ARGEX Titanium Inc
Argex Silver Capital Inc Drilling the La Blache property with historic tonnage of 79 million tonnes grading 20.5% Titanium, 48% iron ore and .36% vanadium
Tuesday, 8 July 2014
EuroPac Initiates Coverage On Argex – Speculative BUY - $1.60 Target
RGX:TSX
This morning, EuroPacific Canada released a 50 page report on Argex Titanium. Analyst Luisa Moreno makes the case for a Speculative BUY rating and a 12-month price target of $1.60.
Investors in Argex would think a $1.60 price target is conservative, considering the industry disrupting potential of Argex’s proprietary chemical process for the production of titanium dioxide (TiO2) . However, in her opening paragraph, Ms. Moreno states, “we anticipate an upgrade to our target price once project financing for the Company’s first production plant is completed and financing risk is reduced, which should be seen favourably by investors. We believe the economics of the project will support a successful financing. The current EV/EBITDA multiple for 2017, the first year of full production, is 8.6x.”
Here are some key points from the report:
- Argex has the potential to become one of the lowest cost and relatively more environmentally friendly TiO2 pigment manufacturing operations in the world.
- Feasibility Study cash costs of ~$1,500/t, which include transportation, feedstock, and finishing costs, but exclude potential by-product credits, compare favourably to major pure play pigment manufacturers with current average costs above US$2,000/t TiO2.
- Argex is currently pursuing financing for its first plant, and expects to be in production within 24 months of construction startup. We assume Argex will complete financing in H214, and forecast construction to begin in Q414 with initial production of TiO2 pigment to begin in late 2016. Argex also has mid-term plans to double TiO2 production through the construction of a second processing plant in 2017-2018 with initial production expected in 2019.
- Argex has completed a definitive Feasibility Study and a pilot plant optimization program, and has started preliminary engineering work with equipment vendors for the procurement of long lead items.
- Demand for pigments seem to have returned in 2013, and are expected to continue to rise in the near term spurred by TiO2 consumption in China and other emerging countries in the Asia and Pacific regions.
The full report is intended for EuroPacific clients. If you would like a copy of the report please contact Luisa Moreno at 416-933-3352 or by email at luisa.moreno@europac.ca
Please
login
to post a reply
luker
City
Toronto, Ontario
Rank
President
Activity Points
40633
Rating
Your Rating
Date Joined
07/27/2008
ARGEX Titanium Inc
Symbol
RGX
Exchange
TSX-V
Shares
135,453,671 FD May 9, 2012
Industry
Metals & Minerals
Website