Paladin Energy Ltd

Hylea Metals Acquires to 65% Stake In PDN’s Kayelekera Project: Paladin Energy Ltd (ASX: PDN) has an engagement in the development and operation of Uranium mines in Africa, together with the global exploration and evaluation activities in Africa, Australia and Canada. The company recently acknowledged the market that Hylea Metals Limited has entered into the agreement with PDN to acquire a 65% interest in the Kayelekera Uranium Project in Malawi. The remaining 35% is held by HCO’s joint venture partner Chichewa (20%), and the Government of Malawi (15%).

In another update, PDN announced the appointment of Ms Anna Sudlow as Chief Financial Officer (CFO), effective from 1 July 2019, replacing the current CFO, Mr Craig Barnes who is leaving the company to pursue other opportunities.

March’19 Key Highlights: On the safety concerns, no lost-time injuries were reported at the Langer Heinrich Mine or Kayelekera Mine, during the period.PDN reported no uranium sales in the March quarter. Its cash and cash equivalent for the period was reported at US$29.9 Mn.


H1FY19 Cashflow Data (Source: Company Reports)

What To Expect: The first stage of a pre-feasibility study (PFS) to refine the rapid restart plan is expected to complete by September 2019.

The second stage of PFS for process optimisation is expected to complete by March 2020.It involves a more detailed study including process optimisation targeting aspirational average life of mine all-in costs for LHM of US$30/lb. The process optimisation study will target an operating cost reduction of approximately US$6/lb of U₃O₈ and generate a saleable vanadium product, as well as completing a front-end upgrade in the future that would expand the scale of the current beneficiation circuit to enable low-grade ore to be processed with greater operating margins.

Uranium Outlook: Uranium usage is expected to increase globally which is supported by the fact that, as per IPCC report, Global Warming may increase by 1.5 degree Celsius by 2030. As a retaliatory measure, various countries are focusing on renewable and alternate source of energy.

China plans to have 56 reactors operating by 2020 and 180 reactors, or 220% increase, by 2030 to reduce its reliance on coal. India is expected to have 21 reactors into operation by 2031. Saudi Arabia announced 17 new reactors to be built in the coming years. There is further growth opportunity to produce Vanadium at LHM, and estimated production has been kept at ~ 1.3Mlbs pa. The future demand for Vanadium is expected to rise due to supply constraints.
Stock Recommendation:Its current ratio for H1FY19 stands at 12.85x, which is better than the industry median of 1.25x, which implies the company is in a better position to address its short-term obligations. The company’s stock price is trading towards the 52-week lower levels which can be considered as a decent opportunity to make an entry. Hence, considering the aforesaid facts and current trading level, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.120 per share.
 

Nuheara Limited

NUH’s Share Tumbled Over 16% On June 25, 2019: Nuheara Limited (ASX: NUH) has an engagement in the development and commercialisation of its proprietary hearing and wearables technology platform. The company provided recent updates to the market, where it highlighted that its IQstream TV™ commenced shipping the first week of June, ahead of its scheduled shipping date. The Company has seen a significant up-take from existing IQbuds BOOST™ customers. With IQstream TV™ successfully entering mass production, the technical team is now focusing on bringing IQbuds MAX™ into mass production. Further, pre-production builds of IQbuds MAX™ on the production line are planned for Q3 2019 and to enter the later stages of mass production in Q4 2019. NUH announced that the company’s contract with the Australian Government Hearing Services Program (HSP) has now been extended to June 30, 2020.  

NUH announced that its IQbuds BOOST™ has successfully been placed on the NHS Scotland hearing contract (which also incorporates the Northern Ireland region) under the Hearables category, Lot 5 – Hearable and Wearable. This contract would help the company to fulfil its aspiration to become a global hearing leader by providing more functional, affordable and accessible hearable products.

March’19 Quarter Financial Highlights: NUH’s cash balance was reported at $5.68 Mn with zero debt on March 31, 2019. The cash receipts from customers for the quarter period was reported at $641K, which is 11.5% down as compared to the previous quarter.

 
March’19 Operating Cashflow Metrics (Source: Company Reports)

Stock Recommendation:NUH’s gross margin, EBITDA margin and net margin for H1FY19 stood negative, which implies that the company is yet to post a decent financial performance. Moreover, its EV/Sales and P/B multiple for TTM stand at 17.9x and 4.4x, which are higher than the industry median of 7.6x and 3.8x, respectively, indicating an overvalued position at the current juncture.

Hence, considering the aforesaid facts and current trading level, we recommend investors to avoid the stock at the current market price of $0.060 per share (down 16.667% on June 25, 2019).
 

Altura Mining Limited

Ningbo Shanshan Becomes Substantial Holder To AJM: Altura Mining Limited (ASX: AJM) has an engagement in the construction of the mine and processing plant at Altura’s 100% owned Pilgangoora Lithium project in the Pilbara region of Western Australia. The company recently announced that Ningbo Shanshan Co. Ltd has acquired around 251 Mn shares in the company (11.8% interest), from the former shareholder Shaanxi J&R Optimum Energy Co. Ltd. Ningbo Shanshan has been an early mover in the battery materials markets and has become a global leader.

March’19 Quarter Key Highlights: AJM completed commissioning of Stage 1 at the Altura Lithium Mine. The process of plant improvement throughout the quarter has resulted in the consistent production of ~14,000 tonnes per month of Spodumene. The Company shipped two cargoes totalling 14,770 dmt to Chinese based converters with the third cargo of around 8,000 dmt loaded in the first week of April. There were delays at the port due to severe tropical cyclone veronica. The company was able to raise A$24.5 Mn through the placement to institutional and sophisticated investors. It further raised A$14 Mn from the securities purchase plan (SPP) offer to existing eligible shareholders.


H1FY19 P&L Statement (Source: Company Reports)

H1FY19 Financial Performance: Revenue from continuing operations was reported at $0.45 Mn in H1FY19 as compared to $0.41 Mn in H1FY18. Net loss from the continuing operations for the period was reported at $10.88 Mn in H1FY19 as compared to a loss of $4.24 Mn in H1FY18.  

What to expect: The company aims to create sustainable value for its shareholders through the development of profitable mining operations and other supplementary mining activities. It also aims to complete commissioning and achieve commercial production and sales from its Lithium project.

Stock Recommendation:The company’s stock is trading close to its 52 weeks low levels ($0.095), and therefore probability to bounce back increases. Moreover, its EV/Sales multiple for TTM stands at 10.9x, which is lower than the industry median of 163.3x, indicating an undervalued position at the current juncture.

Hence, considering the aforesaid facts and current trading level, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.125 per share (down 10.714% on June 25, 2019).
 

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