rbc updated research

Updated research report by the RBC

To quote the research analyst:

Investment opinion:

"The granting of Mining Licences in Madagascar is a pleasant surprise to us because it is earlier than we anticipated and is, in our view, a major milestone. Completion of engineering studies mid-year, to be followed by environmental approval, should lead to a development decision and funding in the 2H. The company is valued at ~A$100m with A$12m cash on hand and we rate Toliara as a very good emerging mineral sands project. The ML approval is a major step forward, reinforcing our Outperform rating and A$0.50 price target."

Development Opinion:

"The Mining Licence for the Ranobe Mine has been granted for a term of 40 years and is renewable. It is several months earlier than anticipated and applies to a 145Mt resource. In a addition, a second ML was granted over a 140Mt resource, again not expected by us and reinforcing the scalability of the Toliara Project."

Financials:

"We assume capex of US$150M to be funded by equity and a
pre-payment from a customer in H2/12 and not bank debt. Strong mineral sands prices medium-term are forecast to deliver CY15 earnings of A$76m (A13.9¢) for a PER <3x and our P/NAV of ~0.4x is discounted to peers."

NAV/s remains A$1.01