Market Cap $1.53b, Cash $146m (minus recent purchases), Debt $117.4m, EV $1.49b
Taking a gamble tipping a large market cap, but then again that is what stopped my tipping at $6 and at $7.20.
1. Today MIN announced its purchase of Global Advanced Metals' Wodgina mine, tenements and equipment with the exception of Tantalum rights. GAM holds 41 current tenements in the Pilgangoora/Marble Bar region, including the Mount Cassiterite and Mt Tinstone open pits. The tailings have been said to contain 1% lithium and are already out of the ground. This represents a huge amount of ground with known LCT pegmatites, feedstock ready to go and processing plant which we hope can be readily modified to process spodumene as opposed to its current use of Tantalum and Iron Ore. The mine is about ~25km from PLS and its neighbours, along with processing plant it has a 13MW gas fired power station and 387 bed camp, e.g. potential for toll treatment. This should put MIN in a position to take advantage of supply shortage before PLS' production kicks in.
2. MIN has a 43.1% stake in Mt Marion alongside Ganfeng and NMT, it owns and operates the plant allowing it to derive income from processing the spodumene as well as selling it. Recent increases in offtake agreements have made this asset more appealing, particularly since MIN gets to double dip. Positive drilling results have been flowing, albeit a bit deep, with updated Mineral Resource and Ore Reserve estimates anticipated to be released "around 30 June".
3. Iron ore, the dirty word. EBITDA guidance of $250-290m given by company in HY results presentation based on forward $60AUD average Iron Ore price Feb-Jun. The price has been higher during this period and the company may need to put out an earnings guidance update before their annual report. I estimate an additional 60m EBITDA without factoring in the discount for their slightly lower than 62% FE grade.
Cons: Large market cap and it is still an Iron Ore company, with a tangible Lithium kicker - Mt Marion might make up 15% of its earnings in FY17.
