{australien_flagge}Analysts at leading Australian Broker, MST Access, have taken a close look at the stock of Australian HPA company FYI Resources (WKN A0RDPF / ASX FYI). They value the stock at AUD 0.43 and thus believe that FYI still has significant potential for future price and value increases.
{australien_flagge}Analysts at leading Australian Broker, MST Access, have taken a close look at the stock of Australian HPA company FYI Resources (WKN A0RDPF / ASX FYI). They value the stock at AUD 0.43 and thus believe that FYI still has significant potential for future price and value increases.
MST Access says CEO Roland Hill’s company owns 100% of its High Purity Alumina (HPA) project in Western Australia, which has the potential to produce 10,000 tons of HPA per year for more than 25 years. This, MST said, is a globally significant volume and FYI can address a wide range of potential customers.
As the experts further explain, the company’s plan is to build up production in stages. An initial demonstration plant designed for 1,000 tons per year would initially optimize the commercialization phase and reduce its risks, demonstrate the value-add, provide key project data and produce HPA products on a commercial scale for potential customers. These would use the material to perform product qualification work.
High demand and strong price fundamentals expected
And MST Access believes that the decarbonization/electrification trend means high demand and strong price fundamentals for HPA as a critical component for low-power batteries and LED applications. It is FYI’s goal, the analysts added, to produce the highest quality HPA suitable for these applications.
According to the experts, an important advantage for FYI is, not only the demonstration of production of well regarded, high quality HPA, but also that the project is fully owned by the company. This allows flexibility in development, partnerships and financing. Moreover, the project is located in Western Australia, a world-class mining and processing area, they add. In addition, FYI’s HPA project has been granted Major Project status, which offers advantages in dealing with governments and authorities.
Additionally, MST points out that FYI’s board and management have extensive experience in developing large projects and operations. Indeed, the company’s management team has held senior positions at major corporations such as Rio Tinto, Tianqi, Shell and Newmont.
Valuation of AUD 0.43 per share (fully diluted)
MST Access comes with a sum-of-the-parts valuation of AUD 0.43 per share. Therefore, the analysts attest FYI Resources great potential from the current share price level, should the company successfully finance and then develop its project.
Financing is then, where MTS sees the greatest risk to its valuation of the company. FYI is considering a mix of debt, strategic investments, government loans and equity to finance the project, they said. If any of these components were to default, this would put the execution of the project at risk, the experts continued. The other main risks would relate to the timely execution and construction of the project.
The full 35-page MTS analysis on FYI Resources (WKN A0RDPF / ASX FYI) can be found here:
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