Metals X Limited

Update on Nifty Copper Operations:Metals X Limited (ASX: MLX) is involved in the operation of tine and copper mines in Australia; and exploration and development of base metals projects in Australia. On November 15, 2019, the company provided an update on its Nifty Copper Operations, where it highlighted that in September’19 quarter, it made positive progress on each of the Nifty work streams underlying the key lead indicators for the targeted increase in mining production rate to 2 Mtpa.The key lead indicators included confidence in the resources and reserves, development of mining stocks, progress on ventilation issues and resolution of paste delivery systems. However, despite the company’s continued progress against these lead indicators, the expected resulting increase in mining rate is yet to be realised. In particular, production for the December quarter to date has been negatively impacted by delays in bringing targeted stopes on line, lower than planned equipment reliability and underground productivity.

Key Highlights of September’19 Quarter:Production of tin contained in concentrate for the period was reported at 2,056 tonnes at an AISC of $16,105 per tonne of tin. EBITDA and net cash flow for the period was reported at $9.3 Mn and $5.5 Mn, respectively. Production of copper contained in concentrate was reported at 3,425 tonnes at an AISC of $11,655 per tonne. EBITDA loss and net cash outflow for the period was reported at $12.9 Mn and $24.4 Mn, respectively.

Closing cash and working capital at the end of the period was reported at $63.1 Mn, including cash of $50.9 Mn. Loan facility established with Citibank was reported at $35 Mn.During the period, MLX completed Capital raising of A$32.7 Mn, which comprised institutional placement and fully underwritten accelerated non-renounceable entitlement offer, with strong support by a number of high-quality existing and new institutional investors.


September’19 Quarter Cash Movements (Source: Company Reports)

What to Expect:MLX is focusing over Renison Tin Operations for optimizing the mine schedule to increase mine grades and increasing mine production. It is targeting to increase mining rates to ~1 Mtpa to optimise ore sorter tin recovery and mass rejection. Under the metallurgical improvement program, the company has identified numerous opportunities to increase throughput, recovery and concentrate quality. Moreover, with recent increase in both nickel and cobalt prices, the company is exploring potential partners to develop Wingellina.

Stock Recommendation:MLX’ share generated a negative YTD return of 55.81%. Its current ratio for FY19 stood at 1.99x, better than the industry median of 1.81x, which implies that the company is in a better position to address its short-term obligations. Its debt to equity ratio for FY19 stood at 0.09x, lower than the industry median of 0.12x. The stock is currently trading below the average of its 52-week high and low of $0.446 - $0.136. Hence, considering the recent update on Nifty Copper Operations, company’s progress on Renison Tin Operations, exploration for potential partners for Ni-Co segmentand current trading levels, we recommend a “Hold” rating on the stock at the current market price of $0.180, down 12.195% on November 15, 2019 on the back of release in relation to the weak production activity for December quarter.
 

Carnarvon Petroleum Limited

All Resolutions at AGM Passed Via Poll:Carnarvon Petroleum Limited (ASX: CVN) is involved in oil & gas exploration, development and production. On November 15, 2019, the company informed the market that all resolutions considered at its 2019 Annual General Meeting were passed by poll.

September’19 Quarter Key Highlights:The company raised $82.5 Mn (before costs) through an institutional placement and share purchase plan to fund its ongoing appraisal activities and initial phases of the Dorado development. Net cash outflow from operating activities for the period was reported at $19,944,000. Net cash outflow from investing activities for the period was reported at $8,000. Net cash outflow from financing activities for the period was reported at $78,420,000. Cash and cash equivalents at the end of the period was reported at $133,403,000.




September’19 Quarter Operating Cash Flow Statement (Source: Company Reports)

What to Expect:The Dorado -3 appraisal well provided further confirmation of the very large Dorado resource which was discovered in 2018. Moving to the Buffalo project, Carnarvon also achieved an important milestone by signing a Production Sharing Contract (PSC) with the Government of Timor -Leste. The signing coincides with the ratification of the Maritime Boundary Treaty between Australia and Timor - Leste which has resulted in the Buffalo oil field project moving into Timor - Leste jurisdiction. The finalisation of the PSC signing is an important step which gives Carnarvon clarity to progress its plans to re -develop the Buffalo oil field.

Stock Recommendation:MLX’ share generated a YTD return of 7.58%. The stock is currently trading towards its 52-week low of $0.305. Its current ratio for FY19 stood at 34.66x, better than the industry median of 1.21x, which implies that the company is in a better position to address its short-term obligations. The company is in a great position to progress its major projects, particularly as the Dorado Project moves into the Front-End Engineering Design (FEED) phase before the Final Investment Decision (FID).Hence, considering the aforesaid factsand current trading levels, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.355, down 1.389% on November 15, 2019.

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.