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VSA Capital Market Movers - Millennial Lithium, Polymetal International

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Millennial Lithium (CVE:ML)

ML has announced key changes to its fundraising which is currently underway as well as an update on the Cauchari East project. Following the appointment of Montgomery and Associates, a hydrogeological consultancy, it has been determined that the cost of the next phase of development is likely to be lower due to be reduced drilling costs and necessary drilling frequency.

This will enable any funds raised in the current raise to be used more efficiently; however, ML has announced that at this time it will scale back the planned fundraising from C$8.7m to C$5.65m with a new subscription price of C$1.25 versus the previous C$1.35 which represents a 9% discount to the last close. ML will not be accepting further subscriptions in this raise.

At Cauchari East, ML has begun a ground geophysics programme consisting of a Vertical Electrical Soundings (VES) survey. This will comprise seven profiles of the two blocks and will detect soil layering, the top of the bedrock, groundwater table and salt water intrusions with the last two key for identifying subsurface brines.

We reiterate our Speculative Buy recommendation

Polymetal (LON:POLY)

POLY has announced robust results for 2016 with revenues up 10% YoY to US$1.6bn as gold prices were up 8% YoY. Gold equivalent production of 1.27mnoz was marginally ahead of guidance while gold production of 890koz was up 3% YoY offset by lower silver production which was down 9% YoY to 29.2mnoz.

EBITDA of US$759m was up 15% YoY primarily reflecting the stronger top line as cash costs on a gold equivalent basis were up 6% YoY to US$570/oz, at the upper end of the guidance range. AISC of US$776/oz were also up 6% YoY. The outlook for next year is for a modest increase in production to around 1.4-1.55mnoz gold equivalent although unit costs are expected to rise to US$600-650/oz and US$775-825/oz on an AISC basis.

POLY announced the dividend for 2016 of US$0.42/sh. for the full year which was down 18% YoY.


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