Macquarie upgrades TP Maintains Outperform

	Column 1	Column 2
0	Stock:	MCR AU
1	Name:	Mincor Resources NL
2	Price:	A$0.87 (At 06:10, 28 July 2014 GMT)
3	Recommendation:	Outperform
4	12mth price target:	A$1.55
5	12-month TSR:	82.8%
6	Market Cap (m):	A$164
7	Market Cap (m):	US$154
8	Current valuation (DCF):	A$1.55

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Event
· MCR released its June quarter production result.
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Impact
· Production below expectations: MCR mined 2.4kt of nickel in ore and produced 2.1kt of nickel in concentrate in the June quarter, around 4% lower than we had forecast. The weaker result was attributable to lower output at both Miitel and Mariners and the cessation of production at Otter Juan and McMahon.
· Cash costs were higher than forecast: Cash costs for the quarter averaged A$5.12/lb, which was 20% higher than we had forecast. Lower tonnes mined at Mariners were the key driver behind the higher cash costs, with average head grades in line with our expectations.
· Net cash flow was soft: MCR indicated that net cash at the end of June had fallen from $55m to $51m, which was 8% lower than we had forecast. However we note that this is largely attributable to working capital movements with cash plus net working capital increasing from $58m to $61m over the three months.
· Exploration looks encouraging: MCR has had a number of wins on the exploration front. Extension drilling at Mariners and Miitel has been successful and we expect to see a material increase in reserves when the annual statement is released in August. A new discovery at Voyce, just to the south of Mariners, looks encouraging but is at an early stage.
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Action and recommendation
· Maintain Outperform: MCR’s June quarter production result was soft with the cessation of mining at Otter Juan and McMahon and a stope failure at Mariners impacting both output and cash costs. Exploration remains a key driver for MCR given the short mine lives of Mariners and Miitel and we believe a material reserve and resource upgrade is likely with the full-year earnings result.