Fortress Minerals (FMIL) - UOB Kay Hian 2019-03-25: High-Grade Iron Ore Play

FORTRESS MINERALS LIMITED (SGX:OAJ) | SGinvestors.io FORTRESS MINERALS LIMITED (SGX:OAJ)

Fortress Minerals (FMIL) - High-Grade Iron Ore Play

  • FORTRESS MINERALS LIMITED (SGX:OAJ) produces high-grade iron ore concentrate mined from deposits in the Bukit Besi mine at Terengganu, Malaysia.
  • With an estimated output capacity of 40,000 wet metric tonnes per month, Fortress Minerals is well-positioned to ride on increasing demand from Chinese steel mills as China addresses the twin problems of pollution and inefficient steel mills.



WHAT’S NEW



INVESTMENTS HIGHLIGHTS


Healthy prospects with China market being Fortress Minerals Limited (FMIL)’s focus.

  • Fortress Minerals believes the structural reforms in China to address pollution and inefficient steel mills will drive demand for high grade iron ore.
  • According to Australia’s Department of Industry, Innovation and Science, China’s iron ore imports are expected to remain high at 1,000mt annually.
  • In addition, the roll-out of China’s “One Belt One Road” infrastructure programme will continue to spur demand for iron ore concentrates.

Mining project valued at US$32m.

  • Fortress Minerals produces iron concentrate which are at least TFe grade 65.0% and contains low levels of impurities, commanding premium prices against lower grades.
  • Based on a valuation report from SRK Consulting, the Bukit Besi Project is worth an estimated US$32m in the base case.

Substantial exploration upside.

  • There is substantial exploration potential within the mine as only 4.71% of the mining areas has been explored. In addition, Fortress Minerals’ mining rights are valid up till early-2033.

Risks

  • Risks include:
    1. regulatory risks,
    2. early termination of mining rights,
    3. non-renewal or extension of mining leases,
    4. lower-than-expected availability of mining resource, and
    5. shareholders’ loans that will come due.





Singapore Research UOB Kay Hian Research | https://research.uobkayhian.com/ 2019-03-25
SGX Stock Analyst Report NOT RATED MAINTAIN NOT RATED 99998 SAME 99998



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