Kidman Resources Ltd

KDR Details

Significant Increase in Earl Grey Lithium Mineral Resource Estimate: Kidman Resources Ltd.’s (ASX: KDR) stock surged 5.2% on March 19, 2018 after a 54% increase in the combined Mineral Resource Estimate (MRE) for the Earl Grey Lithium Deposit was reported. Earl Grey is estimated to contain 189 million tonnes of 1.50% Li₂O or 7.03 million tonnes of Lithium Carbonate Equivalent, which is 91% of Resource classified as Measured or Indicated. Further, the result has confirmed Earl Grey’s position to be one of the world’s Tier-1 globally significant hard rock lithium deposits. Earl Grey is also expected to be in the first quartile of the global hard rock cost curve, as per the mine and concentrator scoping study.
 

Major Hard Rock Lithium Projects (Source: Company Reports)
 
Moreover, Western Australia Lithium joint venture (JV) with Sociedad Quimica y Minera de Chile (SQM) is rapidly advancing and the site selection for the proposed refinery is expected to be unveiled soon. Additionally, there is high level of interest from various parties seeking lithium hydroxide off-take. As a result, KDR stock continued to rise 14.52% in one month as on March 16, 2018. The expanded Exploration Target within KDR’s highly strategic Forrestania landholding, where multiple pegmatite targets are still to be tested, provides continued upside. We give a “Buy” recommendation on the stock at the current price of $2.24
 

KDR Daily Chart (Source: Thomson Reuters)
 

Woodside Petroleum Limited

WPL Details

New executive incentive structure: Woodside Petroleum Limited’s (ASX: WPL) stock rose 1.33% on March 19, 2018 with positive sentiments counting well on the stock and commodity prices. While the group’s recent production result was not upbeat (although now expected to increase from contribution by Wheatstone), the group is still putting efforts on reducing its production costs. Oil and LNG landscape is also expected to boost the performance. Meanwhile, WPL has recently completed a comprehensive review of the company’s Executive Incentive Framework, and it will now introduce a new executive incentive structure. As per the new structure, the executives will transition to the Executive Incentive Scheme (EIS) and the CEO will move to contractual terms. Further as per the new structure, 12.5% of award will be paid in cash and 87.5% of award will be paid in the form of restricted shares and performance rights. The changes are applied to awards allocated in 2019 for the 2018 performance year. On the other hand, WPL has raised gross proceeds of approximately A$2.5 billion through an Entitlement Offer, which the company will use to progress the Scarborough, SNE-Phase 1 and Browse developments. Meanwhile, WPL stock has fallen 8.87% in three months as on March 16, 2018 and concerns over oil price crash are doing the rounds. Nonetheless, we give a “Buy” on the stock at the current price of $28.99, given the long-term prospects and recent developments.
 

WPL Daily Chart (Source: Thomson Reuters)
 

Oil Search Limited

OSH Details

Petsec Energy Announced its Operatorship of Block 7 through the Acquisition of Oil Search (ROY) Limited: Oil Search Limited (ASX: OSH) stock rose 1.56% on March 19, 2018 after Petsec Energy acquired all of the shares of OSH’s subsidiary Oil Search (ROY) Limited, that holds a 40% working interest (34% participating interest) in the Al Barqa (Block 7) licence and operatorship, in the Republic of Yemen. Moreover, for the second half of 2018, the company is targeting LNG expansion feed. This includes, presentation of LNG expansion to Government, completion of Gas Agreement discussions with Government, completion of Pre-FEED and signing of binding downstream integration agreements. The company in 2018 also needs to seek approval for its Alaskan appraisal programme, leading to Nanushuk oil field FEED in 2019, and create value from Alaskan Option. Additionally, OSH will provide updated guidance for 2018 once the company has more clarity on the progress of repair works after Highlands earthquake, both at the PNG LNG Project facilities and at its own operations. On the other hand, OSH stock has fallen 4.46% in three months as on March 16, 2018. We give a “Hold” recommendation on the stock at the current price of  $7.18
 

OSH Daily Chart (Source: Thomson Reuters)
 

Newcrest Mining Limited

NCM Details

Updated Wafi-Golpu Feasibility Study: Newcrest Mining Limited’s (ASX: NCM) stock edged up by 0.1% on March 19, 2018, while an updated Wafi-Golpu Feasibility Study demonstrated lowest decile C1 cost copper production of $0.26/lb (or minus $2,128/oz AISC in gold production terms) with the initial capital expenditure to commercial production to be approximately $2.8bn. The NPV is of approximately $2.6bn and IRR in real terms is of approximately 18.2%. Moreover, compared to 2016 Preliminary Study findings, the updated Wafi-Golpu Feasibility Study shows that proposed starter block cave is larger (16mpta) and deeper and has three block caves (BC44, BC42 and BC40) in total. The proposed processing plant, will include the onsite self-generation of bulk power and associated fuel handling. Additionally, NCM has to submit the amended supporting documentation for SML (Special Mining License) on 20^th March 2018. The company is targeting to submit the Environmental Impact Statement (EIS) by end of June 2018. The finalisation and approval of the Study by Newcrest and Harmony Boards will be after grant of SML. On the other hand, an area of the Cadia northern tailings dam embankment slumped after the identification of cracks earlier in the day in the dam wall during a regular inspection. Meanwhile, NCM stock has fallen 11.6% in one month as on March 16, 2018 and is trading at a very high P/E. Based on the foregoing, we give an “Expensive” recommendation on the stock at the current price of $19.75
 

NCM Daily Chart (Source: Thomson Reuters)
 

Lanka Graphite Ltd

LGR Details

Significant fall in revenue in 1H 2018: Lanka Graphite Ltd (ASX: LGR) stock rose 3.64% on March 19, 2018 after the company for 1H 2018 reported a 2.5% change in the net loss to $792,646 from $813,194. However, the company has reported 77% fall in the revenue to $12 for 1H2018. The company has proposed not to pay dividend for 1H 2018.  Moreover, the company had undertaken additional capital raising activities and raised $436,732 by issuing shares during the period. On the other hand, the group can commence small scale production at its Sri Lanka Graphite project based on its first Artisanal Mining License at Exploration license EL307. LGR indicated to have production starting in quarter 1 of FY18 with volumes to reach at least 20 tonnes per month within six months of commencement.
 

1H 18 Financial Performance (Source: Company Reports)
 
The group also has distribution agreement (with G3) in place for graphene products to Australia and New Zealand. Moreover, National Taiwan University of Science and Technology (NTUST) in collaboration with UCSD has developed micro-patterned graphene -based sensing skins using Lanka’s high-grade vein graphite. Meanwhile, LGR stock has risen 14.58% in one month as on March 16, 2018 while it has fallen 21.4% in last one year. Based on the foregoing, we believe that this is a highly speculative bet and it would be better to wait for some more positives. We give an “Expensive” recommendation on the stock at the current price of $0.057
 

LGR Daily Chart (Source: Thomson Reuters)

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