Analyst price target implies share price upside of 160% for Elixir
Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.
In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.
The below articles were written under our previous business model. We have kept these articles online here for your reference.
Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.
Click Here to View Latest Articles
Analysts at K1 Capital recently ran the ruler across Elixir Energy Limited (ASX:EXR) after the company last week released an updated prospective resource for its 100% owned Nomgon IX CBM PSC project.
The independent reserve auditor ERCE Equipoise (ERCE) appraised the project following Elixir’s successful 2020 drilling campaign where seven CBM exploration and appraisal wells were drilled spanning a distance of 62 kilometres. Notably, all of the wells intersected coal.
An initial contingent resource estimate for the Nomgon sub-basin discovery area will be prepared and issued once all of the data from the appraisal drilling program has been compiled, modelled and analysed.
In the interim, a summary of the prospective resource range is outlined below:
It is important to note that the estimated quantities of petroleum that may be potentially recovered by the application of a future development project relate to undiscovered accumulations.
These estimates have both an associated risk of discovery and a risk of development.
However, taking into account these provisions, K1 Capital analyst John Young was impressed with the updated prospective resource, increasing his valuation from 27 cents per share to 29 cents per share, implying upside of 18 cents per share or 160% to the company’s current share price.
In part, Young said, ‘’The increase recognises greater gas in place and higher geological chance of success (30% vs. 19% prev.), based on recent drilling.
"Results from the two core holes indicate high gas content (8.6-8.9 m3/t DAF) and fully saturated coals, indicating good CBM potential.
"With cash at bank and in-the-money options due by end December, Elixir is funded to continue exploration and appraisal in 2021.’’
Analyst highlights catalysts in 2021
Another important issue that Young touched on was the fact that Elixir’s PSC covers approximately 30,000 square kilometres adjacent to the border with China, and with leaders openly stating that they are aiming to reduce emissions, the country could be a source of demand.
An initial contingent/discovered resource estimate for the Nomgon sub-basin should be established in 2021 following further analysis of drilling data.
Young said that independent confirmation of suitable CBM coals would reduce project risk and contingent volumes should increase with ongoing drilling.
He noted that gas content permeability and seam thickness results to date indicate the Nomgon project area is potentially attractive for CBM development.
With Elixir planning for a pilot test next year to determine well deliverability parameters it is easy to see that the company is shaping up as a news flow driven story.
Young sees the prospect of extensional drilling and an expansion of exploration drilling to other sub-basins as potential share price catalysts in the next 12 months.
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
Publication Notice and Disclaimer
The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.
This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.
