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Northland Capital Partners View on the City - W Resources & Edenville Energy.

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W RESOURCES (LON:WRES)

SECTOR – MINING

RATING – BUY*

MARKET CAP – £29.8m

CURRENT PRICE – 0.52p#

TARGET PRICE – 1.2p

ANALYST –BARRY GIBB

 

 

Year-end Dec

2016A

2017A

2018E

2019E

 

Revenue (£m)

0.1

-

-

 28.8

EBITDA (£m)

(0.6)

(0.5)

(0.7)

 15.1

PBT/(LBT) (£m)

(0.9)

(0.7)

(4.2)

 7.6

Basic adj. EPS/(LPS) (p)

(0.0)

(0.0)

(0.1)

 0.1

DPS (p)

-

-

-

-

Net Cash/(Debt) (£m)

(0.7)

(0.8)

(26.1)

(15.2)

P/E (x)

n.a.

n.a.

n.a.

4.8

Dividend yield (%)

-

-

-

-

EV/EBITDA (x)

(33.8)

(52.8)

(76.5)

 2.8

 

SOURCE: Northland Capital Partners Limited estimates. #Priced at prior trading day close. *Northland Capital Partners Limited provides commissioned research coverage to W Resources and therefore this information should be viewed as a Marketing Communication.

 

La Parrilla mine, first crushed ore

 

NORTHLAND VIEW

§  W Resources reports that it successfully fed the first mined ore into the newly completed crusher which is now being commissioned at its flagship tungsten and tin project, La Parrilla, in Spain. This was achieved on 18 December, ahead of management’s January 2019 target. 

§  The crushing circuit has been engineered to minimise creation of tungsten fines and is designed to process 350 tonnes per hour (‘tph’) of ore.  It comprises a jaw crusher and secondary cone crusher both with vibrating grizzlies prior to size reduction and two tertiary cone crushers in closed circuit with a double deck banana screen. The circuit has been designed for modular expansion to 700 tph without the need for modification.

 

Increased volume of mined ore is expected to be delivered to the plant as it moves into 2019, in accordance with a planned ramp-up ahead of the commissioning of a new larger scale concentrator in Q219. This is expected to allow the Company to generate revenue and cash flow ahead of its move to large scale production later in 2019 for which it plans a run rate of 2,500 tonnes per annum of tungsten concentrate. Having secured a US$35m debt finance facility from Blackrock in Q118 along with two major offtake agreements (firstly with Europe’s leading tungsten processor and secondly with a leading US supplier) against a background of firm product pricing, WRES’s strategic planning is now advancing well.  Facilitating this, last month’s fund raise was designed to provide working capital independent of the debt finance facility, whilst also introducing new investors to the share register.  Despite this positive news, La Parrilla’s quality concentrate and excellent geographical location, the share price has failed to recognise the Project’s continuing delivery on its advanced development stages, which makes the Company appear significantly undervalued.  Consequently we have Buy recommendation and price target of 1.2p per share.

COMPANY DESCRIPTION

W Resources is in the process of constructing the La Parrilla Tungsten Mine, located in Spain.

 

Edenville Energy (LON:EDL)

SECTOR – MINING

RATING – CORP*

MARKET CAP – £2.0m

CURRENT PRICE – 0.13p#

ANALYST – BARRY GIBB              

 

 

Year-end Dec

2016A

2017A

 

 

 

Revenue (£m)

-

-

No forecasts provided

EBITDA (£m)

(3.2)

(1.2)

Adj. pre-tax Profit (£m)

(3.2)

(1.2)

Adj. EPS (p)

(0.5)

(0.1)

DPS (p)

-

-

Net Cash/(Debt) (£m)

0.1

0.8

P/E (x)

-

-

Dividend yield (%)

-

-

EV/EBITDA (x)

-

-

 

SOURCE: Northland Capital Partners Limited estimates. #Priced at prior trading day close. *Northland Capital Partners Limited acts as Nomad and Broker to Edenville Energy and therefore this information should be viewed as a Marketing Communication.

 

Lamella plant operational

 

NORTHLAND VIEW

§  Further to the announcement of 17 December, Edenville Energy reports that the Lamella clarifier water treatment plant installed at the Company's Rukwa Coal Project is fully operational.

§  The plant has been designed to enhance the quality of the water and reduce the amount used in the Project's coal processing, while also ensuring that the site follows recognised international environmental practices.  Management believe this plant will improve water quality both in the plant process and in the return ponds, which in turn should lead to increased coal processing productivity.

 

This is an important step forward following the Project update that was announced on 17th December.  Edenville presently has regular coal supply agreements for in excess of 8,000 tonnes per month and is now busy implementing site expansion in anticipation of confirming yet further medium- to longer-term supply contracts.

 

 

 

COMPANY DESCRIPTION

Edenville Energy is moving the Rukwa Coal Project towards near-term production and advancing its Coal to Power Project.

 

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