UBS Sept Quarterly

	Column 1
0	Tiger Resources Limited
1	Production continues to lift
2
3	Event: September quarter production report Tiger Resources has reported a 6% lift in quarterly production to 7.1kt Cu and 6% ahead of the UBS-e. Production is now annualising 28.6kt Cu. Cash costs declined 12% q/q to US$1.53/lb and were in line with our forecasts. The AISC was US$1.63/lb, unchanged q/q. During the quarter, access to the grid ramped up from 18% (of total power requirements) in June to 40% in September and this is expected to lift further by the end of the year. While electricity costs declined, overall processing costs were unchanged during the quarter at US$0.82/lb following reduced availability of the primary stacker and unplanned maintenance. We expect processing costs to reduce from here short of further interruptions. At the end of the quarter, the company held cash of US$18m and net debt of US$150m, unchanged q/q. Despite a low AISC, cash payments were adversely impacted by one-offs and financing costs. Impact: 2015 guidance reiterated, as easy target Tiger has reiterated 2015 guidance of 25kt Cu with a cash cost of US$1.30-1.40/lb and an AISC of US$1.57-1.67/lb. This implies December quarter production of 5.4kt, an easy target in our view. Moreover, we expect cash costs to trend lower into the final quarter post unplanned maintenance in the Sept-Q. Action: Buy maintained – A solid asset with upside potential We rate Tiger as a Buy based on valuation. The debt refinancing should provide some certainty for investors. The additional $25m of funding secured to debottleneck the plant is expected to lift cathode production from 25ktpa to 32.5ktpa. Should this be achievable, it should provide confidence that the plant could be duplicated at some point in the future to lift output to 65ktpa, a significant uplift from the originally expected target of 50ktpa. The debottlenecking project appears to have very high financial returns. However, longer term, we are still looking for commentary on timing and funding options for the potential bigger expansion. In the interim, due to the depressed share price, we believe Tiger remains a potential corporate target. Valuation: $0.33 (DCF, 15% discount rate) Our forecasts are unchanged. Target price is set at 0.6x NPV.