Turning point...

Many of the concerns that investors have for Tiger may soon be resolved - waiting for them to be announced will lower the investment risk, but will also reduce the potential investment return.  We are possibly at a big turning point in the company's performance:

- Financing: This is probably the largest concern of investors and it has clearly weighed heavily on sentiment. Taurus already have US$100m exposure to the company (with only 60% of the security - as Gerald Metals holds 40%) that means that they need to re-fi to protect their exposure (and hold onto their equity options exposure).  After nearly 12 months of pain, the Taurus facility should be resolved shortly - vastly reducing balance sheet risk and a big catalyst for the share price.

- Operational: The performance of the leach and SX/EW is way above consensus with the plant running close to 30,000 tpa in June/July (see Africa Downunder presentation).  This bodes well for the 3Q production numbers in the upcoming quarterly report and for unit cost performance.  The key cost driver though is electricity...

- Grid power: The transition to grid power is critical for Tiger to lower the AISC to approx US$1.50 a pound.  Investors were disapointed with the last update as it appeared to backtrack from earlier guidance and it seemed that they were running behind schedule.  Glencore's decision to mothball production in the DRC and Zambia will underpin more grid power for Tiger in late 2015 and throughout 2016.   Just 50% grid draw should reduce Tiger's unit costs by approx US$0.15c per pound which would bring the unit costs down to approx US$1.50 per pound.  This would be a good catalyst, but the company should be significantly re-rated if they can get grid draw to +75% by the end of the year.

- Management: Most of the current issues are the result of poor financing decisions, and poor operational execution.  Hopefully a new CEO by the end of the year will give many investors a reason to re-visit the Tiger investment case and give investors confidence that execution will improve and strategic decisions will be better made next time.

- Debottlecking project: With the plant already running close to 30,000tpa - surely this project will take output to 35,000 tpa, not 32,500 tpa?  This is a low risk, high return investment that will reduce unit costs.  Funding this project by year end will underpin higher production and lower costs by the end of 2016.

- Future upside: Tiger needs to show it can fix the balance sheet and debottleneck the plant first, but at the right time (and hopefully with improving copper prices), the large reserve and resource base will support a doubling of capacity.  This should take production to 70,000 tpa (154 million pounds per annum) with C1 unit costs of potentially less than US$1.10 per pound.  As a benchmark, Barrick recently sold Zalividar in Chile for a (100% basis) valuation of US$2bn - and it has an annual production of 230-250 million pounds with unit costs between US$1.65 to $1.95 a pound.  (http://www.bloomberg.com/news/artic...-half-of-chilean-copper-mine-for-1-01-billion). Different political risk, but it was executed in a very weak copper market.