Mustang Resources Ltd (ASX: MUS)

MUS Details

Targeting sustained production and cashflow: Mustang Resources Ltd (ASX: MUS), which is an emerging gemstone developer and producer focused on the near-term development of the highly prospective Montepuez Ruby Project in northern Mozambique, is setting itself for the maiden tender this week. MUS has finalised the inventory for its maiden public tender commencing October 27, 2017. The group will be offering 405,000 carats for sale and this is more than twice the quantum originally targeted (200,000 carats). The group is also indicating to start with processing of plant expansions immediately after the completion of the maiden tender. About 42 leading ruby buyers from across the globe (including Thailand, India, Sri Lanka, Hong Kong, the United States and Europe) are said to have officially registered for attending the tender. MUS is also readying itself to ramp-up the exploration program from November 2017 as part of its strategy to establish 10-year, JORC-compliant mine life. The next upgrade to the processing plant, subject to successful testing, and including the installation of an optical sorter in the existing plant, and procurement of a new 300tph jig plant, will help to enhance plant operating efficiencies while increasing the available processing capacity of Montepuez from ~432,000tpa to ~2Mtpa. MUS targets this in terms of installation and commission by July 2018. The group has further highlighted that the progress on operations at the Montepuez Project has provided a valuable insight into the likely size of the inventory which will be offered for sale at the two tenders planned for CY2018 of about at least one million carats; and MUS has already signalled about three tenders that are planned for CY2019. With these, the group is aiming to have a sustained production and cashflow on a much greater scale. We give a “Hold” on the stock at the current price of $0.17

Altura Mining Ltd (ASX: AJM)

AJM Details

Improved Mineral Resource and Ore Reserve estimates at Pilgangoora: Altura Mining Ltd (ASX: AJM) has reported for a more confident view on the commissioning of the 100% owned Pilgangoora Lithium Project early next year following increases to the Project’s Mineral Resource and Ore Reserve estimates. The group has reported for revised ore reserve estimate of 34.2 million tonnes at 1.04% Li₂O and 357,000 tonnes of contained Li₂O, including 8.1 million tonnes in the Proved category. Revised Mineral Resource estimate of 44 million tonnes at 1.00% Li₂O and 441,000 tonnes of contained Li₂O, including 8.5 million tonnes in the Measured category were reported. The change in the Mineral Resource estimate has been owing to the infill and confirmatory drilling that improved the geological interpretation of the deposit and reduced the risk associated with the categorisation of Measured and Indicated Resources. The improved confidence led to the conversion of 78% of the Mineral Resources to Ore Reserves. Overall, the upgrade reduces risks associated with grade control and orebody knowledge with almost 25% of Reserve now in the Proved category. Altura also confirmed that the project is on track for commissioning in 1Q 2018 and first sales in 2Q 2018.

Lately, AJM also updated about the progress on the construction of its flagship Altura Lithium Project which is continuing on schedule with 90% of plant and equipment now at the mine site ready for installation. Further, critical shipments in recent weeks marked the delivery of key long-lead items including the ball mill, apron feeder, dense media separation modules, thickeners, screens and conveyors. The group is scheduling its Annual General Meeting on November 22, 2017. In the last three months, the stock moved up 80% (as at October 23, 2017). We put a “Hold” on the stock at the current price of $0.275
 

Pilgangoora Lithium Project Geological and Drill Hole Plan (Source: Company Reports)

Saracen Mineral Holdings Ltd (ASX: SAR)

SAR Details

Surging on positive updates and outlook: Saracen Mineral Holdings’ stock surged up 10.3% on October 24, 2017 with positive sentiments at the back of encouraging updates from the group. SAR had reported for record quarterly gold production of 80,274oz (Thunderbox record 37,191oz; Carosue Dam 43,083oz) with a 11% quarter on quarter fall in all-in sustaining cash costs (AISC) of A$1,008/oz, compared to June quarter. The group maintained its FY18 guidance at ~300,000oz at an AISC of A$1,150/oz. The group’s cash and equivalents of A$60.5m at quarter-end have been up from A$45.2m despite spending A$22m on growth capital and exploration. Gold sales for the quarter of 79,799oz at an average sale price of A$1,583/oz for revenue of A$126.3m were reported. Further, SAR hedged about 48,000oz at A$1,704/oz, while 43,200oz of hedging was delivered at A$1,555/oz. There has been a 40% increase in group ore reserves of 2.1Moz at 30 June 2017 against 1.5Moz at 30 June 2016, despite depletion of 293,000oz, supporting a seven-year mine life at the 300,000oz per annum production rate. Overall, the group seems to have begun FY18 with a robust performance in terms of production and costs running ahead of annual guidance and healthy exploration outcomes. The group’s managing director, Raleigh Finlayson also indicated that record production, lower costs, a rising cash pile and 40% increase in reserves growth has led to a bumper start to the new financial year for Saracen. Growth is expected to fall in line with drivers that include organic growth opportunities at Carosue Dam, results at Karari and the start of drilling at Whirling Dervish. In last six months, the stock has moved up 40% (as at October 23, 2017) and is expected to have more momentum given the developments and positive outlook. We give a “Hold” recommendation at the current price of $1.48 
 

Outlook in years to come (Source: Company Reports)

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