Tigers Realm Coal Ltd plans production this quarter with $23.3M raised
Tigers Realm Coal Ltd (ASX:TIG) has commenced the development of Project F Phase One at its Amaam Coking Coal Project located in eastern Russia.
With $23.3 million funding recently secured in a successful rights issue, the company is targeting production for December, 2016.
The company has been applying the funds raised towards completion of a 30 kilometre haulage road, mining equipment and site infrastructure construction works.
Following test work, two North Asian steel companies have already confirmed their technical acceptance of Project F semi hard coking coals subject to trial cargos.
Additionally, confirmation has been received from several other North Asian customers of their potential interest in our Phase One thermal and semi soft coal products.
Background
Two tenements, Amaam and Amaam North, together comprise the Amaam Coking Coal Project, located within 35 kilometres of the Bering Sea coast in Chukotka Autonomous Okrug, far eastern Russia.
Tigers Realm has 80% ownership of Amaam and has recently signed a Heads of Agreement which will see its 80% ownership of Amaam North increase to 100%.
In addition, the company owns 100% of the Beringovsky Port and Coal Terminal, located 35 kilometres to the north east of the Amaam North tenement.
Amaam and Amaam North have combined JORC compliant coal resources of 632 million tonnes with the majority of these resources being of coking coal quality.
Project F within Amaam North has 110.6 million tonnes of coal resources, 16.1 million tonnes of which have already been classified as Product (Marketable) Reserves under JORC.
Tigers Realm aims to commence coal mining late in the fourth quarter of 2016 at Project F: Phase One.
Project F: Phase One update
Phase One is a starter project ahead of an expansion to full Project F at 1+ million tonnes per annum.
The Phase One open pit targets near surface coal reserves located 37 kilometres from the company owned Beringovsky Port.
The capital investment for Phase One is estimated to be US$ 6.6 million expended in two periods and site operating costs are estimated at US$25 per tonne free on board (FOB).
The first stage of road works is 80% completed and is to be finished by November.
Infrastructure construction commenced in early October following the arrival of required construction materials and contractor teams to Beringovsky.
Planned 2016 procurement for Phase One is complete.
To date, work on mining operations has focussed on recruitment, detailed mine planning, and preparations for grade control drilling. The project’s key operational roles are now filled.
Work in the mine area is expected start in early November.
The successful completion of these works according to plan will see first coal mined and transported to the port stockpiles in December 2016.
Analysis
With $17.7 million in cash at the end of the September quarter and development of Project F Phase One underway, Tigers Realm is well positioned to make the transition into a coking coal producer.
This starter open pit project has good potential to generate free cash flow with low operating costs of US$25 per tonne FOB.
Recent spot selling prices ensure a good margin at US$65 per tonne FOB for thermal coal and US$110 per tonne FOB for semi soft coking coal from the nearby port.
Project F has the potential to be one of the world’s lowest cost coking coal producers.
Test work completed by North Asian steel companies confirming the technical acceptance of Project F semi hard coking coals subject to trial cargos further de-risks the project.
Shares in Tigers Realm are trading strongly, up 150% year to date, currently priced at $0.075.
News flow is expected with regard to further development updates at Project F Phase One and grade control, which is expected to commence within two weeks.
With a JORC compliant coal resources of 632 million tonnes within Amaam and Amaam North, Project F is just beginning for Tigers Realm.
Reviewing Indicator Levels for Tigers Realm Coal Limited (TIG.AX)
Equity traders may be partly leaning on technical stock analysis. Tigers Realm Coal Limited (TIG.AX) presently has a 14-day Commodity Channel Index (CCI) of 51.49. The CCI was created to typically stay within the reading of -100 to +100. Traders may use the indicator to determine if a stock is trending or to spot overbought/oversold conditions. A CCI reading above the +100 level would suggest that the stock is overbought and possibly primed for a correction. On the other hand, a reading of -100 would indicate that the stock is oversold and possibly ready for a rally.
A commonly used tool among technical stock analysts is the moving average. Moving averages are considered to be lagging indicators that simply take the average price of a stock over a certain period of time. Moving averages can be very useful for identifying peaks and troughs. They may also be used to assist the trader figure out proper support and resistance levels for the stock. Currently, Tigers Realm Coal Limited (TIG.AX) has a 200-day MA of 0.04, and a 50-day of 0.06.
Presently, the stock has a 14-day RSI of 60.88, the 7-day is sitting at 55.66, and the 3-day is resting at 20.05. The Relative Strength Index (RSI) is one of multiple popular technical indicators created by J. Welles Wilder. Wilder introduced RSI in his book “New Concepts in Technical Trading Systems” which was published in 1978. RSI measures the magnitude and velocity of directional price movements. The data is represented graphically by fluctuating between a value of 0 and 100. The indicator is computed by using the average losses and gains of a stock over a certain time period. RSI can be used to help spot overbought or oversold conditions. An RSI reading over 70 would be considered overbought, and a reading under 30 would indicate oversold conditions. A level of 50 would indicate neutral market momentum.
Dedicated investors may be looking to employ another tool for doing technical stock analysis. The Williams Percent Range or Williams %R is a technical indicator that was designed to measure overbought and oversold market conditions. The Williams %R indicator helps show the relative situation of the current price close to the period being observed. Tigers Realm Coal Limited (TIG.AX)’s Williams Percent Range or 14 day Williams %R presently is at -50.00. In general, if the reading goes above -20, the stock may be considered to be overbought. Alternately, if the indicator goes under -80, this may show the stock as being oversold.
We can also take a look at the Average Directional Index or ADX of the stock. For traders looking to capitalize on trends, the ADX may be an essential technical tool. The ADX is used to measure trend strength. ADX calculations are made based on the moving average price range expansion over a specified amount of time. ADX is charted as a line with values ranging from 0 to 100. The indicator is non-directional meaning that it gauges trend strength whether the stock price is trending higher or lower. The 14-day ADX for Tigers Realm Coal Limited (TIG.AX) presently sits at 39.56. In general, and ADX value from 0-25 would represent an absent or weak trend. A value of 25-50 would indicate a strong trend. A value of 50-75 would indicate a very strong trend, and a value of 75-100 would signify an extremely strong trend.
Project F coals accepted at North Asian steelmills
Two North Asian steel companies have confirmed technical acceptance of semi-hard coking coals from Tiger’s Realm Coal’s Project F in Russia’s Far East, according to the company’s latest quarterly update. The acceptance remains subject to trial cargoes.
Project F development is well underway with a 30 km haul road from the mine site to port around 80% complete, as of the end of 3Q16. Tiger’s Realm has also taken delivery of eight Scania coal haulage trucks and a 40 t excavator for coal mining, as well as a number of support vehicles.
The company also began site infrastructure construction works in 3Q16.
Phase 1 – a starter project ahead of the full Project F – targets near-surface coal reserves with coal production of 0.6 million tpy by 2018. Later stages of Project F will take the mine to over 1 million tpy of production. CAPEC for Phase 1 is estimated to be US$6.6 million.
Tiger’s Realm also said it had received confirmation from several other North Asian customers of their potential interest in its phase one development of Project F, which will produce both thermal and semi-soft coking coals.
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TIG Price at posting:
7.5¢ Sentiment: Buy Disclosure: Held
