VSA Morning Miner, 01/12/21
PYX Resources (Pyx Resources Limited (LSE:PYX, NSX:PYX))
PYX Resources (Pyx Resources Limited (LSE:PYX, NSX:PYX)) has announced the successful increase in production capacity in line with earlier guidance to 24ktpa at the Mandiri zircon project in Kalimantan, Indonesia, up from 18ktpa. As part of the added capacity the company will in addition be able to produce rutile, ilmenite and leucoxene which it has not done to date. These additional products could modestly but significantly enhance by-product revenues particularly as the company shifts to in house mining and are included in our forecasts from 2022F onwards.
Realised assemblage of mined products is 60-70% zircon and 8-9% for each of ilmenite and rutile with zircon the predominant mineral in the assemblage; the key factor which makes PYX’ projects stand out globally. Rutile prices were reported by Iluka (ILU AU) at US$1,242/t in the previous quarter, up 1.5% QoQ. Both rutile and ilmenite are feedstocks for titanium dioxide although ilmenite is more prevalent and substantially cheaper. Rutile is considered a premium product although synthetic rutile may be produced from ilmenite.
Today’s announcement is another successfully executed step for PYX in line with its stated plan. The company will now be working to increase production rates to meet the expanded capacity and fully benefit from the strong pricing environment for mineral sands and zircon in particular.
We reiterate our Buy recommendation and target price of A$2.90/sh or £1.60/sh.
Oliver O'Donnell, CFA, Head of Research & Natural Resources Analyst | T: +44 (0)20 3617 5180 | E: oodonnell@vsacapital.com
Paul Renken, Senior Geologist | T: +44 (0)20 3005 5011 | E: prenken@vsacapital.com
VSA Capital Research | T: +44 (0)20 3005 5000 | E: research@vsacapital.com
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