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Significant and value-enhancing project
Canaccord Genuity certifies Tiger Resources positive second quarter

Written by Björn Junker • August 7, 2015 • Printer-friendly version
Analysts at Canaccord Genuity evaluate the latest data for the second quarter of the copper producer Tiger Resources (WKN A0CAJF / ASX TGS) positive and reiterate their rating of "Speculative buy" fixed.



Copper production;  Photo: Tiger Resources

After all, say the experts, and production costs are in the three months to the end of June better than expected and the risks for the Kipoi mining also have decreased due to a number of developments, especially due to the long-awaited funding and the successful links the mine to the power grid.
Canaccord also considers the potential expansion of production at Kipoi, which would take place too low according to the experts costs, as a significant, value-creating project, but assume that the final completion of the refinancing - the should take place in September quarter - the important catalyst for a possible price increase.
Analysts had expected an output of 6,200 tons of copper cathode from tigers in the second quarter, but the company produced 6,700 tonnes actually.  In addition, Tiger called all-in sustaining costs (AISC) reported of 1.64 USD per pound copper, while Canaccord had gone out of 1.74 USD per pound.
The good performance was mainly due to the fact that the working SXEW (Solvent Extraction Electro Winning) above the nominal capacity of 25,000 tons per year.  The June production on an annualized basis, according to Canaccord means, for example, an output of 28,900 tonnes of copper.  The costs are mainly due to lower cost of acid, a decrease in general and administrative costs on site and the lower diesel prices lower than expected.
Tiger, the experts continued, had the end of the quarter has cash and cash equivalents of $ 31.5 million, which agree with their expectations.  Canaccord estimates the liabilities of the company at the end of the quarter was $ 176 million, with possible payments further 25 million USD from the Taurus-credit as well as the repayment of 12.5 million USD of Gerald loan were not taken into account.
Tigers have also reported, said the analysts, that they had reached linking the mine to the power grid, which have made a contribution of 4.5% in June (previously Diesel).  The main connection to Likasi is scheduled for completion in September quarter and Tiger assume then quickly refer 50% of electricity over the network.  2016 is expected to increase to 90% the share of electricity from the public grid.  However, Canaccord is there a little more cautious, pointing out the problems of other producers in the Copperbelt, albeit in Zambia, out.
The plans to expand production at Kipoi to 32,500 tonnes of copper cathodes per year see the analyst as a favorable and value-enhancing way to exploit the reserves at Kipoi.  However, they believe that the cost estimate of Tiger (AISC of 1.39 USD per pound of copper) could be too optimistic, since they start from a slightly lower proportion of power.
Total Canaccord Genuity maintains the rating "speculative buy" and the target price of 0.20 AUD per share determined.

Canaccord Genuity maintains speculative buy rating