Analyst David Coates 612 8224 2887 Authorisation Peter Arden 613 9235 1833 GICS Sector Materials Expected Return Capital growth 92.3% Dividend yield 0.0% Total expected return 92.3% Company Data & Ratios Enterprise value $149.8m Market cap $152.4m Issued capital 586.0m Free float 65.6% Avg. daily val. (52wk) $211,169 12 month price range $0.13-$0.35 Price Performance BELL POTTER SECURITIES LIMITED ACN 25 006 390 7721 AFSL 243480 DISCLOSURE: BELL POTTER SECURITIES ACTED AS LEAD MANAGER TO THE $30.0M PLACEMENT IN DECEMBER 2017 AND MANAGER TO THE $5.5M PLACEMENT IN AUGUST 2017
Drilling to commence in coming weeks AML is preparing for the single largest drilling campaign ever undertaken at its 100%- owned Walford Creek copper-cobalt project in NW Queensland. A 30,000m diamond core and RC drilling program is set to commence on schedule in coming weeks. The recent wet-season and tropical cyclone events have resulted in minimal rainfall on site and mobilisation of drilling crews is not expected to face any delays. Activity will ramp up to a total of three rigs, including a multi-purpose rig to drill RC pre-collars and accelerate the diamond drilling program. The focus will be on both infill and extension drilling and early holes will target zones significantly (~2km) beyond the currently defined Resource. While these are higher risk, it creates the opportunity for very positive news flow in the short term through the potential confirmation of material extensions to the current Resource. There is strong geological evidence to support this thesis and we view this time as a compelling opportunity to gain exposure to AML. Exposure to the cobalt crunch We view copper and cobalt to be among the best commodity exposures to the Electric Vehicle and renewable energy themes. Walford Creek is one of just a handful of assets offering this combination and the cobalt grade of 0.15% Co (1,500ppm) in its Copper Lode Mineral Resource is the highest grade vs its Australian peers. Combined with the Cobalt Peripheral Resource, we estimate Walford Creek contains over 43kt Co at 0.13% Co. We also estimate that, at current prices, the life-of-mine (LOM) revenue split between copper and cobalt would be roughly even at 42-45% each. Investment thesis – Buy, (Speculative), valuation $0.50/sh We reiterate our view that AML has entered an exciting period of cost effective discovery and growth and that there are strong expectations news flow from the upcoming drill program can deliver strong, positive catalysts for the share price. Our NPV-based valuation increases 5% to $0.50/sh on an increased cobalt price assumption and AML remains one of our Top Picks for 2018. Buy (Speculative)
AML Price at posting:
28.5¢ Sentiment: Buy Disclosure: Held
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