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Huntleys Recommendation: Minara Resources Limited ( MRE )

Recommendation: Accumulate below $2.20
MRE is a major Australian producer of nickel and cobalt via its 60% owned Murrin Murrin operation. Murrin Murrin, located near Leonora in Western Australia, produces over 30,000tpa of nickel and 2,000tpa of cobalt from the processing of laterite ores. MRE is focused on improving the performance of its processing plant and ramping up production to nameplate capacity of 40,000tpa. If the Murrin Murrin plant can be successfully ramped up, the nature of the investment will change. Expansion options may come into play and provide attractive upside. Nickel fundamentals should remain supportive in the medium term, which gives management room to perform. MRE has a prudently conservative balance sheet with minimal debt and cash of over $100m. The company is leveraged to nickel and cobalt prices and subject to operational risk. Earnings volatility may feature.