Canyon Resources — Strategic investment in Camrail

Canyon Resources (ASX: ASX:CAY)

Last close As at 07/03/2025

AUD0.25

−0.01 (−2.00%)

Market capitalisation

AUD355m

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Research: Metals & Mining

Canyon Resources — Strategic investment in Camrail

Canyon Resources has announced that Camalco, its wholly owned in-country subsidiary, has entered into two agreements to acquire a 9.1% combined interest in Camrail, Cameroon’s rail operator. The transaction was approved by Camrail’s board and will see the company paying A$3.4m in cash for the stake. Canyon will nominate one director to Camrail’s board. This is a strategic investment that will allow the company to exercise more control over the rail infrastructure upgrade in Cameroon required to bring the Minim Martap bauxite project into production, therefore further de-risking the project.

Written by

Andrew Keen

Managing director, head of content, energy and resources, industrials

Energy and resources

Asset acquisition

10 March 2025

Price AUD0.245
Market cap AUD348m

Net cash at end December 2024

AUD15.6m

Shares in issue

1,419.2m
Code CAY
Primary exchange ASX
Secondary exchange N/A
Price Performance

Business description

Canyon Resources is a development and exploration company focused on expediting the development of the high-grade bauxite Minim Martap project in central Cameroon, through its in-country subsidiary Camalco.

Analysts

Andrew Keen
+44 (0)20 3077 5700
Andrey Litvin
+44 (0)20 3077 5700

Canyon Resources is a research client of Edison Investment Research Limited


Note: PBT and EPS are on a company reported basis.

Year end Revenue (AUDm) EBITDA (AUDm) PBT (AUDm) EPS (AUc)
6/22 0.0 (12.7) (12.8) (1.84)
6/23 0.0 (4.5) (5.0) (0.54)
6/24 0.0 (10.1) (9.5) (0.80)
6/25e 0.0 (11.2) (10.4) (0.75)

In two separate transactions, Canyon will gain control over a combined 9.1% interest in Camrail for a total consideration of A$3.4m in cash. On 28 February, the company completed the acquisition of a 3.8% stake from Societe d’Exploitation des Bois du Cameroun (SEBC) for A$1.4m. In a separate transaction, it will purchase a 5.3% ownership from Total Energies Marketing Cameroun (Total Cameroon) for A$2.0m in cash. These transactions will make Canyon the third largest shareholder in Camrail, after Bolloré Group (77.4%) and the government of Cameroon (13.5%). The acquisition was approved by Camrail and will allow the company to nominate a director to Camrail’s board.

This is a strategic move for Canyon that will allow it to exercise more control over the ongoing rail infrastructure upgrade in Cameroon, one of the most critical elements in bringing Minim Martap into production, and could also help it secure a commercial rail transportation agreement for the project. As such, this is another indication of the company’s progress towards commissioning the project and its de-risking.

Given the lack of influence on Camrail’s business, the acquisition is likely to have minimal effect on Canyon’s financials, assuming the company will account for its 9.1% stake using a cost method. The transactions reduce Canyon’s last reported net cash at end December 2024 from A$15.6m to c A$12.2m. We note that the company has A$35m in options outstanding with its key shareholder Eagle Eye Asset Holdings (43.6%), exercisable upon the mining licence grant (obtained in 2024) and securing binding commercial rail and port agreements (expected in H125).

We maintain our project level valuation of Minim Martap at US$566m (A$877m) on an NPV basis, with the value of the residual resource adding another US$175m (A$272m).

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