Initiation of Coverage

FYI

Baillieu Holst came out with a Speculative Buy and a price target of $0.07

Some snippets:

Key drivers: 1) Production and sales of an upgraded concentrate; 2)
expansion of production has a low capital intensity; 3) the easily mined
saprolite ore, which helps preserve the predominantly large flake size; 4)
logistics and established customer base and infrastructure; 5) resource
upside; 6) expansion of production; and 7) lithium exploration upside in
Madagascar.


As at 27 December 2017, BSM had cash of A$3.2m and no debt. In the 2018 financial year
we estimate it will breakeven at an operational level. In FY19, the Graphmada mine is
forecast to have an EBITDA of US$12m, while BSM should also have A$18m from the
exercise of options, both of which will provide the equity finance to fund an expansion in
plant capacity to 20,000tpa and growing the business elsewhere.

They've estimated an average graphite basket price of $1,374 (US$/t) for FY18