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Market: AIM
Sector: General Mining - Rare Earth Minerals
EPIC: TXR
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Titanium Resources
titaniumresources.com
Titanium Resources Group is a mining company with operations in the Republic of Sierra Leone. The Group is the country's largest private sector employer and produces rutile and ilmenite for use in industrial applications. The Group's operations historically accounted for over 65 per cent of the exports of Sierra Leone.
Full Titanium Resources profile here
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Arbuthnot maintains 'buy' recommendation and 20p target for Titanium Resources after placing

19th Nov 2009, 5:24 pm Arbuthnot maintains 'buy' recommendation and 20p target for Titanium Resources after placing

Banking and wealth management service Arbuthnot issued a research report on Titanium Resources Group (AIM: TXR) today in response to the company’s recent placing, reiterating 'buy' recommendation and maintaining its target price of 20 pence for what it earlier called one of the best recovery plays in the sector.

Titanium placed 151.2 million shares at 10 pence per share to raise gross proceeds of US$25 million, aiming to increase production at its rutile deposit in Sierra Leone. US$20 million will be used to complete the construction of the Dredge D3 to add 30,000 tonnes to its annual production in 2011, with US$2 million used to improve recoveries on the Dredge D1 Wet Plant to add a further 5,000 tpa (tonnes per annum).

The remainder will be used to fund the upgrade of the company’s Land Plants to increase its total processing capacity to 280,000 tpa.

Titanium Resources said it was on track to achieve targeted production of 65,000 tonnes of rutile and 8,000 tonnes of zircon concentrate this year. Production is set to increase next year following the replacement of the bucket line on Dredge D1, which, combined with the commissioning of Dredge D3, is expected to provide a “healthy cashflow” for the company.

Arbuthnot’s previous valuation of the business took into account a fund raising with the price target taken form the lower end of the potential placing price range of 5 to 10 pence. The report said that with the lower dilution from the placing at 10 pence and its post-fundraising valuation of £110 million, there was scope to increase the target price in line with the reduced dilution.

The stock was upgraded to 'buy in September.

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