PYX Resources Ltd (LSE:PYX, NSX:PYX)’s growing exposure to the premium zircon market has caught the eye of equities analysts at WH Ireland, who have outlined a bullish thesis for the London-listed producer.
Zircon demand is expected to grow by 3% on a compound annual growth rate, with industries including solar, defence, aerospace and nuclear seeking premium-grade zircon.
“With production at Mandiri slated to double in the short term and the optionality to introduce production from Tisma, we forecast improved profits and cash generation, which we expect to fund further brownfield expansions,” stated analysts.
They added: “As PYX increases production, some of its peers are winding down operations, as their reserves are exhausted.
“With massive reserves of premium zircon and proximity to China (the major market for zircon concentrate), PYX is expanding its position in the premium zircon market.”
Furthermore, PYX Resources’ debt-free books and healthy cash balance have “set a solid foundation for continued growth and increasing returns”.
Analysts noted that increased production at PYX Resources is beginning to yield the expected economies of scale to insulate the company from volatility in the price of zircon.
WH Ireland sees fair value at 82p a share against a 16.88p publication price.