PYX Resources is worth a multiple of its current share price, according to house broker WH Ireland, which sees the Kalimantan-based mineral sands miner as low risk.
Fair value for the broker is 129p per share, compared to a 20.5p market price, which it bases on a simple average of net present value and a peer multiple of seven times earnings.
PYX has a simple business model to produce premium zircon (and minor rutile and ilmenite) at high margins, adds WHI.
Its zircon contains low impurities, low aluminium oxide at less than 0.2% and with a uranium and thorium content below 500 ppm, and is in demand as a premium product for high-end uses.
Typically these are ceramics manufacturing (tiles, sanitary wear) but also for high tolerance casting/foundry applications and additive manufacturing, all uses that are growing.
WHI notes that PYX has been producing high-grade zircon concentrate from Mandiri since 2015 and successfully marketing it to high-tech buyers.
Production has steadily increased to 9,000t/yr and PYX has plans to take production at its Mandiri mine to 48,000t/yr within five years
Shares rose 20% to 20.5p after the trading update.