WH Ireland (WHI) said its fair value for PYX Resources Ltd (LSE:PYX, NSX:PYX) shares is 98p, which represents a more than 400% premium to the current share price.
While punchy, the target is still shy of the one calculated by Cedrus Investments suggesting the stock is worth 195p. It expects demand for zircon, its core product, and titanium dioxide minerals to be strong 'going forward'.
The miner, with operations in Indonesia, has experienced significant improvements in production and sales metrics for the year ending December 31, 2022, according to the research note from WHI.
It highlights that zircon production increased by 25% to 9.1kt, and the company began production of rutile and ilmenite, which together amounted to 7.5kt.
Financially, PYX achieved a positive underlying EBITDA of $0.4mln, a substantial improvement from a $0.8mln loss in 2021. The company remains debt-free, with cash reserves of $7.2mln as of December 2022.
Following the recent award of an exploration and mining license at Tisma, WHI anticipates that PYX will focus on production expansions at Mandiri and Tisma.
The first production from Tisma is expected in 2024, and WHI's model shows continued, incremental expansions at both sites to reach production of 200kt/yr zircon by the end of the decade. These expansions could position PYX as a global leader in zircon production.
In addition to production growth, WHI notes that PYX is setting up a distribution warehouse at Port Klang in Malaysia to facilitate quicker and cheaper exports for its expanding customer base.
The company has also entered into funding arrangements with L1 Capital Global Opportunities Master fund and GGY Global Yield fund to support its production expansion ambitions.
WHI reiterates the strong investment case for PYX, emphasizing its strong, scalable production base, high-grade deposits, low operating costs, and fast track to production. These factors set PYX apart from competitors in the premium zircon market.
With a robust plan to increase zircon production and promising prospects from the Tisma deposit, PYX Resources appears well-positioned for growth and value creation, as outlined by WH Ireland.
The shares were changing hands for 18.5p each.