🕐29.04.14 - 09:54 Uhr

INVESTEC: AQUARIUS PLATINUM : Q3 FY14 RESULTS; RIGHTS ISSUE UNDERWAY - HOLD



Aquarius Platinum (Price: 20.0p | Target: 22.0p | Rec: Hold) Q3 FY14 represents a financial improvement, with Aquarius now broadly at breakeven.

The operational successes behind this result are evident and have allowed the group to undertake a rights issue which is underway.

Assuming the full US$225m is raised, we believe Aquarius should be able to repay the remainder of the convertible due in December 2015, so this removes a key concern of ours.

Taking additional assumed dilution into account, we lower our target price to 22p (ex rights) and maintain our Hold. * Q3 FY14 results.

During Q3, Aquarius produced 108Koz 3E PGMs (100%) from Kroondal and 52Koz 3E PGMs (100%) from Mimosa.

The group reported revenue for the quarter of US$60m and EPS of 0c.

The loss per share for the first 9 months of the year is now 5.1c, and we estimate a full year loss of 2.6c/share, less than our previous 3.3c, as we assume additional shares in issue for the final month of this financial year. * Valuation and recommendation.

Aquarius’s rights issue is currently underway.

We assume the group is successful in raising the targeted US$225m and that this would lead to shares in issue increasing from below 500m to over 1.46bn.

Taking this into account, we reduce our target price, which is based on NPV, P/E and FCF multiples, to 22p on an (ex rights basis) and reiterate our Hold recommendation. * Risks: In our view, the risk to shareholders of Aquarius being unable to repay its convertible bonds in December 2015 would be removed assuming it raises the full US$225m in its rights issue.

The company is clearly very exposed to platinum group metals (PGM) prices and our target price and forecasts assume rising commodity prices into the future.
To access the full note please click here Analyst: Louise Collinge +44 (0)20 7597 5779
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