Alumina Limited

AWC Details

Tracking on Growth: Up 4.7% on March 22, 2018, Alumina Limited (ASX: AWC) was soaring at the back of positive trends gearing up for the activated alumina market. The group invests worldwide in bauxite mining, alumina refining and selected aluminium smelting operations through its 40% ownership of Alcoa World Alumina and Chemical (AWAC). Recently, the company announced that Vanguard Group Inc. became the substantial holder since 08 March 2018 by holding 144,092,710 of securities with 5.003 per cent of the voting power. On financial front, the company recorded a statutory net profit after tax of $339.8 Mn for the full year to 31 December 2017 against the loss of $30.2 Mn in the prior corresponding period. The improvement in AWAC’s net profit was due to higher realised alumina prices during 2017. The company has declared a fully franked final dividend of US9.3 cents per share which is 200% higher than previous year. Alumina prices strengthened during 2017 as a result of High demand of alumina, tightness in the Atlantic market and structural & environmental reforms in China. Growth in demand for alumina rose by 7.7% in FY17.
 

NPAT Performance (Source: Company Reports)
 
The management of the company expects that global alumina market will be balanced in FY18. Meanwhile, EBITDA grew by 31% YoY to $1623.7 Mn in FY17 from $1239.2 Mn in FY16. Net cash inflows amounted to $1037.8 Mn from $652.8 Mn, marking a solid growth of 59% on year on year basis. In 2018, alumina will be produced from the Ma’aden/AWAC Ras Al Khair refinery in Saudi Arabia which is ramping up and recently operated at its 1.8 million tonne nameplate capacity. Meanwhile, the stock price was up by 7.3 per cent in the past six months as on March 21, 2018.  We have a “Hold” recommendation on the stock at the current price of $2.46
 

AWC Daily Chart (Source: Thomson Reuters)
 

Syrah Resources Limited

SYR Details

In-Line Production: Syrah Resources Limited (ASX: SYR) initially rose up on ASX before trading flat on March 22, 2018, and the rise seemed to be owing to overall positive sentiments in metal and mining sector with US Fed interest rate hike news. The group, which is an Australian-based industrial minerals and technology company, produced its first saleable flake graphite product in November 2017 and transitioned into operations on 1 January 2018.


Mining Characteristics (Source: Company Reports)
 
Recently, a mining agreement has been signed by his excellency Ernesto Max Elias Tomela, the Minister of Mineral resources and Energy on behalf of Government of the Republic of Mozambique and Syrah's wholly owned subsidiary, Twigg Exploration and Mining, Limitada. This has been the final step in the process for obtaining an approval on the Mining Agreement by the Administrative Court in Mozambique for enforcement. This agreement consolidates all prior project documents and approvals. Thereby, the ramp up production of flake and fines graphite at Balama with increased recoveries and production achieved in February 2018, has been tracking well. Syrah is now focused on the remaining commissioning activities of the fines circuit and further optimisation works. Marketing activities have stepped up to include binding sales agreements with battery anode manufacturers. Syrah has been targeting production of 160,000 - 180,000 tonnes in 2018 and 250,000 - 300,000 tonnes in 2019 of graphite concentrate based on demand scenario. Meanwhile, the stock price was up by 9.41% in the past one month as on March 21, 2018. Given the above, we have a “Hold” recommendation on the stock at the current price of $3.72
 

SYR Daily Chart (Source: Thomson Reuters)

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