logo-loader
viewAdamas Finance Asia Limited

Adamas Finance upbeat on potential for Chinese quarry

Chairman John Croft was upbeat on Future Metal’s potential: “There are strong indications that there will be considerable demand for Future Metal’s products, which have now been independently verified by a recently completed market study.”

Adamas Finance Asia Limited -

Adamas Finance Asia Limited (LON:ADAM) said market conditions for its largest investment, a China-focused miner, were buoyant as it reconfirmed plans to have it back in production by the year-end.

ADAM owns 85% of Future Metal, formerly Hong Kong Mining Holdings, which quarries dolomite for magnesium smelting and wall rock for construction materials.

Investment manager Harmony Capital commissioned an independent report assessing the demand for Future's products, which “has risen noticeably in recent years”.

The continued urbanisation of China, combined with strict new environmental rules, have led to a shortage of wall rock, the document’s compilers, the China Market Research Centre, found.

Future, being an early adopter of the new framework, stands to benefit. This, and the miner’s ability to tap into the convenient transport network to surrounding cities, should provide tailwinds for the company, the report concludes.

ADAM said Future’s rock production could be in the order of 485-575,000 tonnes a year. This is based on work carried out by independent consultants CMRC and SRK.

This can be broken down as follows:

  • Qualified dolomite: 150-180,000 tonnes
  • Unqualified dolomite: 35-45,000 tonnes
  • Wall rock: 300-350,00 tonnes

Contract extraction costs are put at US$2.90-$3.90 per tonne, with operating expenses set to come in at US$0.6mln-US$0.8mln. The tax rate, meanwhile, should be 25%.

This means Future should make a decent margin on production with estimated sales prices (net of VAT) as follows:

  • Qualified dolomite US$7.00-9.10
  • Unqualified dolomite US$4.20-$5.60
  • Wall rock US$7.70-8.40

ADAM chairman John Croft was upbeat on Future’s potential: “There are strong indications that there will be considerable demand for Future Metal’s products, which have now been independently verified by a recently completed market study.”

Quick facts: Adamas Finance Asia Limited

Price: 24 GBX

AIM:ADAM
Market: AIM
Market Cap: £21.1 m
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

In exchange for publishing services rendered by the Company on behalf of Adamas Finance Asia Limited named herein, including the promotion by the Company of Adamas Finance Asia Limited in any Content on the Site, the...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

Full interview: Restructuring beginning to have 'considerable effect' on...

Suresh Withana from Harmony Capital, the investment manager of Adamas Finance Asia Limited (LON:ADAM), caught up with Proactive London to discuss its results for the six months to June 2019. Total income increased to US$1.25mln from interest payments and fair value adjustments (H1...

on 10/9/19

2 min read