Please see attached research released by Veritas Securities on Gulf Industrials(ASX:GLF) with a BUY Recommendation
Gulf Industrials Limited (GLF.ASX)
Recommendation BUY
Share Price A$0.02
Price Target A$0.07
Valuation A$0.15
Market capitalisation A$m 9
Shares on Issue* 401m
Enterprise value A$m 9
Previous rating Initial
* Partially diluted for options
Low risk industrial minerals strategy
? GLF is a focused Industrial Minerals company with a strategy to develop into a diversified producer in the foreseeable future.
? The company has recently become a producer with the commencement of production at its East African Vermiculite (EAV) project in eastern Uganda.
? The project will supply a premium grade product into a vermiculite market which is experiencing a natural demand increase and also shortfall in mine supply.
? GLF have also acquired the high grade Soalara limestone project in south west Madagascar targeting first production in 2012.
Investment drivers
? GLF plans to increase production from the current 18ktpa to 115ktpa of vermiculite concentrates by 2014 to capitalise on the natural demand increase for vermiculite and to replace a shortfall of mine production from Rio Tinto?s Palabora mine in South Africa.
? The Namekara vermiculite deposit has sufficient reserves and resources for +50 years at the expanded rate.
? GLF has secured a 25 year sales contract for all production with an industrial minerals specialist, Dupre Minerals, who will market and distribute the product to its customers.
? GLF have acquired a 100% interest in the Soalara limestone project in Madagascar and have commenced a feasibility study. The project has the potential to substantially increase revenue and cashflow for GLF with first production slated for 2012.
? Our earnings forecast highlight a re-rating of the GLF share price in the short term as we see GLF trading on a PE multiple of 3.1 x 2012FY and 1.5 x 2013FY.
Recommendation
? We see significant value upside from the expansion of production to 115ktpa by 2014.
? Our NAV includes the EAV only as we await newsflow on the Soalara limestone project.
? Based on our NAV of $0.15 per share we place a medium term price target of $0.07 per share on a partly diluted basis as we await ongoing news on EAV production and planned upgrades.
? We recommend a BUY.
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Last
0.7¢ |
Change
0.002(40.0%) |
Mkt cap ! $3.794M |
Open | High | Low | Value | Volume |
0.6¢ | 0.8¢ | 0.6¢ | $49.50K | 6.851M |
Buyers (Bids)
No. | Vol. | Price($) |
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4 | 2551166 | 0.6¢ |
Sellers (Offers)
Price($) | Vol. | No. |
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0.7¢ | 271195 | 2 |
View Market Depth
No. | Vol. | Price($) |
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4 | 2551166 | 0.006 |
17 | 6038884 | 0.005 |
13 | 7881000 | 0.004 |
6 | 11015333 | 0.003 |
1 | 700000 | 0.002 |
Price($) | Vol. | No. |
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0.007 | 271195 | 2 |
0.008 | 5659443 | 6 |
0.009 | 2047304 | 3 |
0.010 | 920303 | 3 |
0.011 | 175000 | 2 |
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