Australian Mines management attributes rerating to Clean TeQ comparison
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
Shares in Australian Mines (ASX:AUZ) traded as high as 5.3 cents on Wednesday morning, representing a gain of nearly 60 per cent relative to the previous day’s close of 3.4 cents. This came on the back of a similar spike on Tuesday when the company’s shares increased from 2.6 cents to 3.4 cents, representing a gain of 30 per cent.
Increases on both days have been supported by extremely heavy volume buying with an all-time record of nearly 250 million shares changing hands by midday today.
The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.
Yesterday’s surge in AUZ’s share price prompted a query from the ASX, requesting the company to explain whether there was any information not released to the market that could account for the spike.
Australian Mines makes comparisons with Clean TeQ Holdings cobalt project
In responding to the ASX query, Australian Mines referred to a Macquarie Research report, which recently attributed a 12-month price target of $2.10 to Clean TeQ Holding (ASX:CLQ). The report valued CLQ’s Syerston project at $1.2 billion.
AUZ has reported to the market (most recently in an ASX announcement dated 6 September 2017), that the company’s North Queensland Sconi Project is similar to CLQ’s Syerston Project in areas such as resource tonnage, expected cobalt-nickel-scandium feed grade, geology, metallurgy and expected metal recoveries.
Despite AUZ’s Sconi Project and Clean TeQ’s Syerston project being very similar, the former’s market capitalisation prior to the recent rerating represented about 10 per cent of CLQ’s market capitalisation. Even after the rerating that has occurred in recent days, AUZ’s market capitalisation is still well shy of CLQ’s.
AUZ’s management is of the view that the significant disparity between Australian Mines and CLQ’s market capitalisations appears to have created an arbitrage situation whereby investors can gain exposure to the cobalt-nickel market via AUZ at a material discount to its peers.
However AUZ is still a junior company and investors should seek professional financial advice if considering this stock for their portfolio.
AUZ also noted that discussions with investors attending the 121 Mining Investment conference in Hong Kong, were aware of the disparity in the two companies’ market capitalisations, and management suggested that this was attracting new investors to AUZ.
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.
