GMC - SPECULATIVE BUY - PRICE TARGET $0.033

FYI Received the following from Triple C - Full report available with share price of 3.3 cents..

Dear All,

Please see attached our updated coverage on Gulf Manganese Corporation (GMC.ASX) in which we have a Speculative Buy recommendation with a 12 to 18-month share price target of 3.3 cents a share.

HIGHLIGHTS:

• Opportunity: GMC is capitalising on superior raw material to build the first ferromanganese smelting facility in West Timor. Indonesia is endowed with some of the highest-grade manganese ore in the world with grades averaging 48% Mn.
• Permitting: A Direct Shipping Ore (DSO) licence is in place and historical manganese ore mines are actively progressing through permitting to reopen and supply ore for export or for GMC’s smelter. We assumed a debt funding facility of US$40 million with equal repayments over four years and an 18% p.a. interest rate.
• Funding: GMC is negotiating with several potential off-takers and debt providers to secure the additional capital to fully fund the completion of the Kupang Smelting Hub Facility.
• News Flow: News flow is accelerating since GMC received its DSO licence. High grade manganese ore mines are progressing rapidly towards re-start. Positive news on debt funding should act as a strong share price catalyst.
• Key Assumptions include LC FeMn price flat at US$1,900/t, 49% manganese ore at US$250/t, two additional furnaces from FY2023 for a total of 4 or 32 MVA, then two more (fully funded by cash flow) for a total of 8 or 50 MVA from FY2028. Our financial model considers only the first 20 years of the project to FY2039.
• Valuation: Considering the significant added value generated by the smelter and robustness of the project, we consider that GMC should reach a market value in the order of A$168m million within the next eighteen months or $0.033 per share.
• Upside: Beyond the leverage on FeMn alloy prices, further valuation upside can come from increased market recognition of product quality in terms of pricing, additional furnaces beyond the six considered, securing high-grade manganese mineral resources.