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Northland Capital Partners View on the City - W Resources; Active Energy

Published: 10:41 03 Dec 2018 GMT

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SECTOR: MINING; ENERGY

W RESOURCES (LON:WRES)

SECTOR – MINING

RATING – BUY*

MARKET CAP – £28.5m

CURRENT PRICE – 0.52p#

TARGET PRICE – 1.2p

ANALYST –BARRY GIBB

 

 

Year-end Dec

2016A

2017A

2018E

2019E

 

Revenue (£m)

0.1

-

-

 28.8

EBITDA (£m)

(0.6)

(0.5)

(0.7)

 15.1

PBT/(LBT) (£m)

(0.9)

(0.7)

(4.2)

 7.6

Basic adj. EPS/(LPS) (p)

(0.0)

(0.0)

(0.1)

 0.1

DPS (p)

-

-

-

-

Net Cash/(Debt) (£m)

(0.7)

(0.8)

(26.1)

(15.2)

P/E (x)

n.a.

n.a.

n.a.

4.8

Dividend yield (%)

-

-

-

-

EV/EBITDA (x)

(34.5)

(53.8)

(78.0)

 2.9

 

SOURCE: Northland Capital Partners Limited estimates. #Priced at prior trading day close. *Northland Capital Partners Limited provides commissioned research coverage to W Resources and therefore this information should be viewed as a Marketing Communication.

 

First Tungsten Export Shipment from the La Parrilla Mine

 

NORTHLAND VIEW

  • W Resources announced its first shipment of tungsten concentrate from its La Parrilla Mine, following the early start-up of production as part of a planned staged build-up to full mine production in H1 2019.

  • This is the first of a three stage production programme, which is expected to allow the Company to generate revenue and cash flow ahead of its move to large scale production in 2019 with a planned run rate of 2,500 tonnes per annum of tungsten concentrate. Export shipment size is expected to build through December and the New Year.

W Resources announced on 20 November 2018, that it had commenced early start-up of production of tungsten and tin concentrate at its La Parrilla mine in Spain. This was part of a planned staged build-up to full mine production in H119, with first crushed mine feed being taken to the existing concentrator.  As expected, this has now resulted in a first shipment of concentrate to its major European offtake customer which was successfully delivered on 30th November. In turn, this should pave the way for production from a new larger scale concentrator in Q219. Having secured a US$35m debt finance facility from Blackrock in Q120 along with two major offtake agreements (firstly with Europe’s leading tungsten processor and secondly with a leading US supplier) against a background of firm product pricing, WRES’s strategic planning now appears well advanced.  Against this, last week’s minor fund raise was designed simply to provide working capital independent of the debt finance facility, while also introducing new, highly credible investors to the share register.  Despite this positive news, La Parrilla’s quality concentrate and excellent geographical location, the share price has failed to respond to the Project delivering on its advanced development stages, which makes them appear significantly undervalued.  Northland has set a price target of 1.2p per share along with a Buy recommendation.

 

COMPANY DESCRIPTION

W Resources is in the process of constructing the La Parrilla Tungsten Mine, located in Spain.

 

 

ACTIVE ENERGY GROUP (LON:AEG)

SECTOR – RENEWABLE ENERGY

RATING – CORP*

MARKET CAP – £11.9m

CURRENT PRICE – 1.1p#

ANALYST – MIKE JEREMY

 

Year-end Dec

2016A

2017A

 

 

 

Revenue (US$m)

-

-

No forecasts provided

EBITDA (adj) (US$m)

(2.20)

(5.24)

Rptd. Net Loss (US$m)

(4.66)

(8.60)

EPS (US$c)

(0.48)

(1.87)

DPS ($c)

-

-

Net Cash/(Debt) (US$m)

(5.5)

(13.3)

P/E (x)

N.M.

N.M.

Dividend yield (%)

-

-

EV/EBITDA (x)

N.M.

N.M.

 

 

SOURCE: Northland Capital Partners Limited estimates. #Priced at prior trading day close. *Northland Capital Partners Limited Acts as Nomad to Active Energy Group and therefore this information should be viewed as a Marketing Communication.

 

Equity placing to raise £1.495m

 

 

NORTHLAND VIEW

  • On 30 November Active Energy completed the issue of equity raising £1.495m (gross) to develop its joint venture with Georgia Renewable Power (GRP) and to begin work on its CoalSwitch™ project in Newfoundland.

  • As announced on 15 October, the initial CoalSwitch™ plant - using some equipment from AEG’s Utah site - will be installed at GRP's Lumberton facility before the end of 2018, with capacity of 10 tonnes-per-hour by Q1 2019. CoalSwitch™ 25 tonne-per-hour production is planned for GRP’s Carnesville and Colbert plants in Georgia over the coming 36 months, targeting overall CoalSwitch™ production of 100 tonnes-per-hour.

  • As announced on 30th November, the issue of timber permits in Newfoundland will support operation of a $19.7m wood pellet plant to be constructed in Hawke's Bay to produce 55,000-65,000 metric tonnes of CoalSwitch wood pellets per year, with export to Poland highlighted.

  • The placing of 149,500,000 shares at 1.0p was accompanied by grant of warrants at 1:4 shares at 1.75p with a life of 12 months from the date of grant (not listed).  CEO Michael Rowan and senior management subscribed for a total of 9,500,000 shares. In addition, certain creditors of the Company resolved to receive a total of 15,500,000 shares in lieu of cash.

Following the announcements and progress in October and November, AEG is now moving towards commercial realisation of its CoalSwitch™production plans.

COMPANY DESCRIPTION

Active Energy Group (AEG) is an international, vertically-integrated forestry management and renewable resource energy provider.  The group combines management of forestry resources with the commercial development of a proprietary solution (CoalSwitch™) to the integration of wood-based (biomass) fuel into existing coal-fired thermal power plants. 

 

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