Thank you to Rogues Trader on HC for the following info:
MRX valued at 14.4c
Date
11 April 2007
ASX Code
MRX
Share Price
9.7cps
Market Cap (fully diluted)
$68.2m ($68.3m)
Issued Capital (fully diluted)
702.7m shares (704.5m)
Cash (as at 15 March 2007)
$5.5m
Board
David Humann (Chairman)
Shane McBride (Managing Director)
Clive Donner (Non-Exec Director)
Geoffrey Jones (Non-Exec Director)
Ronald Hing (Non-Exec Director)
Richard Procter (Non-Exec Director)
Top Three Shareholders
Independence Group NL (18.9%)
LinQ (9.4%)
Glencore (6.3%)
Resources Analyst
Andrew Rowell
Ph: +61 8 9268 2837
andrew_rowell@hartleys.com.au
Matrix Metals Limited’s (“MRX”, “Company”) plans to commence
production at the Leichhardt SX/EW copper operation (previously known
as the Mt Cuthbert/Mt Watson operation) during the September 2007
quarter at an initial production rate of 5,500tpa copper cathode.
Geotechnical and metallurgical studies are about to commence to confirm
the potential to increase this to 10,000tpa in the short term.
The development of the copper oxide deposits provides cashflow for the
Company to continue its strategy to focus on the discovery of world class
copper sulphide deposits within its 5,000km² tenement holding in the
prospective Mt Isa region in Queensland.
We believe the Leichhardt operation has the potential to generate
significant cashflows, given that MRX is unhedged and the copper market
expected to remain tight throughout 2007,. In addition to the Company’s
copper projects, Matrix retains exposure to the booming uranium sector
through its investment and joint venture with Deep Yellow Limited.
We believe that MRX will be re-rated as the market recognises MRX’s
move to production, its leverage to the copper price and the exploration
potential of its ground holding. We continue to rate Matrix Metals
Limited as a Speculative Buy.
Investment Highlights
• Copper Production from September Quarter – The Leichhardt
Project will be developed in two stages. Stage 1 has low start-up
costs and a short time frame to production (September quarter 2007)
at the rate of ~5,500tpa copper cathode. In Stage 2, production is
expected to increase to 10,000tpa based on geotechnical and
metallurgical studies being completed to allow the resource to be
converted to a JORC compliant reserve.
• Leveraged Copper Play - MRX is a leveraged copper play that is
fully exposed to copper price movements due to the absence of
mandatory hedging,. Hartleys currently values MRX at 14.4cps,
however, we recognise that MRX is extremely sensitive to copper
prices. In order to highlight this, our valuation ranges from 4.4cps at
US$1.50/lb Cu to 50cps at the current spot price of ~US$3.35/lb.
Stage 1 of the Leichhardt project is robust at current copper prices
with a breakeven point of ~US$1.60/lb Cu. The development of
Stage 2 is likely to have low capital costs and reduced unit operating
costs, thus providing an enhanced financial outcome.
• Glencore Offtake Agreement for Existing Deposits – Glencore
has secured the offtake rights to existing sulphide deposits and their
extensions on MRX’s tenements by providing the funding for
production at the Leichhardt project. However, new sulphide
deposits discovered in the area remain available for offtake
negotiations.
• Xstrata JV and Deep Yellow Drill Programmes – Xstrata has the
right to earn up to 75% of primary sulphides around a small area
(210km²) surrounding the large McCabe deposit. Drilling is expected
to commence in late March 2007. In addition, Deep Yellow (earning
up to 80%) is targeting uranium anomalies in close proximity to the
Mary Kathleen uranium mine and the large undeveloped Valhalla and
Skal uranium deposits. As part of the transaction, MRX has been
issued 21.4m DYL shares with a current value of $8.5m.
Matrix Metals Limited Speculative Buy