Strandline Resources - Argonaut upgrades price target to 3.0c following Rio JV
Strandline Resources (ASX:STA) has earned an upgrade to its price target from Argonaut following the $14m Rio JV announced earlier in the week. Argonaut has maintained its Spec Buy rating on the stock and upgraded the price target to 3.0 cents per share. Strandline's last share price was 0.8 cents per share.
Following the announcement that Strandline Resources Limited (Strandline or the Company) had entered into an Earn-in and Joint Venture Agreement with Rio Tinto in connection with the Company’s suite of heavy mineral sands (HMS) tenements located in the southern region of Tanzania (which include the Miteja, Kiswere, Sudi and Mtwara prospects), Argonaut has updated its research coverage and price target.
Argonaut has upgraded the Price Target (current share price 0.8c) from 2.8c to 3.0 cents per share.
The quality and strategic nature of Strandline Resources’ (STA) landholding in Tanzania has been validated by a US$10.75m (A$14.5m) earn-in by Rio Tinto (Rio). RIO has entered into a staged earn-in agreement for up to a 75% stake in STA’s southern tenements, prospective for mineral sands deposits.
Importantly, this agreement excludes the Company’s northern tenements which host the Fungoni and Tanga projects and the Mafia and Bagamoya prospects. In effect, STA has monetised early stage prospects for an amount equivalent to its enterprise value (~$14.7m on the last close), whilst maintaining a 100% interest in core assets.
STA will continue to generate strong newsflow through 2017 with a Definitive Feasibility Study (DFS) on the Fungoni Project due Q2/Q3 CY17, ongoing exploration results and anticipated resource expansion from the Tanga Hub.
We believe the Company is well positioned to benefit from a recovering mineral sands sector, which has seen both TiO2 and zircon prices rise ~US$50/t year to date.
Argonaut maintains a SPEC BUY recommendation with an increased 3.0¢ target price (from 2.8¢).