Cantor Fitzgerald: Buy rating and $3.10 target price for RGX
According to Cantor Fitzgerald:
July 4, 2014
Argex Titanium (BUY) – Completes convertible debenture Financing
RGX CN (C$0.82, TP C$3.10), Market Cap: C$110.5m
RGX successfully completed its previously announced C$7.5m convertible debenture financing on 30 June, receiving C$7.3m net of fees. The funds raised will be used for working capital while the company continues to finalise the US$300m financing required for its first commercial titanium dioxide (TiO2) production plant to be built in Quebec. The debentures carry an 8% annual coupon, which will be paid quarterly from 30 September 2014. The debentures mature on 30 June 2019 and can be converted into shares at C$1.14/share. The company intends to list the debentures on the Toronto Stock Exchange (TSX) later in the year.
As the premium white pigment product, TiO2 pigments are used in paint, plastics, pharmaceuticals, cosmetics and the food industry in a US$20Bn+ market. RGX’s low cost, proprietary process for production of TiO2 pigment is capable of treating ores beyond the scope of the two well established production techniques. As a result, we believe RGX offers good exposure to a commodity which enjoys robust pricing and a positive demand outlook without any associated mining risk. A Feasibility Study last year on RGX’s first, 50kt/year plant showed highly favourable economics.. The company’s process, which is based on well-known production methods from other commodity sectors and off-the-shelf technology, has already attracted interest from several potential customers including one of the world’s leading paint manufacturers. With the company now comfortably financed for the medium term and remaining confident that it can secure the capital required for its first plant, we reiterate our BUY recommendation and TP of C$3.10.
