Pilbara Minerals Limited

PLS Details
 
Atlas expected to take first delivery of DSO material from Pilgangoora in April 2018: Pilbara Minerals Limited’s (ASX: PLS) stock has risen 2.44% in last five days as on April 10, 2018 but slipped by 4% on April 11, 2018, while the first DSO sales from its 100%-owned Pilgangoora Lithium-Tantalum Project are nearing. This is after the completion of all conditions precedent to the Atlas Mine Gate Sale Agreement. The company has received USD$3M pre-payment from Atlas Iron to help fund DSO establishment costs. The mining of DSO material at the Monster Pit is now well advanced; and as per the Agreement, Atlas is expected to take first delivery of DSO material from Pilgangoora during April 2018. Moreover, the Agreement is expected to deliver a decent operating cash margin due to an attractive fixed US$ base price per wet metric tonne of mine gate material sold, subject to adjustments in respect of the final product specifications shipped and the actual shipping costs realised. Looking at the bigger picture, lithium price scenario for the medium term is decent and PLS is expected to witness improved financial results in FY19 given the recent developments. Therefore, we give a “Hold” recommendation on the stock at the current price of $ 0.805.
 

PLS Daily Chart (Source: Thomson Reuters)
 

Orocobre Limited

ORE Details
 
Cauchari Drilling Update: Orocobre Limited’s (ASX: ORE) stock fell 4.4% on April 11, 2018 with market volatility. On the other hand, the company has confirmed positive porosity and permeability conditions of the NW Sector extending north from CAU07, CAU16 and CAU15 from the drilling of Diamond core hole CAU18. ORE has received the results of nine brine analyses of CAU18 for the interval from 165 m to 320 m depth, which consist of sand and halite dominated units. The nine CAU18 brine analyses averaged 476 mg/l Lithium and 3,727 mg/l Potassium from 165-320 m depth. The average Mg/Li ratio is of 2.5:1, which is very similar to the nearby hole CAU07 (2.3:1) and the producing Olaroz brine project resource (2.4:1). This is very positive for utilisation of conventional or other brine processes. Moreover, Phase 3 drill program is planned for depths below 450 m to fully define the extent of the deeper sand unit and the base of the Cauchari salar basin. The program will be supported by a new drill rig, that will be mobilized to the Project by mid-April. On the other hand, ORE has adopted a restricted share unit plan to further align the interests of the company’s senior executives, key employees, consultants and directors with those of the shareholders of the company. It is worth noting that the exploration program is being managed by JV partner Advantage Lithium Corp. who hold 75% of Cauchari, while Orocobre owns the remaining 25% of Cauchari and 29% of Advantage Lithium’s issued capital. Meanwhile, ORE stock has fallen 29.19% in three months as at April 10, 2018 as the group reported for softness in production for the March quarter (2,802 tonnes, down 29% from 3,937 tonnes in the December quarter) due to adverse natural conditions noted at Olaroz. We give a “Hold” recommendation on the stock at the current price of $ 4.780.
 

ORE Daily Chart (Source: Thomson Reuters)
 

Western Areas Limited

WSA Details

Early capital works program to commence at the Odysseus Project: Western Areas Limited’s (ASX: WSA) stock rose 3.4% on April 11, 2018 with commodity price movement, despite the fact that WSA’s Board very recently approved an early capital works program, prior to the release of the DFS, for the Odysseus Project at Cosmos. This reflects the company’s confidence on Odysseus to become WSA’s third operating mine and second production centre in Western Australia. As well as, the company seems to be positive on the nickel sulphide market as the demand for Class 1 nickel sulphides in the battery and electric vehicle (EV) market is projected to grow substantially over coming years.
 

Breakdown of costs, into three work programs of Early works program (Source: Company Reports)
 
The early capital works program is an eighteen?month program with an estimated cost of A$32m and will commence later this month. This will also bring Odysseus to development ready status. Additionally, DFS is scheduled to be released in the September quarter with an expanded mine life and production profile. Meanwhile, WSA stock has risen 3.88% in one month as on April 10, 2018. Based on the foregoing, we give a “Hold” recommendation on the stock at the current price of $ 3.320, while the group’s FY18 metrics are on track.
 

WSA Daily Chart (Source: Thomson Reuters)
 

Westgold Resources Limited

WGX Details

Downgraded gold production guidance for calendar year 2018: Westgold Resources Ltd (ASX: WGX) has downgraded its gold production guidance for calendar 2018 to 275,000 ounces compared to the 340,000 ounces as announced in February. This was due to various factors, including flooding at the Meekatharra project in the March 2018 quarter and repairs at the Higginsville mine. However, the growth to higher gold production rates in future years is intact with onset of production from the Big Bell Mine at CGO. The Big Bell Mine will be WGX’s largest individual mine with an expected steady-state mine output of one million tonnes per annum. Moreover, the new development into virgin zones is expected to start in the December Quarter of 2018. The ore development is expected to re-commence in early 2019 with a 15-month build-up to full production, which will add approximately 100,000 ounces per annum to group output with the mine having an initial ore reserve of 964,000 ounces (10.1 million tonnes @ 2.97 g/t). Meanwhile, WGX stock has risen 2.37% in last five days as on April 10, 2018. While the gold production in short term has been indicated to be low, the stock price has not been sinking and this indicates the long-term potential still being intact. The group has otherwise reported for first gold pour at Tuckabianna. We maintain a “Buy” recommendation on the stock at the current price of $ 1.510.
 

WGX Daily Chart (Source: Thomson Reuters)
 

Altura Mining Limited

AJM Details

Southern Ridge Deposit’s infill drilling continues to deliver strong lithium intersections: Altura Mining Limited’s (ASX: AJM) stock rose 1.33% on April 11, 2018 after the Southern Ridge Deposit’s infill drilling has been reported to be continued to deliver strong lithium intersections. Southern Ridge Deposit has the potential to increase the Ore Reserve and Mineral Resource estimate of the Altura Lithium Project, which is currently on track for first lithium concentrate sales in Q2 2018. AJM is currently moving its operation towards its Stage 1 production target of 220,000 tpa of 6% grade Li₂O. The Southern Ridge Deposit area is adjoining to the main Pilgangoora deposit. The integration of these results will provide a good platform for the upcoming Stage 2 expansion study. The Stage 2 expansion Definitive Feasibility Study is on track for completion by the end of April 2018.
 

Lithium Project - Stage 2 (Source: Company Reports)
 
On the other hand, AJM has appointed Citigroup, which is the leading global Corporate and Investment Bank, to act as corporate adviser to the Company. Citigroup will assist the company in considering potential interest that may emerge from J&R Optimum Energy and other local and international parties. Meanwhile, AJM stock has fallen 20.21% in three months as on April 10, 2018 with the lithium sector volatility. We give a “Hold” recommendation on the stock at the current price of $ 0.380.
 
 

AJM Daily Chart (Source: Thomson Reuters)

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