New Research: MDL - Dec’17 Q – set for 2018

From Morgans

Grande Cöte Operations (GCO) suffered production restrictions for 4 weeks from a power station failure during the December quarter. Ilmenite production was 126,298t (a record 140,713t in the Sep Q 2017). Zircon production was 16,400t (a record 17,271t previously). The focus remains on the optimisation of operational efficiencies and cashflow, which was positive for the sixth consecutive quarter. Prices for titanium minerals and zircon continued to firm. The Tyssedal furnace (TTI) which restarted on 7 January 2017 returned to positive cashflow generation after the rebuild of inventory and working capital. Scheduled maintenance shutdowns in November restricted production to 50.7kt of Chloride route titanium slag (a record 53.2kt previously). Feedstock consumption and power usage are all below the levels envisaged in operational and financial models. The higher value Chloride route slag prices continue to firm. With cash and equivalents of US$.1m, TiZir reported net external debt of US$322.8m. MDL has cash of US$12.6m. The share price is trading close to our revised target price and therefore we move our recommendation to Hold from Add.