In today’s daily we have covered stock research on Tiger Resources (BUY).
The S&P 500 was up by 5.57 points or 0.27% on Wednesday and closed at 2081.90 points. U.S. stocks ended a volatile session with modest gains on Wednesday after minutes from aU.S. Federal Reserve meeting indicated that the central bank remained on track for a interest rate hike this year. Fed officials acknowledged risks from overseas and a weak start to the year at their March meeting but remained confident in the strength of the recovery, the minutes showed. Markets were supported boosted by merger activity in the healthcare sector, though the energy sector was weak as crude oil plunged.
Mylan jumped 14.8 percent to $68.36 after the generic drugmaker offered to buy PerrigoCo for about $29 billion in cash and stock. Perrigo jumped 18.4 percent to $195. The two companies were the biggest percentage gainers on the S&P 500. After the market closed,Alcoa Inc reported first-quarter revenue that was below expectations. The stock, which is viewed as the unofficial kick-off to the earnings season, was flat in extended trading.
Alcoa Daily Chart (Source - Thomson Reuters)
S&P ASX 200 was up by 34.70 points or 0.59% on Wednesday and closed at 5960.7 points. Rio Tinto shares finished Wednesday lifted 1.5 per cent to $US57. BHP Billiton gained 1 per cent to $30.74 and Fortescue Metals jumped 8.1 per cent to $1.94. ANZBanking Group shares slipped 0.3 per cent to $36.79, as the Federal Court overturned an appeal from the bank over credit card late-payment fees.
Harvey Norman shares fell 0.7 per cent to $4.33. Myer shares surged 8.8 per cent to $1.425. Among the other banks, Commonwealth Bank of Australia dropped 0.2 per cent to $94, National Australia Bank added 0.3 per cent to $38.45 and Westpac Banking Corp rose 0.3 per cent to $39.76. SPI futures are up 9 points. The Australian dollar was trading at US76.89¢, little changed from Wednesday's local close at US76.77¢. The local sharemarket has shaken off Tuesday's rates decision and pushed higher for the third straight session.
ANZ Daily Chart (Source – Thomson Reuters)
Top Performers on the ASX 200 were :-
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Tiger Resources Video
Stock Of The Day - Tiger Resources (BUY)
Tiger Resources (TGS) has seen lot of turbulence in the past one year. The results showcased that the Company’s revenue got affected by lower copper price environment and lower payable copper volumes 21.4kt Copper versus 27.7kt Copper. The full year profit of US$8m was reported which was a dip from a $33m profit in 2013. There was a 37% fall year on year with regards to the reported EBITDA for the full year of US$48m. The increased finance costs from funding of SXEW plant and acquisition of Gecamines interest in Kipoi JV was another important aspect. Particularly, the transition from the heavy media separation (HMS) plant to the SXEW plant got the operating cash flows of $5m. Cash flows were also impacted by acquisition of Gecamines’ 40% interest leading to TGS issuing equity and debt. At the end of the year, TGS reported cash of $21.5m and a net debt position of $155m with a high gearing at about 50%.
Income Statement (Source – Company Reports)
We still believe that TGS’s Kipoi asset is a cash generative one having a long life (+10 years). However, in view of the existing copper prices TGS may need to have re-financing of existing debt. The Company believes to have secured debt facilities by mid of 2015. We note that TGS debt of US$175m through four separate facilities are maturing in 2015 or 2016 and there is also a repayment due in January 2016 for the US$100m acquisition finance facility. Therefore, major re-financing is thus expected soon. At the same time, stable output from SXEW plant will be required for any good refinancing deal. As of now on track production for the first two months of 2015 of 4kt of copper cathode seems to help achieve the guidance of 25ktpa. The Company specifically reported for strong production performance in January/February wet season with 3,920t cathode produced to 28thFebruary 2015.
Kipoi SXEW Phase 2 provides a Compelling Expansion Proposition (Source – Company Reports)
TGS thus recapped the production guidance of 25kt cathode for 2015. Few disruptions during rains in February resulted from wet season management initiatives. Nonetheless, it is to be born in mind that the 25ktpa operation may not enough to take care of the fixed cost base and the existing debt repayment structure. The market believes that there may be a requirement of circa $225m refinance for replacing the existing debt and for aiding the expansion to 50ktpa. It will be prudent to watch if the copper price makes the market consider TGS as a target for a takeover. As per the 1Q15 updates, the Company also reported that the 30Mva substation is expected to be installed by end of 2Q15.
Financing Facilities (Source – Company Reports)
TGS conveyed that the average 2015 cash operating costs are in the range of $1.30/lb to US$1.40/lb while the all-in sustaining cash costs are in the range of $1.57/lb to $1.67/lb. The 2015 stacked material has been projected to be 1.00mt at an average grade of 3.6% AsCu. About 9kt acid soluble copper is expected under leach at the end of 2015. The stacked material is expected to include oxide floats with an average grade of 2.5% AsCu, expected recovery 90% after 120 days under leach; and HSO material with an average grade of 4.2% AsCu, expected recovery 70% after 300 days under leach.
Stacked AsCu Grade (Source – Company Reports)
As per the 2015 outlook, the Company aims to emphasize on maintaining safe and strong operating performance. TGS aims to have Kipoi transition to grid power generation while power quality allows for production of high quality LME 99.999% copper cathode.
Demonstrated Track Record of Mine Plan Execution in the DRC (Source – Company Reports)
The value of the Kipoi ore body is expected to be realized for the benefit of shareholders and stakeholders. The Company also believes that the near mine exploration is set to high the confidence levels while increasing the Kipoi’s life of mine.
TGS Daily Chart (Source - Thomson Reuters)
Accordingly, we put a BUY recommendation for the stock at the current price of $0.051.
Level 13 167 Macquarie Street
Sydney NSW 2000 Australia
E-Mail - [email protected]
Phone - 02 8667 3147
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