AJM: Altura Mining Ltd

[Corporate]

Not much happening with AJM recently. This is a long term hold for me and I'm not going to be tempted into selling any time soon. Happy to wait for the 100%+ gain.

Low risk play IMO.

[soulman]

Seems to be some accumulation here in AJM for the last week or so. Didn't even know they have a drilling services division.

Not sure whether their 30% Mt Webber iron ore project is significant for AGO to take the other 30% they do not own for a nice sum. Kagara today announce a sale of their nickel deposit to WSA for a lazy $68 mil. That's not bad considering the depressed nickel prices.

[macduffy]

New Indonesian mine ownersip rules appear to affect AJM's Tabalong coal project adversely. (100% owned at present.)

http://www.smh.com.au/business/indon...316-1vaj8.html

[soulman]

Nice big volume, big price hike in AJM today. Should really continue tomorrow.

[JBmurc]

Altura Mining- Lithium in the Rough?

Posted on September 7, 2017September 7, 2017 by thelithiumspot
Price (as of close, 9/6/17): A$.165

We believe that Altura, Ticker: AJM (ASX) or ALTAF(OTC), is one of the more undervalued Lithium stocks. In the following post, we strive to present our analysis on the the company and our outlook for the stock.
Investment Thesis

Altura Mining is an under-followed miner that is targeting production in 2018. We believe this name has flown somewhat under the radar and provides significant upside potential over the next few years as they ramp up production to full capacity. With the lithium supply market expected to remain tight, and demand potentially overshooting industry forecasts, there is significant room for upside in the stocks of miners that can properly develop and execute on their projects. We believe Altura Mining is such a candidate, with 2017, 2018, 2019, and 2020 fair values of A$.24, A$.37, A$.42, and A$.49, respectively, compared to a current stock price of A$.165. Our valuation is based on discounts to the 2020 acquisition valuation, the year in which we model Altura reaching full production.
Company Overview

Altura Mining, based in Western Australia, is operating a hard-rock lithium project in Pilgangoora, Western Australia. The company is expecting to be the first new hard-rock producer coming online in 2018. Although many investors have probably heard about Pilbara Minerals, they do not know much about Altura, who is developing their project in the same neighborhood. This is why Altura caught our eye- they share a resource, are targeting to come online around the same time, but are currently trading at a lower multiple.
Management

[​IMG]
Source: Company Presentation
As the above chart from Altura’s recent presentation shows, their management team consists of experienced mining industry veterans with a high-level of knowledge about the mining and production process. That may seem obvious for a mining company, but a lack of relevant experience has never stopped companies from hiring executives in the past. Thus, we are encouraged by Altura’s operators and the passion they share for lithium.
However, the one issue with having so many operations oriented individuals is that the company isn’t as good at broadcasting their strengths to the market. We believe this is one of the reasons why the company isn’t as widely followed as some of their peers like Pilbara, Nemaska, or Lithium Americas. It should be noted though that while this is an issue for existing shareholders, it presents an opportunity for investors looking to get into the stock.
In our lengthy conversation with management we brought up this perceived lack of marketing and self-promotion many times. We certainly weren’t the first to notice or even bring up the issue to management, but it seems like they must have been thinking the same thing because over the last few weeks, they’ve been much more active on social media, using the platform to more effectively communicate their progress to investors and market watchers. We read this as a positive not only because it will bring more attention to their operations, but also because it shows that management is willing to take constructive advice from stakeholders.
Finally, we want to mention that we left our conversation with management reassured by their ability to execute and develop the Pilgangoora project. From our conversation, they seem like honest, straight-shooters. They provided very straightforward answers that made us confident they are focused 100% on developing the Pilgangoora project, and ramping up production as quickly and efficiently as possible without cutting corners.
Pilgangoora Lithium Project

The Pilgangoora project has many favorable characteristics- it has close proximity to ports, a good quality resource, and low operating costs. We know that they have an ore reserve estimate of 30Mt at 1.04% Li2O, and an initial mine life of 13 years (based on the original 20Mt reserves estimate from the 2016 DFS) while producing an average of 220 ktpa of 6% Li2O spodumene concentrate at an estimated operating cost of A$316/t. Additionally, the DFS revealed a low strip ratio of less than 3:1, which helps keep operating costs lower.
Altura’s location is ideal. They are in the heart of mining country for Australia and are very close to all the right roads and ports to help them ship out their Lithium efficiently. This is important to note with any Lithium provider since having easy access to necessary infrastructure will help lower the operating costs leading to the company having higher margins.
Financial Positioning/Funding

The initial capex for the Pilgangoora project is expected to be approximately A$140m, including sustaining capital requirements. The company raised this amount through a Senior Secured debt facility which was finalized at the end of July. The terms of the deal are summarized as follows:
They’ll take 6.5% directly off the table
Interest rate will start at 14% rising to 15% after 18 months
The deals allows for a mechanism to pay down or replace entirely after 12 months
The company can repay $25m at a time
Management told us that if all goes well, they hope to start the paydown of debt in the second half of 2018, expecting completion by 2019.
Finally, the company had about A$37m in cash at the end of March, which will help cushion the company in the event of delays or cost overruns. Any remaining cash will also help with working capital requirements.

Valuation---2020= 77cps

[JBmurc]

Really enjoying the ride from my mid-July 15.5c purchase >>25.5c getting tapped currently ....chart wise strong trend continues ...getting tempted to take some off the table to pay GST bill ...but thinking better plan is to exit another share ....IMHO AJM will continue to trend much higher

[cammo]

Jumped in at 14c. Couple more announcements and will be in the 30s

[t.rexjr]

Jumped in at 14c. Couple more announcements and will be in the 30s

I'd speculate you may be well past there when this latest announcment is released if it's anything to do with lifting output. My sell last week is looking like a pretty terrible decision right about now...

[JBmurc]

Sounds like is around more Capital rasing?

[t.rexjr]

Full steam ahead, fair racing today. Must be all boozed up on cup day!