UBS retain BUY, $5 TP

UBS retain BUY on the back of todays quarterly.

Building harvest pond inventory to be a strong focus
ORE expects an improvement in production and costs into 1H FY 18 as evaporation rates improve through Spring and Summer. FY 18 guidance is to be given in August. A central focus for ORE will be developing a model that provides production reliability and resistance to adverse weather conditions. ORE is aiming to run with a big stock of inventory that should enable it to ride the impacts of weather and seasonality.
We await some key near-term catalysts
A short-term issue for ORE involves resolving its evaporation pond modelling issues and achieving a consistent 17.5ktpa nameplate capacity at Phase 1 Olaroz. We also look for ORE to raise the capacity of its purification circuit and produce a greater share of battery grade product. Subject to JV approvals, financing and permitting construction of the proposed LiOH processing plant in Japan could commence as early as Nov 17.
Valuation: A$5.00 (unch) DCF @ 10% d.r
Our valuation remains based on a 100% valuation of Olaroz Phase 1 and 70% valuation of Phase 2, due to associated risks. We retain our Buy call, and are confident about the longer-term outlook for ORE, once operational efficiency is improved, and the supportive macro backdrop.