🕐02.07.13 - 16:27 Uhr

INVESTEC: AQUARIUS PLATINUM - KROONDAL EXTENSION REMOVES ONE UNCERTAINTY - HOLD



Aquarius Platinum (Price: 40.5p | Target: 46.0p | Rec: Hold) We have marked to market our 1H13A commodity prices and made changes to our longer term platinum group metals (PGM) and FX assumptions.

Importantly, we have reduced our long term, inflation-adjusted platinum price from US$2,200/oz to US$2,090/oz.

In addition, we also take into account AQP’s positive news on its Kroondal life of mine extension.

The net impact on our AQP target price is minimal: an increase from 45p to 46p.

With little in the way of near term catalysts, we retain our Hold recommendation. * Weaker commodity prices assumed.

We have revisited our commodity price assumptions and made changes to our PGM and FX estimates.

We reduce our long term platinum price forecast from US$2,200/oz to US$2,090/oz and our palladium price from US$1,050/oz to US$960/oz.

For CY13E we now assume a platinum price of US$1,523/oz, down from US$1,599/oz.

However, given the South African currency’s performance of late, we now assume a weaker ZAR/USD exchange rate for CY13E of 9.49, versus 8.80 previously. * The Kroondal agreement.

AQP’s recent announcement that it has negotiated an extension to its agreement with Anglo American Platinum (AMS SJ, Hold), whereby AMS will contribute an additional 16Mt of ore for Kroondal to mine, is positive news as it will increase the life of that operation by c.3 years.

Increased longevity of this material asset could aid AQP in refinancing / renegotiating its convertible, which falls due in December 2015. * Valuation.

Incorporating the Kroondal news and our new commodity price and exchange rate assumptions, we now value AQP at 46p/share – increased from 45p previously.

In line with our target price methodology for other platinum stocks under our coverage, we use a blend of parameters to value AQP, including NPV, and earnings and cash flow multiples.

With only modest upside and little in the way of near term catalysts for AQP, we reiterate our Hold.
To access the full note please click here Analyst: Louise Collinge
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