DMS Plant commissioned - Newfield Resources Limited

Transcription

DMS Plant commissioned - Newfield Resources Limited
Newfield Resources Ltd (NWF): DMS Plant commissioned
Newfield Resources Ltd NWF), $0.76, Recommendation: Speculative Buy, Valuation: $0.91
Analyst: Paul Adams
Date: 31/03/15
Event: DMS plant commissioned
After a quiet 3 months NWF has announced the completion of commissioning of their recently installed Dense Media
Separation (DMS) plant at Golu at their Allotropes Diamond Project in Sierra Leone. Simultaneously, a larger gravel pump
was installed to reduce potential bottlenecks in the future. The DMS plant will be used as an exploration and bulk
sampling tool to determine grade and economic viability of a number gravel horizons within the project area.
Key Points
DMS plant commissioned: NWF has successfully commissioned its DMS plant at Golu. This completes 9 month’s work to
establish the infrastructure required to enable NWF to undertake resource definition of a number of gravel horizons within the
project area and subsequently to becoming a diamond producer. Sign-off has been obtained by the plant manufacturer for the four
containerized units with a series of ex-factory commissioning tests and X-ray unit test, which have confirmed the plant recovery
rates are operating within design specs
Capacity increased: NWF has simultaneously overcome a potential bottle-neck by increasing the size of the gravel pump. This will
ensure that optimum feed rates can be maintained. The DMS circuit has a design capacity of 10tph of concentrate from a head feed
of approximately 20 – 40 tph, dependent on the gravel facies type.
Set up for resource definition: NWF are now set up to undertake a series of tests on a number of gravel horizons within the
project area. Numerous pits have been dug over the immediate project area which will be the source of bulk samples which are to
be processed through the plant. NWF is also in the final stages of a Small Scale Mining License application, which will cover an
area of previously defined diamondiferous gravels. NWF expect the granting of the license shortly. Once this has been granted
NWF will be in a position to generate cash flow to aid in the resource definition work
Currently well funded: NWF had $3.75m worth of options exercised over the previous month and as at 19 March, had a cash
balance of approximately $4.6m. A further 11.7m options can be converted before 15 June 2015, realising an additional $2.9m. We
would expect that, together with the ability to realise operating cash flow from small scale mining, the company will be reasonably
well funded over the short to medium term.
Our View
After a quiet 3 months, we are pleased to see this announcement. It is obvious that that management team has been getting the job
done and moving the project forward, under what must have been difficult operating conditions given the outbreak, and subsequent
spread, of the Ebola virus in the region. Travel restrictions would have hampered operations to some degree. The installation of a
larger gravel pump before operations begin will also de-risk the potential for operational issues moving forward. Management
continue to operate conservatively and have a deliberate strategy to build the project without risking large amounts of capital
The ability to generate a cash flow from small scale mining operations will also help fund the testing of the Lake Popei kimberlite
targets, which will require drilling, and other exploration activities as they arise.
We make no change to our recommendation of a Speculative Buy or our valuation of $0.91 per share at this stage. We look
towards the granting of the Small Scale Mining License and first results from the bulk sampling programs. Activity and news flow
should now ramp up and NWF will be very active over the next 6-9 months.
Contacts
Research
Paul Adams | +61 9263 5234 | [email protected]
Michael Eidne | +61 9263 5213 | [email protected]
D J Carmichael Pty Limited ABN 26 003 058 857 AFSL 232571
Telephone: 08 9263 5200 Facsimile: 08 9263 5283 Email: [email protected] Webpage: http://djcarmichael.com.au
Disclosure Disclaimer
RCAN1250
This Research report, accurately expresses the personal view of the Author. DJ Carmichael Pty Limited, members of the Research Team; including
authors of this report, its directors and employees advise that they may hold securities, may have an interest in and/or earn brokerage and other
benefits or advantages, either directly or indirectly from client transactions in stocks mentioned in this report.
DJ Carmichael Pty Ltd participated in an equity raising for Newfield Resources and was paid a fee for this service. DJ Carmichael Pty Ltd acted as
corporate advisor to Newfield Resources and was paid a fee for this service.
DJ Carmichael Pty Limited is a wholly owned subsidiary of DJ Carmichael Group Pty Limited ACN 114 921 247.
In accordance with Section 949A of the Corporations Act 2001 DJ Carmichael Pty Limited advise this email contains general financial advice only.
In preparing this document DJ Carmichael Pty Limited did not take into account the investment objectives, financial situation and particular needs
(‘financial circumstances’) of any particular person. Accordingly, before acting on any advice contained in this document, you should assess
whether the advice is appropriate in light of your own financial circumstances or contact your DJ Carmichael Pty Limited adviser. DJ Carmichael Pty
Limited, its Directors, employees and advisers may earn brokerage or commission from any transactions undertaken on your behalf as a result of
acting upon this information. DJ Carmichael Pty Limited, its Directors and employees advise that they may hold securities, may have an interest in
and/or earn brokerage and other benefits or advantages, either directly or indirectly, from client transactions. DJ Carmichael Pty Limited believe that
the advice herein is accurate however no warranty of accuracy or reliability is given in relation to any advice or information contained in this
publication and no responsibility for any loss or damage whatsoever arising in any way for any representation, act or omission, whether express or
implied (including responsibility to any persons by reason of negligence), is accepted by DJ Carmichael Pty Limited or any officer, agent or
employee of DJ Carmichael Pty Limited. This message is intended only for the use of the individual or entity to which it is addressed and may
contain information that is privileged, confidential and exempt from disclosure under applicable law. If you are not the intended recipient or
employee or agent responsible for delivering the message to the intended recipient, you are hereby notified that any dissemination, distribution or
copying of this communication and its attachments is strictly prohibited.
Recommendation Definitions
SPECULATIVE BUY – 10% out-performance, but high risk
BUY – 10% or more out-performance
ACCUMULATE – 10% or more out-performance, buy on share price weakness
HOLD – 10% underperformance to 10% over performance
SELL – 10% or more underperformance
Period: During the forthcoming 12 months, at any time during that period and not necessarily just at the end of those 12 months.
Stocks included in this report have their expected performance measured relative to the ASX All Ordinaries Index. DJ Carmichael Pty Limited’s
recommendation is made on the basis of absolute performance. Recommendations are adjusted accordingly as and when the index changes.
To elect not to receive any further direct marketing communications from us, please reply to this email and type ‘opt out’ in the subject line. Please
allow two weeks for requests to be processed.
© 2015 No part of this report may be reproduced or distributed in any manner without permission of DJ Carmichael Pty Limited.
D J Carmichael Pty Limited ABN 26 003 058 857 AFSL 232571
Telephone: 08 9263 5200 Facsimile: 08 9263 5283 Email: [email protected] Webpage: http://djcarmichael.com.au