Analyst Comment: This transaction has been a long time in the making and has cleared the path for Minbos to accelerate the development of their high grade Cacata Phosphate Project. The merger will streamline the decision making process regarding the preferred development option for the Cacata Project (study due 1Q17), as well as makes future negotiations regarding financing and offtake much simpler.
In a show of support for the transaction the company’s major shareholder exercised $3.8m worth of options. With 310m options outstanding (1c exercisable before the end of 2016), and Petril being given the same rights as the option holders as part of the merger, Minbos could have more than $14m in cash by 1Q17 if all rights are exercised. This could see Minbos fully funded through to the completion of the BFS, as well as having a significant portion of funds required for Cacata’s development.
Valuation: We value Minbos at $0.031 / share (share price $0.008 / share). We applied a 40% risk weighting discount to our valuation given the current stage of development, however will reduce this discount at the completion of the option study (1Q17) and subsequent BFS (2H17).
We also see long term upside in the company’s growing development and exploration assets that we have only applied a notional valuation for at this time. With a total resource in excess of 600Mt (JORC and non JORC) , there remains good potential for the company to advance multiple production centres throughout Angola in the long term. We will review our valuation for these assets in the future.
The information is general information only. Any advice is general advice only. Neither your personal objectives, financial situation or needs have not been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice. Adam Kiley (AR No. 458224) is an authorised representative of Intelligent Financial Markets Pty Ltd (AFSL No. 426359).
