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

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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

• Fortress Minerals Limited (SGX:OAJ) will start trading on the Singapore Exchange on 27 Mar 19.
• FORTRESS MINERALS LIMITED (SGX:OAJ)  Fortress Minerals (SGX:OAJ) Share Price  Fortress Minerals (SGX:OAJ) Target Price  Fortress Minerals (SGX:OAJ) Analyst Reports  Fortress Minerals (SGX:OAJ) Corporate Actions  Fortress Minerals (SGX:OAJ) Announcements  Fortress Minerals (SGX:OAJ) Latest News  Fortress Minerals (SGX:OAJ) Blog Articles

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

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