Ironveld - Initiation of Coverage
Financing deal to unlock tremendous value at a world-class high purity iron, vanadium and titanium project in the Bushveld
Ironveld joined AIM in 2012 with Prospecting Rights over a vast 165km² area in the Bushveld, South Africa, with plans to mine magnetite iron ore as feedstock for its own pig iron plant. Since then, there has been a large JORC-resource delineated (2013), a cracking DFS (2014), mining licences secured, environmental approval gained, plus confirmation of power supply from Eskom - major milestones on the road to putting this project into production. All great news but in recent years Ironveld has been treading water. Post a recent £1.15m funding, the board now has 12-months to finally do a financing deal. Last year Ironveld was being helped by IIG in this respect but is now free of their clutches. This stock is in play.
Remarkable high-grade iron asset with 3 economic revenue streams
The project’s JORC-compliant resource of 56.3Mt grading at 68.6% Fe2O3, 14.7% TiO2 and 1.12% V2O5 is capable of producing three economic revenue streams – HPI with a big competitive advantage plus vanadium and titanium. Already a leading offtake partner is engaged for the vanadium.
Near-term chance to get into production with smelter acquisition
Securing finance would allow Ironveld to either acquire an identified 7.5MW smelter or build their own 5MW smelter at the mine site. Beyond that are plans to build a new 15MW smelter and double production.
Chance of early cash flow from JV deal supplying magnetite ore
Ahead of all that, a deal could be in the offing to mine/crush/supply ore which could really improve Ironveld’s negotiating stance in financing talks.
Risked conservative NPV plus peer comparison shows upside of 376%
Our conservative valuation illustrates the potential. We initiate coverage of Ironveld with an initial target price of 3.26p and Conviction Buy stance.
RISK WARNING & DISCLAIMER
Ironveld is a research client of Align Research. Align Research & a Director of Align Research hold a major interest in the shares of IRON. Full details of our Company & Personal Account Dealing Policy can be found on our website http://www.alignresearch.co.uk/legal/
For full disclaimer information please refer to the last page of the full document. This investment may not be suitable for your personal circumstances. If you are in any doubt as to its suitability you should seek professional advice. This note does not constitute advice and your capital is at risk. This is a marketing communication and cannot be considered independent research.
| Year to June | 2019A | 2020A | 2021E | 2022E |
|---|---|---|---|---|
| Revenue (£’000s) | - | - | - | 556 |
| PTP (£'000s) | (625) | (1,019) | (592) | (258) |
| EPS (p) | (0.10) | (0.16) | (0.06) | (0.02) |