It looks (from the outside) like MQG is “reinventing the wheel” and largely going through the whole process again. Think we all agree on that
Based on the time it has taken to date, we suggest that it may be stretching expectations to get any mezzanine debt agreement signed sealed and delivered by June 2019. Even the optimist in me finds it hard to argue with that.
We note there have been no updates on previously mooted stream finance facilities or on a partial project sale to a JV partner. Obviously missed the announcement regarding the withdrawal of the stream finance.
Attaching a 60% project-risk discount, we calculate ATC’s risk-adjusted equity value atA$126m or A$0.17 per diluted share. At current share price levels, we believe that ATC offers risk-adjusted upside potential and maintain a Speculative Buy (Higher Risk) recommendation. Our risk discount could largely unwind if ATC successfully and timeously secures the required funding balance.Thus, positive funding news could act as a significant share price catalyst. We all hope so.
The risks section covers most but I disagree with a couple. Securing product off-take beyond the 10-year agreement currently secured with Mitsubishi. Not a risk IMO. 2 + 10 years is too far away to be considered a rational risk. Operating costs particularly mining. Got to be joking. Have a look at my previous post. Meckering mining and Kaolin loading only $US0.14/Kg and 250 years supply.
ATC Price at posting:
11.5¢ Sentiment: Buy Disclosure: Held
