Capital Raise, page-62

Received this Price target report from Shaw & Partners:

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Shaw and Partners Stockbroking Equity Research Report (ASX:STA). BUY. Price Target increased to $0.80 (prior $0.71)

Tajiri receives Environmental Certificate. Upgrade Price Target to 80c

Shaw’s Comments:

• Mining activities in Tanzania have been in hiatus since 2016 when the government re-worked the country’s mining laws to more equitably share the benefits of resource extraction. A new Tanzanian President, Samia Suluhu Hassan, was elected in March 2021 and is proving to be pro-development and rejuvenating the country’s mining industry.
• In late 2021, Strandline signed a Framework Agreement with the Tanzanian government which paves the way to commercialise Strandline’s Tanzanian mineral sands resources.
• The key feature of the new mining laws is a 16% free-carried interest for the Tanzanian State. Strandline and the Government of Tanzania (GNT) have formed a new joint venture called Nyati Mineral Sands Ltd (Nyati) which will be 84% owned and operated by Strandline via the company’s wholly owned subsidiary Strandline Resources UK Ltd.
• Strandline has two advanced projects in Tanzania at Fungoni and Tajiri, as well as an exploration project at Bagamoyo.
• Fungoni is a relatively small US$35m project, with a 12.3Mt reserve and 6.2yr mine life. Strandline refers to Fungoni as a ‘starter’ project in Tanzania, and when operational will pave the way for the larger Tajiri project.
• Tajiri is a much larger project than Fungoni and in late 2020 Strandline released a scoping study that outlined a US$125m project with a mine-life of 23 years, a pre-tax NPV of US$205m and annual EBITDA of US$37m.
• Strandline has a range of options to commercialise the Tanzanian assets. It could proceed to development on its own, it could bring in a strategic partner, it could sell down to a strategic partner as part of an offtake agreement, or it could demerge the company into a Tanzanian and Australian business – perhaps listing the Tanzanian business on the London Stock Exchange.
• Shaw’s have revised its forecasts following a site visit to Coburn last week and Shaw’s factor in higher zircon and rutile prices out to CY26. Shaw’s FY23 forecast reduces as they move first production from Fungoni into FY24, but FY25 and FY26 increase due to higher price assumptions. Shaw’s valuation increases from 71cps to 80cps.