Blue Ocean Equities initiates coverage at $3.94

For those following Astron's journey,

Blue Ocean Equities has initiated coverage at $3.94 (616% implied return).
Following funding and development they estimate a NAV of $5.00+ (ten-bagger).

STRATEGIC, TIER-1 VHM & RARE EARTHS PROJECT
The Donald Project is the largest undeveloped premium zircon resource globally (~5 years of global demand based on reserves = small fraction of total resource!) and represents a globally significant source of ex-China rare earths.Astron is at an advanced stage of de-risking its 100% Donald Project with a simplified flowsheet (vs 2013 DFS) seeking to fast-track production (MIN & EES secured), extensive met test work (pilot scale) provide confidence around recoveries of fine minerals (incl. rare earths), strong community support, key approvals in place and a development timeline within favourable macro conditions.Donald is well located with access to utilities, road, other existing infrastructure and near rail, ports and four towns.Astron also has established trading, processing and R&D capabilities through its operations in China and has, over 35 years, developed deep relationships with key industry participants. Astron’s Board is chaired by George Lloyd, instrumental in the formation of Iluka Resources, and Management is gearing up for project development.

WIM DEPOSITS: LOW-COST NEW SOURCE OF RARE EARTHS
Donald is a WIM-style deposit and represents a substantially large, long life, near-surface, homogenous, scalable and globally significant source of rare earths.Phase 1 development targets mining of 7.5Mtpa ore to produce 9ktpa of REC (in addition to 270ktpa of HMC) over +35 year mine life, representing only 13% of the Resource!

STRONG MACRO OUTLOOK
At US$11k/t REC, the rare earth value of Donald’s production represents ~ 50% of project revenue. Driven by clean energy and electro mobility, demand for key rare earths (NdPr) is expected to double by 2030. Zircon and rutile prices are expected to remain strong, driven by decline in key sources of supply (Iluka’s Jacinth-Ambrosia) and demand growth.We expect the value of Donald’s rare earths to trend towards 60% of revenue as rare earths prices react to market deficits.

SITE VISIT
In August 2022, BOEQ undertook a site visit to meet with management, key community representatives and gain a deep understanding of Donald’s scale and infrastructure.

INITIATE WITH BUY RATING, $3.94 PRICE TARGET
We initiate on ATR with a BUY rating and a $3.94 Price Target, an implied potential return of 616%. We consider that the material disconnect between ATR’s market value and the fundamental value of the Donald Project represents an opportunity to generate extraordinary long-term returns. Our investment thesis is supported by the quality of the project, advanced feasibility and approvals, ATR’s capabilities, social licence and development strategy. To value ATR, we adopted a DCF approach (EES development case plus expansion in Year 5) and applied a 50% discount to reflect key risks at this stage. We have also assessed and incorporated expected material upside (increase in VHMs resource/reserves, lower strip and scale expansion). On a fully diluted basis, the base case represents a NAV/share of $3.94. Following funding and development, a NAV/share of +$5.00 could be expected.
Analyst: Carlos Crowley Vazquez

Blue Ocean Equities acted as Lead Manager to the recent placement.