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Recommendation: Speculative Buy |
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Note: Marker indicates price at previous close |
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INVESTMENT RATING (Last update: 27/06/2008)
MRE owns 60% of the Murrin Murrin operation near Leonora in WA. The long life mine produces over 30,000tpa of nickel and 2,000tpa of cobalt from laterite ore. Appeal is nickel leverage via the huge resource containing 3.4Mt of nickel and 226,000t of cobalt. MRE is focused on incremental improvement to achieve plant capacity of 40,000t a year after which expansions are possible. MRE is a leveraged nickel exposure suitable for trading. Operational and commodity price risk tolerance is required. The balance sheet is sound with net cash. Low reliability and high costs make MRE speculative.
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Previous Close |
52 week High |
52 Week Low |
|
$2.980 |
$7.850 |
$2.84 |
| Sector |
Materials |
| Market Cap |
$1,391 Million |
|
|
Total Shareholder Return (avg annual rate) |
|
| 1yr |
3yr |
5yr |
10yr |
-49.8% |
24.8% |
31.2% |
-5.4% |
|
|
Intrinsic Valuation |
|
$4.85 |
| Moat Rating |
None |
| Business Risk |
High |
| Pricing Risk |
High |
| Company Beta |
1.39 |
| Sector Beta |
1.38 |
|
|
Year |
12/06A |
12/07A |
12/08E |
12/09E |
|
| NPAT ($m) |
338.7 |
272.4 |
123.8 |
191.9 |
| EPS (c) |
72.5 |
58.3 |
26.5 |
41.1 |
| % Change |
466.4 |
-19.6 |
-54.5 |
55.1 |
| DPS (c) |
57.5 |
40.0 |
15.0 |
25.0 |
| Franking (%) |
100.0 |
100.0 |
100.0 |
100.0 |
| Yield (%) |
17.8 |
5.9 |
5.0 |
8.4 |
| PER (x) |
4.1 |
5.1 |
11.2 |
7.3 |
Source: Aspect Huntley analyst estimates |
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Index Participation |
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Price Chart |
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Index Name |
Weight |
|
All Ordinaries |
0.11% |
S&P/ASX SMALL ORDINARIES |
0.62% |
S&P/ASX SMALL RESOURCES |
1.50% |
S&P/ASX 200 RESOURCES |
0.19% |
S&P/ASX 300 RESOURCES |
0.19% |
S&P/ASX 200 |
0.07% |
S&P/ASX 300 |
0.06% |
S&P/ASX 200 MATERIALS (INDUSTRY GROUP) |
0.23% |
S&P/ASX 300 MATERIALS (INDUSTRY GROUP) |
0.22% |
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Business Description
Minara Resources Limited (MRE, formerly Anaconda Nickel Limited) is involved in mining the mining of lateritic nickel and exploration for lateritic and sulphide nickel resources in Western Australia. The company is focused on its 60% interest in the Murrin Murrin lateritic nickel mining and processing operation.
Aspect Huntley – 04072008
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