Hartley’s views Avalon as ahead of the pack among microcap copper plays
Published 19-JAN-2017 10:49 A.M.
2 minute read
Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.
In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.
The below articles were written under our previous business model. We have kept these articles online here for your reference.
Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.
Click Here to View Latest Articles
Analysts at Hartleys have initiated coverage of Avalon Minerals (ASX: AVI), a company that has made significant ground in the last 12 months in terms of progressing its Viscaria copper project in Sweden.
However, Hartleys is of the view that maiden production won’t occur until fiscal 2019, ramping up to between 25,000 tonnes and 30,000 tonnes per annum from 2020 with an initial 8 to 10 year mine life.
Based on these metrics the broker anticipates that the group can deliver a maiden profit of $13.5 million in fiscal 2020.
It should be noted that broker projections and price targets are only estimates and may not be met. Also, historical data in terms of earnings performance and/or share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.
Assessing the company’s current status, the Viscaria project has a mineral resource estimate of 52.4 million tonnes grading 1.2% copper with 65% in the measured and indicated categories.
Hartleys focuses on ‘copper only’ scoping study at Viscaria
Management took the decision to conduct a revised ‘copper only’ scoping study in relation to the Viscaria project which was released approximately 12 months ago. It is of the view that the outcomes of the study indicate that the project demonstrates robust project fundamentals with low technical risk.
This was one of the focus points of Hartleys coverage with the broker saying, “Extension drilling in 2015 showed Viscaria’s D Zone was strengthening at depth and has the potential to be developed on a similar scale to the historically mined A Zone which yielded 300,000 tonnes of copper prior to 1997.
Hartleys noted the benefits of relatively low labour costs and services, as well as established transport infrastructure. The broker estimates that a 2 million tonnes per annum mine and concentrator can be built on the site for US$130 million.
Hartleys views Avalon as ‘ahead of the pack’ if the price is right
In modelling an economically viable project at Viscaria, Hartleys projected that the company requires a long-term copper price in excess of US$2.80 per pound. This is in keeping with Avalon scoping study which applied a copper price of US$3.00.
While conceding that there is little interest in the small copper sector even since a recent rebound in prices, Hartleys is of the view that a move back towards US$3.00 per pound would see a return of investors to this end of the market.
Should this scenario play out, it views Avalon as ‘ahead of the pack’ compared with peers in that sector.
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
Publication Notice and Disclaimer
The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.
This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.