Clean TeQ Holdings Limited

CLQ Details
· Update on Syerston Nickel & Cobalt Pre-Feasibility Study results: Clean TeQ Holdings Limited (ASX: CLQ) stock recovered over 12.8% on October 11, 2016 driven by the recovery in the commodity prices. The stock has corrected over 27.1% in the last five days (as of October 10, 2016) as investors were expecting a better Syerston Nickel & Cobalt Pre-Feasibility Study results. The PFS forecasted an operation to process 2.5Mtpa ore over an initial 20-year period with current Reserves available for up to 19-years of further mine life. The Average annual production is expected to be 18,730tpa of contained nickel metal equivalent and 3,222tpa of contained cobalt metal equivalent in the next 3-20 years. After-tax NPV is expected to be US$891 million (A$1,187M) and 25% post-tax IRR, while long term average nickel and cobalt prices are forecasted to be US$7.50/lb and US$12.00/lb, respectively. With scandium oxide (Sc₂O₃) by-product production (50tpa at US$1,500/kg), the post-tax NPV is forecasted to rise to US$1,233 million (A$1,645M) while the post-tax IRR is expected to be 30%. Meanwhile, CLQ stock already surged over 168.8% (as of October 10, 2016) this year to date.

· Recommendation: We give an “Expensive” recommendation on the stock at the current price of $0.48


Syerston Nickel & Cobalt PFS base case revenue forecasts (Source: Company Reports)

Oil Search Limited

OSH Details
· Recovering oil prices: Oil Search Limited (ASX: OSH) stock surged 3.4% on October 11, 2016 driven by the recovering oil prices coupled with positive exploration and appraisal drilling update for September 2016. For Strickland 1 ST3, the well was side tracked for the third time and drilled the unstable interval. The well is making efforts for 8 ½” hole, which would be drilled to the top of the reservoir section in the leru formation. For Antelope 7 well, the mobilization of Rig HA115 from Herd Base to the Antelope 7 drill site has started. The rig move was finished 92% while rig-up was finished 37% during the month. On the other side, Russia is also joining Saudi Arabia to support the OPEC for oil production freezing to revert the global oil prices pressure. This could further drive the OSH stock in the coming months.

· Recommendation: We give a “buy” recommendation on the stock at the current price of $7.65
 

Strickland well (Source: Company Reports)

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