Strandline set to triple as funding for WA mineral sands project comes in
Strandline Resources shares are set for a significant re-rating as the emerging mineral sands producer finalises funding for its big Coburn project in WA, according to research reports published this week...
22nd May 2020
Resources Rising Stars
Strandline Resources shares are set for a significant re-rating as the emerging mineral sands producer finalises funding for its big Coburn project in WA, according to research reports published this week.
The company said Coburn had received a clean bill of health from independent experts, including engineers SRK, who found the project would be technically and economically robust.
Importantly, no fatal flaws or residual high risks were identified.
The findings are considered critical because they form part of the due diligence process being conducted by potential lenders, including the Federal Government’s Northern Australia Infrastructure Facility (NAIF).
A NAIF sign-off for Coburn is seen as a key share price catalyst for Strandline because it would mean that the lion’s share of the required debt funding was locked down and that a highly credible national agency had effectively endorsed the project’s technical strength and financial outlook.
Broker Morgans set a price target of 38c – almost triple the current price of 14c– said the independent experts had found that Coburn was “world-class and robust”.
“With the acceptance by the potential lenders of Strandline’s studies – no doubt after the debt-providers’ technical experts reviewed every component and assumption in depth – the way is now clear for Strandline to fix the consortium which will provide the debt, most likely including the NAIF,” Morgans said.
“Once the scope and terms of the debt are agreed, any mezzanine finance and/or offtaker finance is secured, and any dilution of Strandline’s involvement at the asset level is set, the equity component required by Strandline for the development of the A$250M Coburn project will become apparent.
“In terms of the size of its end market, China is under-represented in offtake.”
Fellow broking house Shaw and Partners put a 32c price target on the stock, saying “Coburn is a world class mineral sands resource with all necessary permits. The project looks likely to reach FID this year”.
“Strandline is now moving to secure debt financing and strategic partner arrangements at Coburn and we expect progress in the June quarter,” Shaw said.
“The debt package is expected to be in two tranches, a consortium of commercial banks and NAIF.
“Coburn is now ready to go. It has all permits, and required technical reports completed.”
Strandline Managing Director Luke Graham said completion of the reports kept Coburn firmly on the path to funding and development.
“These independent reports validate Coburn’s very strong fundamentals, its development readiness and support finalising debt and equity financing for the project,” Mr Graham said.
“With the key development approvals in place and binding offtake contracts signed with major customers, Coburn is moving rapidly towards development.”
Image: Business News
© 2020 Resources Rising Stars All Rights Reserved