Canaccord increases Metals X price target by more than 5% on back of strong December quarter
Published 27-JAN-2017 14:47 P.M.
|
2 minute read
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
Metals X (ASX: MLX) announced a strong result for the three months to December 31, 2016 on Wednesday with its Nifty copper mine located in Queensland turning cash flow positive earlier than expected and the group’s tin operations in Tasmania continuing to deliver robust margins.
Canaccord has subsequently increased its 12 month price target from 90 cents to 95 cents, implying upside of 15% to Wednesday’s closing price of 82.5 cents.
The broker said, “In our view, MLX presents as a unique, well capitalised exposure to base metals, trading at a discount to valuation which in the context of its peer group is an anomaly”.
While the Renison tin operations is a cash cow, Nifty is the asset with untapped potential and the prospect of exploration upside.
Canaccord is forecasting production of between 30,000 tonnes and 35,000 tonnes in fiscal 2018 at all in sustaining costs (AISC) of $2.50 per pound. This measures up well against the spot copper price which is currently approximately $3.50 per pound in Australian dollars.
The broker believes there is considerable potential to increase the company’s tin production as it makes progress with new ore sorting technology. Canaccord said, “Introducing ore sorting technology could increase the production profile by between 15% and 20% if adopted, and we expect MLX to make an investment decision in relation to this initiative in early 2017”.
The company is well positioned to invest in developing both its tin and copper assets with both operations cash flow positive and Canaccord expecting the group to finish fiscal 2017 with net cash of $82 million.
With all of its operations in Australia, Metals X is a beneficiary of the lower Australian dollar relative to the US dollar.
It should be noted that broker projections and price targets are only estimates and may not be met. Also, historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.
General Information Only
This material has been prepared by StocksDigital. StocksDigital is an authorised representative (CAR 000433913) of 62 Consulting Pty Limited (ABN 88 664 809 303) (AFSL 548573).
This material is general advice only and is not an offer for the purchase or sale of any financial product or service. The material is not intended to provide you with personal financial or tax advice and does not take into account your personal objectives, financial situation or needs. Although we believe that the material is correct, no warranty of accuracy, reliability or completeness is given, except for liability under statute which cannot be excluded. Please note that past performance may not be indicative of future performance and that no guarantee of performance, the return of capital or a particular rate of return is given by 62C, StocksDigital, any of their related body corporates or any other person. To the maximum extent possible, 62C, StocksDigital, their related body corporates or any other person do not accept any liability for any statement in this material.
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.