Metro Mining mined and shipped 2.48m wet metric tonnes (WMt) of bauxite in 2020 (to September), mainly into its Xinfa contract. Other sales contracts didn’t complete and production was suspended well before the planned wet season shutdown.
The company has contracts for 2.3M WMt for 2021, with Morgans expectation that these will be honoured as activity returns to pre-covid-19 levels.
The proposed stage 2 expansion to 6m WMt is likely to be delayed, notes the broker.
After production of 3.5m WMt in 2019 the analyst anticipates a strong performance for 2020 after the wet season shutdown.
The broker reduces projected sales tonnage in 2021 and 2022 to 2.3m WMt and pushes out expansion to 6.0m WMt. The broker has also risked the net present value by -50% for a valuation and target price of $0.10, from the former price target of $0.35.
The rating is decreased to Speculative Buy from Add.
Sector: Energy.
Target price is $0.10.Current Price is $0.07. Difference: $0.03 – (brackets indicate current price is over target). If MMI meets the Morgans target it will return approximately 30% (excluding dividends, fees and charges – negative figures indicate an expected loss).
