Ord Minnet broker report from 24th Feb. I haven't seen it...

Ord Minnet broker report from 24th Feb. I haven't seen it elsewhere here on HC. Happy to share now I have topped up.

A slightly softer 1H23 result (vs OMLe) but given its immateriality (low base) we wouldn’t expect the investment community to give it much attention. 3Q operational performance is likely to garner more interest following a softer 2Q. We anticipate a +20% production (and +A$15m earnings) improvement in 2H as we see increasing contribution from Macy North, combining with contractor development haulage and improved sequencing. This, along with study updates (through 2023) and exploration results should see the name move higher – assuming no deterioration in copper price / sentiment.

A1M continues to screen cheaply on near-term (4.5x EV/EBITDA) and longer- term valuation (0.6x P/NAV) – the latter improving more recently following the merger with DRM. CY23/24 FCF metrics will likely to be hindered by bigger capital outlay through CY22/24 (OMLe capex: A$155m) as they expand Eloise and bring Jericho online. However, we believe A1M’s increased scale, liquidity and mine life more than offsets this, particularly for a commodity where there is a lack of domestic players. Delivery to 3/4Q expectations at Eloise (OMLe 2.9kt / 3.5kt Cu) will give investors’ confidence in the longer-term potential whilst exploration news flow poses as upside risk to our base case estimates – where we are optimistic given the relative lack of exploration in the region despite the abundance of sulphide mineralisation.

We retain our Buy Recommendation and A$0.70/sh Target Price.

https://www2.asx.com.au/content/dam/asx/broker-reports/2023/a1m-update-24-02-2023.pdf

Ash