Rare Earth Minerals — Update 23 November 2015

Cadence Minerals (AIM: KDNC)

Last close As at 20/12/2024

GBP0.02

0.01 (0.61%)

Market capitalisation

GBP4m

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Research: Metals & Mining

Rare Earth Minerals — Update 23 November 2015

Rare Earth Minerals

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Metals & Mining

Rare Earth Minerals

Sonora resource increases

Resource upgrade

Metals & mining

24 November 2015

Price

0.78p

Market cap

£53m

US$/£:1.52

Net debt/cash (£m) as

1.6

Shares in issue

6,815m

Free float

97%

Code

REM

Primary exchange

AIM

Other exchanges

N/A

Share price performance

Business description

Rare Earth Minerals (REM) is a minerals investment company with direct and indirect interests in lithium and rare earth projects. REM’s primary value proposition is a 41.75% effective interest in the Sonora Lithium Project concessions in Northern Mexico.

Analysts

Tom Hayes

+44 (0)20 3077 5725

Charles Gibson

+44 (0)20 3077 5724

REM’s majority partner Bacanora Minerals has reported a significant increase in tonnage, grade and resource confidence for the Sonora Lithium Project in Mexico. The overall improvement has seen a large proportion of the inferred fraction converted to indicated, which is pivotal for the completion of feasibility studies and advancing the project to production. With an offtaker for future Sonora lithium production in place, it is down to Bacanora and REM to push forward with the rapid advance of Sonora to meet the required timeframes given in its offtake agreement.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

12/12

0.0

(0.9)

(0.06)

0.0

N/A

N/A

12/13

0.0

1.5

0.05

0.0

15.6

N/A

12/14

0.0

(3.5)

(0.06)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, share-based payments and exceptional items.

Sonora’s lithium resource now comprises an indicated mineral resource of 5.0Mt of lithium carbonate equivalent (LCE), from 364Mt of clay ore bearing a lithium grade of 2,600ppm. This is an 18% increase in lithium grade and an increase in indicated resource tonnes of c 340% over the previous inferred estimate of 1.14Mt LCE from 95Mt of clay at 2,200ppm. Inferred tonnages decrease 38% to 3.9Mt LCE, a reduction from the previous estimate of 6.3Mt, resulting from the upgrading of the inferred resource tonnages to indicated. This improved and upgraded mineral resource estimate is integral to the completion of a feasibility study on Sonora to be finalised by Bacanora, expected during Q116. REM has an effective economic interest in the Sonora Lithium Project of 42.04%. For illustrative purposes only, applying our in-house peer group derived lithium resource multiple of US$24.48/t implies a value for REM’s 42.04% of the combined indicated and inferred resource tonnages on an LCE basis of US$218m, or £143m. This compares to its current market cap of £57m. The Sonora Lithium Project FS in Q116 remains the key catalyst to realising the full value of this resource. We expect to reinstate our forecasts on the company by year end.

Disclaimer

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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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)4 8948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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

245 Park Avenue, 39th Floor

10167, New York

US

Sydney +61 (0)2 9258 1161

Level 25, Aurora Place

88 Phillip St, Sydney

NSW 2000, Australia

Wellington +64 (0)4 8948 555

Level 15, 171 Featherston St

Wellington 6011

New Zealand

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