PYX Resources Ltd (LSE:PYX, NSX:PYX) shares present significant upside to the company’s fair value, according to stockbroker WH Ireland.
The stockbroker today repeated its estimated fair value of 129p, versus a market price of 56.2p, after PYX announced it had entered into a new funding deal.
In a stock market statement,e the company announced it had received a £20mln investment commitment from GGY Global Yield LLC SCS, an international alternative investment firm, with the funds earmarked to support the upgrade of mining operations and production volumes.
The AIM-quoted company, which produces premium zircon, announced the "tailored agreement" which sets out the terms of the investment – in which PYX retains control of the amount and timing of drawdowns over a 36-month period. "The investment commitment is a major milestone in our financing strategy and will enable us to accelerate our previously announced growth plans,” said PYX chief executive Oliver B Hasler.
“We look forward to implementing our vision to become the leading zircon producer globally".
WH Ireland analyst Paul Smith, in a note, meanwhile, added: “We had already forecasted increased production in our DCF and today we maintain our fair value at 129p.
“The funding announced today will facilitate increased production of zircon, ilmenite and rutile at Mandiri, for which PYX has readily found buyers given the superior quality of its product.
“Increased rates of production will reduce unit operating costs and increase further the already healthy margins at Mandiri. Operational profitability will be further supported by the high prices for mineral sands, zircon in particular.”