AJM Details

Altura Mining Limited 

AJM Provides Stage 1 Operations Update: Altura Mining Limited (ASX: AJM) had provided an update on Stage 1 operations from recently-commissioned flagship Altura Lithium Project which is located at Pilgangoora in Western Australia. There has been significant improvement with respect to daily production and overall lithium metal recovery during February which had provided a clear pathway to nameplate capacity. The daily output has achieved the nameplate capacity on several occasions and the near-nameplate recoveries of more than 70% have been achieved. The company had dispatched 8000-tonne cargo in February and another cargo is planned for the early March.

The company’s Security Purchase Plan (or SPP) offer revolves around the fact that for offer to each eligible shareholder to subscribe for up to $15,000 of new shares at the issue price of $0.13 each, with one free attaching Option exercisable at $0.20 each on or before February 28, 2022 for every two new shares issued, to raise up to $5,000,000 before costs. The Placement Options Offer of AJM states that for the offer of 34,763,997 New Options to the Placement Subscribers on the basis of 1 New Option for every 2 shares subscribed for by Placement Subscribers under the Placement.

With regards to Loan Conversion Offer, the company stated that for offer of up to 116,933,615 New Shares and 58,466,808 New Options to Lender under Loan Agreement. The issue of the New Securities under Loan Conversion Offer happens to be subject to Shareholder approval at General Meeting which is to be conducted on March 22, 2019.

With respect to Related Parties Offer, the company added that for offer of 3,540,000 New Shares at issue price of $0.13 each and 1,770,000 New Options to the Participating Directors under the Placement (Related Parties Offer). The issue of New Securities under the Related Parties Offer is subject to Shareholder approval at the Company's General Meeting which would be held on March 22, 2019.

What’s in For Shareholders: As stated by the company in the prospectus, the securities purchase plan is being held as part of wider funding exercise so that it can garner up to $29.5 million, which consists $5 million SPP, placement amounting to $9.5 million as well as $15 million director loan (to be converted to equity). The raised funds would give significant working capital buffer as the company is moving closer to achieve a nameplate production capacity of 220,000tpa at flagship Altura Lithium Project. The existing shareholders can participate and can help support the future of Altura to complete ramp up before the companyturn the minds to Stage 2 expansion of Altura Lithium Project.  

As a result of SPP, the eligible shareholders have an opportunity to increase Altura shareholding without paying brokerage fees or other transaction costs, irrespective of the size of their holding. Therefore, we advise that the shareholders can go ahead with the offer. However, it is recommended that the shareholders have exposure in view of some company specific risks which revolve around the capital and operating costs, reliance on key personnel as well as competition.

Stock Recommendation: On the daily chart of AJM, Exponential Moving Average or EMA has been applied and default values were used for the purposes. After careful observation, it was noticed that the stock price had crossed the EMA and had moved in the upward direction after crossover. Therefore, there are expectations that the company’s stock price might witness a rise moving forward. By looking at the usage of fund from the offering to ramp-up production capacity of the Altura Lithium project and for exploration and fulfill working capital needs, and bullish indication through chart, we have a ”Buy” recommendation on the stock at the current market price of $0.145 per share (up 11.538% on 27 February 2019).


AJM Daily Chart (Source: Thomson Reuters)
 

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