Syrah Resources Ltd

SYR Details

Mining agreement approved by government of Mozambique: Syrah Resources Ltd (ASX: SYR), up over 9% on August 30, 2017, announced that its wholly owned subsidiary, Twigg Exploration and Mining, Limitada (Twigg), holder of the Balama Project, has finalised the negotiation of a Mining Agreement with the Ministry of Mineral Resources and Energy of the Republic of Mozambique. Accordingly, it was approved by the Government of the Republic of Mozambique on 29 August 2017. The Mining Agreement consolidates all prior project documents and approvals. Further, it also provides the Company with clarity around the governing laws and contractualises the mining rights and other obligations for the Balama Project in Mozambique. In accordance with ordinary administrative procedures, the main legal terms of the Mining Agreement will now be gazetted and the Agreement signed by Twigg and the Minister of Mineral Resources and Energy (on behalf of Government of the Republic of Mozambique) in the coming weeks. It will then be presented to the Administrative Court in Mozambique for sanctioning after which it will be binding and enforceable. The Company will announce the key commercial terms of the Mining Agreement once the agreement is signed and becomes binding and enforceable. Given the ongoing project approvals and progress, we maintain a “Hold” recommendation on the stock at the current price of $ 2.97

Sandfire Resources NL

SFR Details

Boost from commodity price: For FY17, Sandfire Resources NL (ASX: SFR) reported a 62% increase in net profit after tax at $77.5 million (FY16: $48.0 million). As a result, SFR stock moved up 3.5% on August 30, 2017. Strong sales and positive copper price adjustment gains resulted in sales revenue of $532.5 million (FY16: $485.8 million), and payable metal sales totalled 62,663 tonnes of payable copper and 34,333 ounces of payable gold (65,832 tonnes of payable copper and 33,302 ounces of payable gold for FY16). The robust financial result was supported by consistent operational performance, lower costs and a significantly improved copper price, which together allowed the company to retire all its debt and almost double its year-end cash position to $126.7 million. The result equates to earnings per share of 49.16c (FY16: 30.54c). The DeGrussa Copper-Gold Mine posted another strong production performance for FY2017 with copper production of 67,088 tonnes and gold production of 38,623 ounces, at a reduced C1 cash operating cost of US$0.93/lb.

Moreover, cash flow from operating activities increased substantially to $216.1 million (FY16: $133.9 million) and to $248.3 million prior to payments for exploration and evaluation expenses (FY16: $166.5 million). Notably, the continued strong cash-flow generation of the DeGrussa Mine segment allowed Sandfire to fully repay its outstanding bank debt during the year, with the $50.0 million outstanding balance on the original $380.0 million DeGrussa Finance Facility. The stock has declined 13% in the past six months while was up 3.7% in the past one year (as at August 29, 2017). Given the volatility in commodity prices, we maintain an “Expensive” recommendation on the stock at the current price of $ 5.78

Magnis Resources Ltd

MNS Details

Qld Premier supports the Townsville Lithium-ion Giga factory: Magnis Resources Ltd (ASX: MNS) has announced that Queensland Premier Annastacia Palaszczuk has publicly expressed support for Townsville Lithium-ion battery Giga factory project following the submission of a scoping study, that demonstrates the project’s positive economic impact. The consortium (that includes MNS) also continues to receive strong support and assistance from local government and State Members of Parliament. Considerable progress is being made in funding discussions with relevant State and Federal government bodies, along with private enterprise including local and overseas groups within the energy sector. As part of the funding discussion process, land valuation work has been completed on the 400-hectare site in Woodstock, Queensland that has been selected as the location for the Townsville Giga factory. In parallel, strong progress is being made on the technical development of the project, including qualification of manufacturing input materials and budget pricing. Further, engagement with major equipment vendors is ongoing and budget costs received to date have been consistent with scoping study estimates. Pilot testing of manufacturing processes and production of prototype battery products for potential customers has begun. However, this work is part of a process package that is being developed for the next phase of the feasibility study. 

Product Streams and Pricing (Source: Company Reports)
 
The stock price has declined over 40% in the last three months (as at August 29, 2017) owing to volatility, decline in graphite prices and termination of offtake agreements with couple of clients. However, the stock is expected to rebound given the ongoing project developments at Nachu graphite project and positive developments regarding Townsville Lithium-ion battery Giga factory. MNS moved up about 1.33% on August 30, 2017 after falling over 8% in last couple of days. We maintain a “Buy” recommendation on the stock at the current market price of $ 0.38

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