Proactive Investors - Run By Investors For Investors

In The News - Base Resources & Monument Mining

In The News -   Base Resources & Monument Mining

In the news: Base Resources & Monument Mining

 

FROM THE BROKING DESK

Base Resources*† has released another impressive set of results. These cover 1HFY17 (to December 2016). Operational sales revenue at Kwale increased 11% YoY to A$90.9m, group EBITDA was up 44% YoY to A$44mn and net profit came in at A$3.8m. Operating cashflow was up 68% YoY to A$45.1m, and free cashflow rose 215% YoY to A$30.9m. As a result, net debt continued to decline rapidly; it fell by A$24.5m to A$179.7m.

While zircon and rutile price moves over the period were minor, ilmenite prices soared. After trading at around US$60/t at the start of 2016, they traded consistently around US$120/t through summer and autumn. Contracts during 2017 are likely to be up to US$140-160/t, and some in the industry are mooting a US$200/t price at some point this year.

Given continued efficiency improvements, Kwale is running like a well-oiled machine. As debt gets re-paid far faster than looked likely a year ago, the share price has performed extremely well; from a low of A$0.055 in April 2016 to a high of A$0.32 last week. There is some small arbitrage between the UK and the ASX lines, which is explained by liquidity; however, we have seen significant UK institutional buying of the shares and as the stock is being transferred across we would expect the UK discount to diminish over time. We saw a little bit of profit taking in Sydney overnight, so this could well be a buying opportunity.


We should have a full piece on Base to follow, but in the meantime you can content yourselves with Jim Taylor’s 26-page introductory piece: Monument Mining††† — Moving Towards Development, 27 February 2017. Monument is aiming to develop a biox plant at its Selinsing gold mine in Malaysia to more than double its mine life from the current three years. It is also aiming to complete the re-development of operations at the Murchison Project in Western Australia. We expect plans for both projects to be finalised in 2Q17, which would allow us to conclude our valuation and rating assessment.

This content has been approved under section 21(1) of the FMSA 2000 by RFC Ambrian Limited ("RFC Ambrian") for communication only to eligible counterparties and professional clients as those terms are defined by the rules of Financial Conduct Authority. The contents are not directed at retail clients as RFC Ambrian does not provide investment advisory services to retail clients.  RFC Ambrian publishes this document as non-independent research which is a marketing communication under the Conduct of Business rules. It has not been prepared in accordance with the regulatory rules relating to independent research, nor is it subject to the prohibition on dealing ahead of the dissemination of investment research. It does not constitute a personal recommendation and does not constitute an offer or a solicitation to buy or sell any security. Neither RFC Ambrian nor any of its directors, officers, employees or agents shall have any liability, howsoever arising, for any error or incompleteness of fact or opinion in it or lack of care in its preparation or publication; provided that this shall not exclude liability to the extent that this is impermissible under the law relating to financial services. All statements and opinions are made as of the date on the face of this document and are not held out as applicable thereafter. This document is intended for distribution only in those jurisdictions where RFC Ambrian is permitted to distribute its research. In particular, it is not intended for distribution in and is not directed as persons in the United States.  On the date of this document, RFC Ambrian, RFC Ambrian's holding company, persons connected with it and their respective directors may have a long or short position in any of the investments mentioned in this document.
RFC Ambrian is a member of the London Stock Exchange and is regulated and authorised by the Financial Conduct Authority. RFC Ambrian is registered in England and Wales no. 4236075. Its registered office is at Level 5, Condor House, 10 St Paul’s Churchyard, London EC4M 8AL.

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use