their mining contractor NRW has started bulk earthworks on site at its 100% owned Pilgangoora Lithium Project located in the Pilbara region of Western Australia. The earthworks have started after getting the statutory approvals and is a major milestone for the project and its team members as AJM defines a clear pathway to production in early 2018. Moreover, the commencement of on-site works also brings AJM closer to unlocking significant strong cashflows in early 2018 through the sales of spodumene concentrate.
 

Commencement of Bulk Earthworks (Source: Company Reports)
 
Disinvestment of non-core coal assets: AJM has planned to divest its interests in both the Delta and Tabalong coal assets and is pursuing several options for sale of the coal assets. Their Delta Coal production was suspended as their resolution of legal action related to the contract mining operations is pending. The mining contractor’s legal case comprises asking payment for mining services to the coal mine, but Delta Coal has lodged a counter claim for breach of contract given the below contract performance leading to more contracted waste removal costs and lower than contracted coal delivery tonnes. But Tabalong Coal Project is a premium grade thermal coal deposit located in South Kalimantan, Indonesia which comprises five Mining Licenses (IUPs), with all five (5) IUPs granted for Operation Production. The group has 70% of three IUPs and holds 56% of the remaining.
 
Stock Performance:AJM stock has fallen 17.65% in the last three months (as on May 08, 2017) impacted by the weakening commodity sentiment coupled with the group’s cash flows scenario. On the other hand, AJM stock was added to all Ordinance Index from the March 20, 2017. Their recent world class Pilgangoora Lithium Project is now closer to production which would lead to a better cash flows and performance of the stock in the coming months. AJM stock surged 7% on May 09, 2017 while the group awarded three significant contracts for construction and operations at Pilgangoora to Civmec, Pacific Energy and Qube Holdings. Till date, AJM is progressing well on different aspects and development activities, including the fulfillment of funding requirements and seems to be placed well for first spodumene concentrate production in the Pilbara. It is expected that discussions with potential financiers may get to advanced stages in the coming months. We give a “Buy” recommendation on the stock at the current price of $ 0.15

 
AJM Daily Chart (Source: Thomson Reuters)

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