Hartleys, Patersons tip Strandline shares to double
Brokers Hartleys and Patersons are urging investors to buy shares in Strandline Resources
3rd May 2019 Resources Rising Stars
Brokers Hartleys and Patersons are urging investors to buy shares in Strandline Resources, saying they stand to make handsome profits as the company advances it pipeline of mineral sands projects in Australia and Tanzania.
In a fresh research report, Hartley tips Strandline shares to hit 22c compared with their current price of 12c, saying the company has “the potential to build a substantial mineral sands business”.
Hartleys examines in detail the recently released Feasibility Study on Strandline’s large Coburn mineral sands project in WA.
“The DFS assumes annual EBITDA ~A$84m a year and our model is similar,” Hartleys says. “On spot mineral sands prices, we estimate annual EBITDA of A$105m a year.”
Patersons has a 28c price target on the stock and cites the company’s strong assets and experienced management as reasons for its optimism.“Strandline announced a 70% increase in the ore reserve in conjunction with release of the DFS at Coburn (WA), underpinning an initial 22.5 year mine life,” Patersons said in its latest research report.
“This junior mineral sands company offers an excellent package of projects, with the near-term Fungoni operation in Tanzania offering early cash flow at very low capital investment which should in turn de-risk the higher capital long mine life Coburn operation.
“The third project, Tajiri, in Tanzania adds further exploration appeal. The company is trading at less than half our risk adjusted valuation, which also factors in dilution for the equity component of any capital expenditure.”
Patersons said that while the project has key approvals already in place, it has assumed development will commence behind the smaller, lower-cost Fungoni project, giving first production from Coburn in FY22.
Patersons also noted that engagement with global consumers had confirmed high demand for Coburn’s products, with the project’s close proximity to key infrastructure in WA also seen as a key positive.
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https://resourcesrisingstars.com.au/news-article/hartleys-patersons-tip-strandline-shares-double
Hartleys, Patersons tip Strandline shares to double
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