A diversified mineral exploration and energy development company, Mayur Resources Limited (ASX: MRL) is primarily involved in the development of natural resources in Papua New Guinea. The company’s portfolio of projects includes Central Cement & Lime (CCL) Project, Orokolo Bay Project & Industrial Sands Portfolio, Copper & Gold Exploration Projects and Coal projects.
For its flagship Cement & Lime Project, the company is following the same investment strategy, which it has followed for its Industrial Mineral Sands portfolio, wherein it secured a funding via a deal with China Titanium Resources Holdings Limited (CTRH), which allowed the company to retain control and also 51% of the ‘Future Economics’ of the Orokolo Bay Project.
The company has recently appointed Morgans Financial Limited and KPMG Corporate Finance to secure around US$350 million in project finance for its CCL Project.
Morgans Financial Limited has been selected to identify, assess as well as shortlist potential equity investors while KPMG has been engaged to provide equity-based advice and introductions covering the rest of the world and will also act as the Lead Debt Financing Advisor and Lead Manager.
These appointments will help the company to execute a funding plan, which contemplates a mix of equity (30%) and debt (70%) from various sources, as depicted in the figure below.
(Source: Company Reports)
The financing plan for the CCL Project can be viewed in the diagram below.
CCL Project Financing Plan (Source: Company Reports)
CCL Project Update: For bringing its CCL project to reality, which is located 25km west of Port Moresby in Papua New Guinea, the company recently lodged Mining Lease (ML) application with the Mineral Resources Authority. The company will now conduct a Development Forum with the various project stakeholders, including the National Government, Central Provincial Government and the landowner community representatives. Subsequently, a compensation agreement will be negotiated and finalised with the identified landowners.
Recent Progress: The company is focused on its diversified and vertically integrated industrial mineral and energy platform and is reviewing options to unlock value. Mayur Resources recently entered into an underwriting agreement with Morgans to underwrite the exercise of 1.337 million Advisor Options and 12.189 million unlisted Loyalty Options, to raise a total of $7.575 million.
Recently, the company completed the Placement to institutional and sophisticated investors to raise approx. $1.5 million; additionally, it is raising further $0.60 million via Repayment of Loan Funded Shares.
The raised funds will be used for the following purposes:
- Central Cement and Lime Project: With regards to the CCL project, these funds will be used for the grant of Mining Lease, finalisation of Offtake Arrangements with end-user customers, securing project debt finance along with the finalisation and award of construction contractors and to reach financial investment decision.
- Coal Exploration Portfolio: In relation to the coal exploration portfolio, the funds will be used for exploration activities to convert JORC Resources to JORC Reserves and to examine support for an international trial bulk shipment.
- Power Generation: The funds are also intended to be used for finalisation and signing of Power Purchase Agreement for Lae EEP Project and to further expand and develop the PNG Energy Generation Solutions (PEGS) MOA, signed with PNG Government National Oil & Gas company Kumul Petroleum for the development of its Lae site.
- Industrial Mineral Sands: The funds will be used to finalise the construction of the Orokolo Bay trial bulk sample plant, ship products to end-user customers for acceptance testing, finalise Orokolo Bay Definitive Feasibility Study and for Submission of Orokolo Bay Mining Lease application.
The funds will also be used to undertake further exploration activities and to examine options and pathway to hold assets as a standalone copper gold portfolio.
In the month of May, the company signed a Memorandum of Agreement (MOA) with Kumul Petroleum to establish a 50/50 joint venture for the development of PNG Energy Generation Solutions, which is an exciting development for both Mayur’s Energy Division and PNG.
A Quick Look at the company’s Decision Makers: The company’s Board includes well-seasoned industry veterans, including Rob Neale, Chairman; Paul Mulder, Managing director; Tim Crossley, Executive Director; Frank Terranova, Non-Executive Director; and Lu Kee Hong, Non-Executive Director. Recently, Mr Tim Crossley, a seasoned resources?energy development and operational veteran, was appointed as Interim Chief Executive Officer (CEO) of the company’s Energy and Power Generation business. The company also appointed well-versed Bill Williams as a new Senior Energy Head.
Financials: For the half-year ended 31st December 2018, the company reported loss of $1.798 million as compared to the loss of $2.4 million in the previous corresponding period, demonstrating an improvement of 25.08% over the prior period. As at 31st December 2018, the company had current assets of $7.34 million and current liabilities of $3.41 million.
In 2019 March quarter, the company spent $1,900k of cash on operating activities, including $1,253k spent on exploration and evaluation activities, $370k spent on administration and corporate cost and $289k on staff costs. At the end of the March quarter, the company had cash and cash equivalents of $5,128k.
The estimated cash outflows for the June quarter is $1,843k, which includes $1,571k of exploration and evaluation expenses, $125k of staff costs and $147k of administration and corporate costs.
Stock Performance: Since the company’s listing in September 2017, the stock of Mayur Resources has provided a return of 30.95% as on 22nd July 2019. The company’s stock last traded at $0.550 on 22nd July, with a market capitalisation of ~$86.06 million.
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