Drilling tees up Q3/Q4 mineral resource estimates

Lepidico 11 September 2017 Update
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Lepidico

Drilling tees up Q3/Q4 mineral resource estimates

Drilling results

Metals & mining

11 September 2017

Price

A$0.012

Market cap

A$25m

A$1.2579/US$

Net cash (A$m) at end June 2017

3.3

Shares in issue

2,139.5m

Free float

66.68%

Code

LPD

Primary exchange

ASX

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(7.7)

(14.3)

2.7

Rel (local)

(6.8)

(14.7)

(1.8)

52-week high/low

A$0.0

A$0.0

Business description

Lepidico provides exposure to a portfolio of lithium assets via its wholly owned properties, JVs and IP in Australia, Canada and Europe. Uniquely, it has successfully produced lithium carbonate from non-traditional hard rock lithium bearing minerals using its registered L-Max® process technology.

Next events

Feasibility study process design

End 2017

Feasibility study report

Q2 2018

Analyst

Charles Gibson

+44 (0)20 3077 5724

Lepidico is a research client of Edison Investment Research Limited

In a busy Q3, Lepidico (LPD) has announced two sets of drilling results from Alvarrões in Portugal, one set from Lemare in Quebec and the conclusion of a farm-in deal in Western Australia. Edison estimates that the Alvarrões drilling results are indicative of a resource in the order of 0.7-2.3Mt of mineralised material at a grade of 1.10-1.13% Li2O, with an in-situ value (upon achieving JORC-compliance) of US$0.5-1.6m. Note that formal mineral resource estimates are expected from both Alvarrões and Separation Rapids in September or October 2017.

Year end

Total revenues (A$m)

PBT*
(A$m)

Cash from operations (CFO) (A$m)

Net (debt)/
cash (A$m)

Capex

(A$m)

06/15

0.0

(1.0)

(1.1)

(0.1)

(0.0)

06/16

0.1

(2.3)

(1.0)

0.7

(0.1)

06/17e

0.0

(1.1)

(0.2)

3.3

(2.5)

06/18e

0.0

(2.8)

(4.2)

15.1

(23.1)

Note: PBT is reported.

Resources likely to support Phase 1 development

Upstream lithium mica feed to Lepidico’s planned Phase 1 L-Max® plant is to be provided from as many as three lepidolite deposits – namely, Separation Rapids (via a concentrate offtake arrangement with Avalon Advanced Materials), the Alvarrões lepidolite mine (via an ore offtake arrangement with Grupo Mota) and/or the PEG009 deposit at Pioneer Dome (subject to 75% farm-in by Lepidico). Of at least as much significance as the direct value of the in-situ resources being drilled therefore is the fact that it is highly likely that the mineral resource updates in September/October will confirm that Lepidico has the 1Mt required to supply a Phase 1 L-Max plant development for in excess of 10 years.

Phase 1 feasibility study ongoing

A trade-off study between Kenora and Sudbury as potential site locations for the plant was completed in July 2017. Suitable enclosed facilities serviced by power, gas and road within established industrial parks close to the rail network have been identified for lease at both locations. However, management reports that, when compared to Kenora, Sudbury may provide substantial operating cost savings and greater access to mining and processing services.

Valuation: 68% premium to current share price

Edison estimates that execution of the PFS according to the operational parameters contained therein will result in free cash flow to Lepidico of A$26.7m per annum once steady-state production at the Phase 1 L-Max plant has been achieved. Assuming US$30m (A$37.7m) of equity financing at the prevailing share price, this implies a valuation for Lepidico of A$0.0185/share currently (from A$0.0202/share due to the lower share price and associated dilution, and updated FX). This rises to A$0.0271 in FY22, based solely on discounting our estimate of (maximum potential) future dividends to shareholders derived from the Phase 1 plant at a rate of 10% per annum (fully diluted) – ie no value is ascribed to the development of the Phase 2 plant or other development options.

Investment summary

Over the course of the past month, following our initiation note (see Masterful metallurgy, published on 4 July 2017), Lepidico has released a number of announcements to the market, including:

two sets of drilling results from Alvarrões in Portugal (see ‘Geological assets’ on page 8 for a brief summary of the asset);

one set of drilling results from Lemare, in Quebec;

the announcement of a farm-in deal with Maximus Resources over the Moriarty lithium project in Western Australia;

the award of the engineering project for the provision of engineering services for the company’s Phase 1 L-Max plant feasibility study to Lycopodium; and

an announcement from Avalon Advanced Materials (with which Lepidico has a lepidolite concentrate supply agreement – see page 7) confirming high-grade lepidolite mineralisation at Separation Rapids.

Each is considered separately, below.

Alvarrões

On 20 July, Lepidico announced the results of the first seven drill holes from its diamond drilling programme at Alvarrões. In general, the programme confirmed multiple, lepidolite-bearing, near surface pegmatite sills, which were confirmed over at least 300m of strike and 200m down-dip. The lepidolite content of the sills was typically between 15% and 25% and lithium oxide (Li2O) grades as high as 1.4% over 3.35m were recorded (hole ALVD04). The drill results were interpreted by Lepidico management as being indicative of a “large lithium mica mineralised system”, as a result of which, a second drill rig was mobilised to site and mine planning and geotechnical consultants appointed, with a view to expediting a mineral resource estimate after the completion of the drill programme in August. One month after its initial drill results, on 25 August, Lepidico announced the results of a further three holes (ALVD08-11, with one abandoned hole, namely ALVD-09). As at that date, 17 holes had been completed, for a total advance of 1,042m (an average of 61.3m per hole). All told, the holes identified 12 stacked sills (denoted H-S). Importantly, drilling demonstrated continuity of the thicker sills in Block 1, which were interpreted to extend at least 400m along strike (NE-SW) and 350m down dip (towards the north-west). A conflated summary of the drill holes is provided below and the location of the drill holes overleaf.

Exhibit 1: Alvarrões diamond drill lepidolite-bearing pegmatite significant intercepts, summary

Hole identification

True thickness
(m)

Average grade

(%, Li2O)

Metal content factor

(m.%)

ALVD01

4.98

0.71

3.5524

ALVD02

5.96

1.13

6.7063

ALVD03

0.94

0.82

0.7708

ALVD04

10.54

1.20

12.6438

ALVD05

4.56

1.13

5.1628

ALVD06

2.40

1.12

2.6880

ALVD07

4.45

0.76

3.3815

ALVD08

5.10

*1.53

7.8030

Block 1 totals/averages

4.87

1.10

42.7086

ALVD10

4.97

1.38

6.8404

ALVD11

6.76

1.15

7.7435

Totals/averages

5.07

1.13

57.2925

Source: Lepidico, Edison Investment Research. Note: *Includes one sample over limit (>10,000ppm Li) being re-assayed.

Note that, for the purposes of the above table, true widths represent a conflation of all of the separate, individual sample widths. The average grade is weighted by individual sample width.

In all but three holes, the true width of the intersection was reported to be the same as the down-hole interval, indicating that the drill hole intersected the sill at right angles (as desired). All of the holes intersecting at right angles were drilled at a dip of 90°, indicating that the sills are essentially flat-lying.

Exhibit 2: Alvarrões diamond drill hole location

Source: Lepidico

Note that Block 1 has been studied by holes ALVD01-08, while Block 3 has been probed by holes ALVD10-11.

Under the terms of its agreement with Grupo Mota (announced on 9 March 2017), Lepidico is undertaking development expenditure of at least €250,000 over an 18-month exclusive period on Alvarrões with the goal of defining a JORC-compliant mineral resource of >1Mt at a grade of 1.5% Li2O. In return, Lepidico will have an exclusive/pre-emptive right for three years in which to effect a commercial relationship with Grupo Mota regarding the supply of ore/concentrate from Alvarrões to Lepidico and/or the right for Lepidico to develop and operate a lithium mica mining and concentration project there. To this end, the drill programme was scheduled to be completed by the end of August, with final assay results anticipated by mid-September ahead of a maiden JORC code-compliant mineral resource estimate at Block 1 around the end of September or the beginning of October.

Edison estimates that holes ALVD01-08 (ie Block 1) cover a surface area of approximately 52,212m2. Assuming continuity of mineralisation between the holes implies a volume of mineralised material of 254,079m3, corresponding to a tonnage of 660.6kt at an average density of 2.6t/m3. At an average grade of 1.10% Li2O, such a tonnage would contain 7,247t of Li2O, or 17,921t of lithium carbonate equivalent (LCE) at a conversion ratio of 2.4728 LCE:Li2O by mass. Note that this estimate is, self-evidently, non-JORC compliant and is intended to provide readers and investors with an order of magnitude interpretation of the drilling performed to date only. In our last major sector report, Gold and other metals: Normalisation augers well for exploration, published in October 2016, Edison estimated an in-situ value for non-spodumene lithium of US$25.72/t LCE, on which basis the delineation of 17,921t LCE JORC-compliant resource would have a value of US$0.46m.

Similarly, assuming continuity of mineralisation across all the holes for which assay results have been provided, Edison estimates that holes ALVD01-11 (ie Blocks 1 and 3 combined) cover a surface area of approximately 171,645m2, which, in turn, implies a volume of mineralised material of 869,552m3, corresponding to a tonnage of 2,260.8kt at an average density of 2.6t/m3. At an average grade of 1.13% Li2O, such a tonnage would contain 25,568t of Li2O, or 63,225t of lithium carbonate equivalent (LCE). At a global average in-situ value of US$25.72/t LCE, such a resource should similarly have a value of US$1.63m. Note that drill hole ALVD18, which is currently in progress, should confirm continuity between Block 1 and Block 3. Hole ALVD19 could determine whether Blocks 1 and 3 are part of a larger mineralised system that, as yet, remains to be drill tested. Either way however, management believes that continuity of mineralisation has now been demonstrated over a sufficient area to establish Alvarrões as a primary feed-source of lithium mica for its proposed L-Max plant with a throughput capacity of 30,000tpa to produce c 3,000t of battery grade LCE, planned to be built in Ontario and currently the subject of a feasibility study.

Note that the mineralised pegmatite system at Alvarrões remains open in all directions, including at depth.

Lemare spodumene

At the same time as it released its Alvarrões results, Lepidico also released results from its second stage of drilling at the Lemare spodumene deposit in Quebec. All told, the programme covered a 600m long extension of the deposit (denoted the SW Extension). A total of 15 holes of NQ core were drilled over 1,527m (an average of 101.2m per hole) on nominal 50m sections along the mapped extension of the spodumene deposit to the SW of the discovery zone drilling last year.

Exhibit 3: Lemare SW Extension, simplified geology showing hole locations

Source: Lepidico

Highlights of the diamond drilling were:

the deposit was extended by 250m; and

wide intercepts encountered (eg 33.7m at 0.94% Li2O and 18.0m at 2.00% Li2O).

However, drilling to the west of a sharp inflection in the interpreted position of the surface mineralised corridor (ie to the south-west, or bottom right, of hole LE-17-19) failed to intersect the spodumene pegmatite or identified only relatively narrow intervals – albeit this is characteristic of the pinch-and-swell nature of the pegmatites encountered elsewhere at the main Lemare prospect 300m to the north-east across the lake (shown in the upper right of Exhibit 3).

As at Alvarrões, a conflated summary of the drill holes is provided below:

Exhibit 4: Lemare SW Extension, significant intersections (>0.5% Li2O), summary

From (m)

To (m)

Interval (m)

True thickness (m)

LiO2 (%)

MCF (m.%)

LE-17-17

109.70

111.80

2.10

1.35

1.37

1.85

LE-17-18

11.50

26.80

4.80

3.09

1.57

4.83

LE-17-19

3.00

47.10

7.40

4.76

1.13

5.36

LE-17-27

13.30

36.60

12.20

7.84

1.42

11.17

LE-17-28

22.50

52.80

16.40

10.54

1.59

16.76

LE-17-29

9.60

58.10

39.50

25.39

1.03

26.07

LE-17-30

6.80

42.30

21.00

13.50

2.04

27.54

LE-17-31

62.00

73.00

2.30

1.48

1.52

2.25

Totals/averages

13.21

8.49

1.41

95.83

Source: Edison Investment Research, Lepidico

All holes were drilled at a dip of 50° and, for the purposes of estimating the true thickness of the intersections, Edison has assumed that the pegmatite is oriented in a vertical configuration.

Assuming continuity of mineralisation down to a depth of 83.34m (calculated from hole LE-17-17) implies a volume of mineralised material of 182,214m3, corresponding to a tonnage of 473.8kt at an average density of 2.6t/m3. At an average grade of 1.41% Li2O, such a tonnage would contain 6,682t of Li2O, or 16,523t of lithium carbonate equivalent (LCE) at a conversion ratio of 2.4728 LCE:Li2O by mass. Note that this estimate is, self-evidently, non-JORC compliant and is intended to provide readers and investors with an order of magnitude interpretation of the drilling performed to date only. In our last major sector report, Gold and other metals: Normalisation augers well for exploration, Edison estimated an in-situ value for lithium carbonate equivalent hosted in spodumene of US$124.91/t, on which basis the delineation of 16,523t LCE JORC-compliant resource would have a value of US$2.06m (excluding any value for by-product contained within lithium mica).

Under the terms of its option agreement with Critical Elements Corp (CRE), LPD is earning up to a 75% interest in the Lemare project. To maintain its position, it had an initial requirement to spend C$800,000 on exploration by 31 August. With completion of the Stage 2 drilling programme, Lepidico reports that it has met this requirement. Now, in order to complete the earn-in to an initial 50% interest, LPD is required to fund a further C$1.2m and to delineate a JORC code-compliant resource by 31 August 2018. The company can then earn a further 25% interest by completing a feasibility study and an environmental study on Lemare by 30 June 2020 and by making a payment of C$2.5m in cash or shares to CRE.

Other developments

Moriarty earn-in

On 21 August, Lepidico announced that it had agreed to earn in to a 75% interest in Maximus Resources’ lithium rights in the Spargoville project, located 70km south of Kalgoorlie and 20km south-west of Kambalda in Western Australia and henceforward known as the Moriarty Lithium project.

The project covers 70km2 of lithium prospective ground, 20km south of the Mt Marion lithium mine, comprises approximately 15km of strike of mafic and ultramafic rocks of the Norseman-Wiluna greenstone belt and contains the Lefroy, Landor and Larkinville prospects. Notably, the project contains several known occurrences of lithium-caesium-tantalum (LCT-type) mica (lepidolite) pegmatites at the Lefroy prospect, at which Maximus reported a 200m long pegmatite averaging 3.55%, with a peak value at 4.97%, Li2O (vs a theoretical maximum of 7.70%). Maximus also reported additional lithium occurrences at the Landor and Larkinville prospects, while mapping by the Geological Survey of Western Australia showed the presence of pegmatites that are considered to be similar to the pegmatites at Mt Marion.

Consideration for Lepidico’s 75% interest is a total of A$350,000, payable as follows:

On execution of the term sheet, payment to Maximus of A$80,000 in Lepidico shares (now completed).

Six months after execution, payment to Maximus of A$120,000 is cash or shares (at Lepidico’s discretion) at a five-day volume-weighted average price (VWAP).

One year after execution, payment to Maximus of A$150,000 is cash or shares (at Lepidico’s discretion) at a five-day VWAP.

Finally, Lepidico can secure 100% of the lithium rights at Spargoville by making a payment of A$400,000 similarly in shares or cash at a five-day VWAP issue price.

L-Max Phase 1 feasibility study engineering services contract

To date, Lepidico has conducted large-scale laboratory tests that have shown the L-Max technology to operate continuously and stably over a protracted period of time. On 27 February 2017, it announced the results of a pre-feasibility study (PFS) into the Phase 1 plant. The study confirmed the viability of constructing a strategically located Phase 1 L-Max plant at Kenora in Ontario, processing lithium-mica concentrates purchased from third-party suppliers. The study assumed a small-scale, commercial L-Max plant processing a lithium-mica concentrate feed at a rate of 3.6 tonnes per hour (tph) to produce approximately 3,000tpa of battery-grade lithium carbonate and a suite of commercially important by-products. Having received the results of the PFS for the Phase 1 L-Max Plant, Lepidico’s strategic imperative is now the advancement of the project to full feasibility study (FS) level and the subsequent development of the Phase 1 plant. To this end, on 3 August, Lepidico announced the appointment of Lycopodium for the provision of process and engineering services for the Phase 1 L-Max full feasibility study. As with the PFS, the objective of the study will be to define an economically and technically viable small, commercial-scale L-Max plant to be built in Ontario that will treat lithium mica concentrate from a variety of sources. In particular, a trade-off study between Kenora and Sudbury, choosing Sudbury as site location, has now been completed. Suitable enclosed facilities serviced by power, gas and road within established industrial parks close to the rail network have been identified for lease at both locations, which will be of considerable benefit to the project. However, management reports that early indications are that Sudbury may provide substantial operating cost savings, as well as greater access to mining and processing services, when compared to Kenora.

In consideration of its services, Lepidico has allotted and issued 45m new and fully paid ordinary shares to Lycopodium. The new shares are subject to escrow restrictions pending completion of the study and are also subject to pro-rata buyback and cancellation provisions (subject to shareholder approval) in the event that the study is discontinued prior to completion.

Separation Rapids lepidolite extension

On 6 February, Lepidico announced that it had entered into a letter of intent with Avalon Advanced Materials, according to which it is envisaged that the latter would sell a minimum of 15,000tpa of lepidolite concentrate (produced from its planned demonstration-scale pilot flotation plant) to the former for processing at its Phase 1 L-Max plant.

In April 2017 Avalon undertook a 2,000m drilling program at Separation Rapids with the aim of:

quantifying the lithium mineralisation in the resource model associated with lepidolite and other lithium micas vs the lithium mineralisation associated with petalite;

expanding the existing mineral resource of lithium (petalite) pegmatite mineralisation;

testing an undrilled target area 1km west of the known resource where a showing of petalite pegmatite sampled by Avalon in 1997 was reported as having yielded 1.56% Li2O across 8.9m; and

collecting geotechnical data for groundwater studies and mine planning in advance of permitting for site development.

In July, Avalon issued a news release highlighting the results of its spring 2017 diamond drilling campaign at Separation Rapids, which, in addition to its petalite resource, extended the lepidolite zones and confirmed that high-grade lepidolite mineralisation comprises approximately 20% of the known lithium resources with additional blue-sky expansion potential. Self-evidently, this development materially enhances the lepidolite potential of the prospect and confirms it as another potential high-quality source of lithium mica for LPD’s Phase 1 L-Max plant. Note that a mineral resource re-estimation at Separation Rapids is scheduled for completion in Q317.

Valuation and financials

Edison’s valuation of Lepidico is derived from the discounting of future, real, maximum potential dividends to shareholders and remains ostensibly unchanged since our valuation at the time of our Outlook note in July 2017, with the exception of adjustments made for Lepidico’s updated share price and FX rate (A$1.2579/US$). In our base case, we assume US$30m (A$34.7m) of equity financing (vs A$39.8m previously) via the issue of an additional 3.4bn shares in FY18 at the currently prevailing share price of A$0.012. Note that this is relatively conservative in terms of implied future gearing/leverage and consequent debt/strategic partner-sourced funding requirements, but is justified on the grounds that prudent gearing/leverage ratios are appropriate in relation to the funding of a specific, specialist, novel and unique technology. In this case, the ultimate valuation of Lepidico shares is A$0.0185 (from A$0.0202/share) as at the start of FY18, rising to A$0.0271 in FY22, when the first dividend is potentially payable to shareholders, as depicted below:

Exhibit 5: Edison estimate of future Lepidico EPS and (maximum potential) DPS

Source: Edison Investment Research

Lepidico had A$1.1m in cash as at 31 March 2017, since which time it has been in receipt of A$3.7m via the issue of 285.4m shares at a price of A$0.013/share. The first phase of the company’s capital raising was a non-underwritten, non-renounceable one for four entitlement offer, which raised A$3.1m. The second phase was the shortfall offer, which raised a further A$0.6m via the pro-rata issue of unsolicited shares to existing shareholders to participate in a shortfall placement. The directors elected not to place the balance of the shortfall, such that net cash as at 30 June was reported to be A$3.3m.

In the meantime, the estimated cost of the L-Max feasibility study is US$5m (A$6.3m vs A$6.6m previously). As a result, management is currently deploying funds into three value-adding drill programmes in the expectation of raising additional equity at a higher price in the future.

We have made a number of small adjustments to financials, which have no material impact on our forecasts.

Geological assets

Lepidico’s current exploration assets include options over the Lemare and the Royal projects, both in Quebec, an ore access agreement with Grupo Mota over the Alvarrões lepidolite mine in Portugal, a farm-in agreement with Pioneer Resources over the PEG 9 lepidolite prospect in Western Australia, ownership of the Euriowie amblygonite project near Broken Hill in New South Wales and an agreement with Crusader Resources regarding the potential deployment of L-Max in Portugal and Brazil.

All three of Lepidico’s planned feed-source targets for the Phase 1 Plant – Separation Rapids, Alvarrões and PEG 9 – are located in stable, mining friendly jurisdictions and close to critical infrastructure, including power, water and transport. Together or separately, these three projects have the potential to provide long-term feedstock for an L-Max processing facility, either at Kenora or elsewhere.

A map of Lepidico’s geological assets, including potential sites for Phase 1 and/or Phase 2 L-Max plants is as follows:

Exhibit 6: Map of assets in which Lepidico has an interest including potential L-Max plant locations

Source: Lepidico

Separation Rapids

Separation Rapids is a large LCT-type complex pegmatite owned by Avalon Advanced Materials and situated approximately 70km north of Kenora in NW Ontario. Although the prospect already contains an NI 43-101 compliant petalite resource (which was the subject of a PEA announcement in September 2016), it is also estimated to contain a significant albeit, as yet, non JORC-compliant lepidolite resource.

Samples from outcropping lepidolite-rich sub-zones to the east of the main Separation Rapids petalite resource were provided to Lepidico for laboratory bench tests using L-Max as part of the Phase 1 plant PFS. Excellent results were achieved (including the production of battery-3454rgrade lithium carbonate of 99.88% purity). Avalon and Lepidico subsequently entered into a non-binding letter of intent, according to which Avalon will sell a minimum of 15,000tpa of lepidolite concentrate, produced as a by-product from its demonstration-scale pilot petalite flotation plant at Kenora, to Lepidico for processing at its planned Phase 1 commercial lithium carbonate production facility.

PEG 9

PEG 9 occurs within a cluster of 13 pegmatites owned by Pioneer Resources along a 20km trend flanking the eastern edge of the Pioneer Dome (an Archaean granite intrusive within the Norseman-Wiluna greenstone belt). It is located approximately 35km north of the town of Norseman and adjacent to the Coolgardie-Esperance Highway and rail line. The prospect itself contains a number of outcropping pegmatites rich in lepidolite and lithium-muscovite.

The PEG 9 prospect was described by Pioneer as an example of a complex lithium-caesium-tantalum (LCT) type pegmatite, outcropping in two parallel structures over a 200m strike length. Although Pioneer had been primarily exploring for spodumene, rock chip samples returned up to 3.94% Li2O from lepidolite-rich pegmatite and up to 3.84% Li2O from a lepidolite-poor, yet micaceous pegmatite. A grab sample from PEG 9 was collected by Lepidico in January that underwent bench scale test work for the L-Max process, producing excellent results, and confirming the amenability of the material as a potential future feedstock for an L-Max processing plant. Lepidico is farming into PEG 9 via a drilling programme. To date, no holes have been drilled at PEG 9, but a maiden drilling programme is scheduled for September 2017, once the required permits have been awarded, with the objective of delineating a 0.5Mt resource at a grade of 1.2% Li2O or more for Lepidico to earn a 75% interest in the prospect.

Alvarrões

The Alvarrões mining concession is approximately 634ha in size and encompasses most of the known lithium pegmatites in the area, which crops out along the north-eastern slopes of the Serra da Estrela mountains.

The Alvarrões Lepidolite Mine is owned and operated by Grupo Mota, which produces approximately 20,000tpa of lithium minerals from the mine, predominantly lepidolite for the ceramics industry.

Under the terms of its agreement with Grupo Mota, Lepidico is undertaking development expenditure of at least €250,000 over an 18-month exclusive period on Alvarrões with the goal of defining a JORC-compliant mineral resource of >1Mt at a grade of 1.5% Li2O. In return, Lepidico will have an exclusive/pre-emptive right for three years in which to effect a commercial relationship with Grupo Mota regarding the supply of ore/concentrate from Alvarrões to Lepidico and/or the right for Lepidico to develop and operate a lithium mica mining and concentration project there.

Lepidico’s agreement with Grupo Mota was announced on 9 March 2017. Since then, Lepidico has inaugurated a 25-hole diamond drilling programme designed to delineate a JORC resource by September 2017.

Exhibit 7: Financial summary

Accounts: IFRS; year end June; A$000s

 

 

2015

2016

2017e

2018e

2019e

2020e

PROFIT & LOSS

Total revenues

 

 

9

116

0

0

0

18,257

Cost of sales

 

 

0

0

0

0

0

(15,746)

Gross profit

 

 

9

116

0

0

0

2,511

SG&A (expenses)

 

 

(455)

(617)

(617)

(617)

(617)

(617)

Other income/(expense)

 

 

0

0

0

0

0

0

Exceptionals and other adjustments

Exceptionals

 

(16)

(415)

0

0

0

0

Depreciation and amortisation

 

 

(5)

(6)

(4)

(1,664)

(3,731)

(4,712)

Reported EBIT

 

 

(467)

(923)

(621)

(2,282)

(4,348)

(2,818)

Finance income/(expense)

 

 

(18)

(5)

3

17

76

(951)

Other income/(expense)

 

 

(559)

(448)

(504)

(504)

(504)

(504)

Exceptionals and other adjustments

Exceptionals

 

0

(888)

0

0

0

0

Reported PBT

 

 

(1,044)

(2,263)

(1,122)

(2,769)

(4,776)

(4,274)

Income tax expense (includes exceptionals)

 

 

0

0

0

0

0

0

Reported net income

 

 

(1,044)

(2,263)

(1,122)

(2,769)

(4,776)

(4,274)

Basic average number of shares, m

 

 

178

465

1,883

3,803

5,570

5,570

Basic EPS (c)

 

 

(0.0)

(0.0)

(0.0)

(0.0)

(0.0)

(0.0)

 

 

 

 

 

 

 

 

 

BALANCE SHEET

 

 

Property, plant and equipment

 

 

9

4

0

18,263

37,263

42,363

Goodwill

 

 

0

0

0

0

0

0

Intangible assets

 

 

0

16,204

18,676

21,821

21,821

21,821

Other non-current assets

 

 

1,485

715

3,187

6,332

6,332

6,332

Total non-current assets

 

 

1,494

16,922

21,863

46,416

65,416

70,516

Cash and equivalents

 

 

53

666

3,300

15,129

15,129

15,129

Inventories

 

 

0

0

0

0

0

1,521

Trade and other receivables

 

 

4

3,870

0

0

0

1,501

Other current assets

 

 

0

0

0

0

0

0

Total current assets

 

 

57

4,537

3,300

15,129

15,129

18,150

Non-current loans and borrowings

 

 

0

0

0

0

23,776

34,877

Other non-current liabilities

 

 

0

0

0

0

0

0

Total non-current liabilities

 

 

0

0

0

0

23,776

34,877

Trade and other payables

 

 

105

614

92

92

92

1,386

Current loans and borrowings

 

 

115

0

0

0

0

0

Other current liabilities

 

 

40

33

33

33

33

33

Total current liabilities

 

 

260

647

125

125

125

1,419

Equity attributable to company

 

 

1,292

20,812

25,038

61,420

56,643

52,370

Non-controlling interest

 

 

0

0

0

0

0

0

 

 

 

 

 

 

 

 

 

CASH FLOW STATEMENT

 

 

Profit for the year

 

 

(1,044)

(2,263)

(1,122)

(2,769)

(4,776)

(4,274)

Taxation expenses

 

 

0

0

0

0

0

0

Depreciation and amortisation

 

 

5

6

4

1,664

3,731

4,712

Share based payments

 

 

450

40

0

0

0

0

Other adjustments

 

 

(451)

1,036

(2,472)

(3,145)

0

0

Movements in working capital

 

 

(10)

148

3,348

0

0

(1,728)

Interest paid / received

 

 

0

0

0

0

0

0

Income taxes paid

 

 

0

0

0

0

0

0

Cash from operations (CFO)

 

 

(1,050)

(1,033)

(242)

(4,250)

(1,046)

(1,289)

Capex

 

 

(9)

(63)

(2,472)

(23,073)

(22,731)

(9,812)

Acquisitions & disposals net

 

 

0

32

0

0

0

0

Other investing activities

 

 

(563)

(80)

0

0

0

0

Cash used in investing activities (CFIA)

 

 

(572)

(111)

(2,472)

(23,073)

(22,731)

(9,812)

Net proceeds from issue of shares

 

 

1,505

1,872

5,348

39,151

0

0

Movements in debt

 

 

100

(115)

0

0

23,776

11,101

Other financing activities

 

 

0

0

0

0

0

0

Cash from financing activities (CFF)

 

 

1,605

1,757

5,348

39,151

23,776

11,101

Increase/(decrease) in cash and equivalents

 

 

(18)

613

2,634

11,829

0

0

Currency translation differences and other

 

 

0

0

0

0

0

0

Cash and equivalents at end of period

 

 

53

666

3,300

15,129

15,129

15,129

Net (debt) cash

 

 

(61)

666

3,300

15,129

(8,648)

(19,749)

Movement in net (debt) cash over period

 

 

(61)

727

2,634

11,829

(23,776)

(11,101)

Source: Lepidico sources, Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Lepidico and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors.
This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Lepidico and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors.
This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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