Celsius Resources Ltd (CLA) · Issued Capital - diluted ITM options 723.4m Melanie Ross (Company...
Transcript of Celsius Resources Ltd (CLA) · Issued Capital - diluted ITM options 723.4m Melanie Ross (Company...
Page 1 of 22
Celsius Resources Ltd (CLA)
Div
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Base M
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CLA.asxSpeculative Buy
Share Price
Price Target (12 month) $0.19
Brief Business Description:
Hartleys Brief Investment Conclusion
Chairman & MD
Top Shareholders
Gecko Nambia (Pty) Ltd 8.6%
Directors and Management 3.3%
Company Address
Issued Capital
- fully diluted
Market Cap
- fully diluted
Cash (31 Dec 2017)
Debt (31 Dec 2017)
EV - current
EV - fully diluted
EV/Resource t Co A$0/oz
EV/Reserve t Co -
Resources (kt Co) -
Reserves (kt Co) -
Mike Millikan
Resources Analyst
Ph: +61 8 9268 2805
A$85.1m
Cobalt and base metal (copper) focused explorer.
Hartleys has assisted in capital raisings in the past 12
months for Celsius Resources Limited ("Celsius") for w hich it
has earned fees. Hartleys has a beneficial interest in 16
million options in Celsius.
591.8m
1 Feb 2018
$0.130
Brendan Borg (Managing Director)
Level 3, 216 St Georges Tce
Perth WA 6000
Controls 95% of the f lag-ship Opuw o Cobalt Projet in
Namibia. Maiden resource estimated due for release in late
Q1 CY18. Cobalt thematic continues to look good, w ith
grow ing demand for use in electric vehicles, storage
batteries and smartphones.
Bill Oliver (Non-Exec Chairman)
A$4.3m
A$0.0m
A$72.6m
A$95.2m
A$76.9m
731.9m
CELSIUS RESOURCES LTD (CLA)
Temperature rising on a hot cobalt play in Namibia Celsius Resources Ltd (CLA) is a cobalt-focused exploration company rapidly
advancing its 95%-owned Opuwo project in Namibia (Southern Africa).
The project contains large-scale cobalt-copper targets, hosted within
sediments (Dolomite Ore Formation (DOF)) of the Kaoko Belt, an extension
of the major copper belts of Central Africa. Mineralisation is sulphide-related,
containing the favourable mineral species of linnaeite (cobalt sulphide) and
chalcopyrite (copper sulphide), with low deleterious elements such as arsenic
(As), cadmium (Cd) and uranium (U).
The mineralisation is relatively fine grained disseminated and vein-hosted,
but appears to be coarsening on number of recent drill sections at depth,
which may improve recoveries and lift grade in parts. The DOF horizon is
extensive and still largely un-tested and has a strike length in excess of
100km within the project area. CLA has confirmed mineralisation over a
+15km zone, with strong potential for adjacent and parallel systems.
Maiden resource imminent with scoping level studies underway The Company has calculated an initial Exploration Target of 33-41Mt grading
0.13-0.17% Co and 0.45-0.65% Cu over an 11km zone down to depths of
150-250m. Mineralisation remains open. A maiden resource is expected to
be released in Q1 CY18, following the completion of resource drilling late
CY17 and full assays in early CY18. The resource will be an interim estimate
with significant growth along strike and at depth anticipated.
The favourable mineralogy (sulphide-related) is considered amenable to
conventional flotation techniques to generate bulk cobalt-copper
concentrates. Preliminary metallurgy has returned recoveries of up to 88% on
the cobalt and 87% on the copper, but further cleaning (removal of other iron
and zinc sulphides) of the concentrate is required to achieve the targeted
concentrate grades (+1% Co). Met-testwork is ongoing to optimise recoveries
and concentrate grades, and will feed into the Scoping Study due Q2 CY18.
The project is located ~750km from the port at Walvis Bay, but is well serviced
by sealed roads and is within 150km of rail. Hydro-grid power is also nearby
with a transmission line transecting the eastern parts of the project. Namibia
remains a stable, mining friendly jurisdiction with a clear mining code.
Strong demand for cobalt, recently reaching 9 year highs Cobalt is one of the key ingredients for use in the cathode combination of
successful Lithium-ion batteries and we like the thematic for increased
demand. The metal remains in short supply and in high demand, with the
cobalt price increasing an impressive 115% in 2017 and has already
increased another 6% early in 2018, to reach a new 9 year high of
US$37.25/lb (or US$82,120/t) in late January 2018.
Initiate coverage with a Speculative Buy and price target 19cps
We initiate coverage of CLA with a Speculative Buy recommendation and
price target of 19cps. Current estimated cash is ~A$4.3M which provides
some funding towards some planned exploration. CLA provides quality
exposure to cobalt (~74% cobalt value as a % of total value), as well as
providing other base metal (copper) upside. Cobalt is threatened by supply
disruptions, as over 60% of the world’s cobalt supply currently sourced from
the DRC. Clearly diversity of supply is sought which could bode well for CLA.
Hartleys Limited ABN 33 104 195 057 (AFSL 230052) 141 St Georges Terrace, Perth, Western Australia, 6000
Hartleys does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the
firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision. Further information concerning Hartleys’ regulatory disclosures can be found on Hartleys
website www.hartleys.com.au
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
0.18
.
5.
10.
15.
20.
25.
30.
35.
40.
45.
50.
Jan-18Oct-17Jun-17Feb-17
Volume - RHS
CLA Shareprice - LHS
Sector (S&P/ASX SMALL RESOURCES) - LHS
A$ M
Celsius Resource Ltd
Source: IRESS
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
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SUMMARY MODEL
Celsius Resources Limited Share Price
CLA $0.130 Speculative Buy
Directors & Management Company Details
Share Price $0.130 Bill Oliver (Non-Exec Chairman) Level 3, 216 St Georges Tce
Market Capitalisation $76.9m Brendan Borg (Managing Director) Perth WA 6000
Net Cash (debt) $4.3m Pine van Wyk (Non Exec Director) +61 8 9226 4500
Issued Capital - current 591.8m Ranko Matic (Non Exec Director)
Issued Capital - diluted ITM options 723.4m Melanie Ross (Company Secretary)
Options - all 140.1m www.celsiusresources.com.au
Issued Capital - fully diluted all options 731.9m
EV Substantial Shareholders (est) m shs %
- current $72.6m Gecko Nambia (Pty) Ltd 50.8 8.6
- diluted ITM $85.6m Directors and Management 19.4 3.3
- diluted fully $85.1m
12Mth Price Target $0.19
Investment Summary
Projects Interest Location
Opuwo 95% Namibia
Carnilya Hill JV* 30% WA
Abednegno Hill 100% WA
* JV with Mincor Resources NL Milestones and Newsflow Project
Q4 CY16 Name change and reinstatement to ASX Corporate
Q1 CY17 Option to acquire Opuwo Cobalt Project Opuwo
Resources Q1 CY17 Acquisition approved and maiden drilling Opuwo
Q1 CY17 Brendan Borg appointed MD Corporate
Opuwo Mt Co% Cu% Comment Q2 CY17 First assays confirm extensive mineralisation Opuwo
Exploration Target 33-41 0.13-0.17 0.45-0.65 Over 11km strike, 150-250m depth Q2 CY17 A$3.5M Capital Raise @ 3.7cps Corporate
Q2 CY17 Initial Exploration Target for Central Zone Opuwo
No JORC resources and reserves - maiden resource due Q1 CY18 Q3 CY17 Commences Scoping Studies Opuwo
Q4 CY17 Moves to 95% project interest Opuwo
Q4 CY17 15,000m resource drill-out commences Opuwo
Q4 CY17 A$3.9M Capital Raise @ 5.5cps Corporate
Q4 CY17 Preliminary metallurgical results Opuwo
Q4 CY17 Completes initial resource drilling Opuwo
Q1 CY18 Drill assays Opuwo
Q1 CY18 Maiden Resource and new Exploration Target Opuwo
P&L FY2017A FY2018F FY2019F CY18 Ongoing exploration drilling - resource extensions Opuwo
Q2 CY18 Metallurgical study update Opuwo
Net Revenue A$m n/a n/a n/a Q2 CY18 Scoping study Opuwo
Total Costs A$m n/a n/a n/a Q3 CY18 PFS expected to commence Opuwo
EBITDA A$m n/a n/a n/a
Deprec/Amort A$m n/a n/a n/a Unpaid Capital
EBIT A$m n/a n/a n/a Year Expires No. (m) $m Avg. Price % ord
Net Interest A$m n/a n/a n/a 30-Jun-19 Listed 77.6 0.8 0.010 13%
Pre-Tax Profit A$m n/a n/a n/a 30-Jun-20 Unlisted 20.0 1.3 0.065 3%
Tax Expense A$m n/a n/a n/a 30-Jun-21 Unlisted 42.5 3.7 0.088 7%
NPAT A$m loss loss loss 30-Jun-22 0.0 0.0 0.000 0%
Abnormal Items A$m n/a n/a n/a 30-Jun-23 0.0 0.0 0.000 0%
Reported Profit A$m loss loss loss TOTAL 140.1 5.8 0.041 24%
Analyst: Mike Millikan
Phone: +61 8 9268 2805
Sources: IRESS, Company Information, Hartleys Research
Junior exploration company focused on the delineation of significant cobalt and
base metal deposits. Potential development options being scoped.
Last Updated: 01/02/2018
Key Market Information
Commodity
Cobalt, Copper, Zinc
Comments
Nickel
Nickel
Feb 2018
Cobalt and base metal (copper) focused explorer. Controls 95% of the flag-ship
Opuwo Cobalt Projet in Namibia. Maiden resource estimated due for release in late
Q1 CY18. Cobalt thematic continues to look good, with growing demand for use in
electric vehicles, storage batteries and smartphones.
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
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BUSINESS OVERVIEW Celsius Resources Limited is an ASX listed (CLA.asx) junior exploration company
focused on the discovery of significant cobalt and base metals deposits. The Company
was reinstated onto the ASX in late CY16, following a name change from Celsius Coal
Limited to Celsius Resources Limited.
In early CY17, Celsius entered into an option agreement for the right to earn a
controlling interest in the Opuwo cobalt project in Namibia. An interest of 30% was
earned in the project in August 2017, following which the Company moved to a 95%
interest through the issuance of CLA shares to Gecko Namibia (now CLA’s largest
shareholder). The remaining 5% in the project is held by local Namibian Company
Amor Investments. Opuwo is CLA’s flagship project but the Company also owns two
nickel assets in Western Australia.
Exploration activities are currently focused on advancing the Opuwo project located in
Namibia, Southern Africa. Opuwo is an emerging cobalt-copper district which has
received very little modern exploration. The Company has 95% interest and has
already confirmed and upgraded historical cobalt mineralisation. Importantly the
cobalt-dominant mineralisation (with copper) remains open along strike and at depth.
The mineralisation is sulphide related and as such amenable to simple flotation
processing, with preliminary metallurgical test-work providing favourable cobalt (up to
~88%) and copper (up to ~87%) recoveries. More detailed met-test-work is ongoing.
Resource definition drilling was completed mid-December 2017, with 75% of assays
now received. Once full results have been received a maiden resource estimate is
expected to be released (due late Q1 CY18). On the current timing a Scoping Study
is planned to be released in Q2 CY18, which will incorporate a maiden resource,
processing flowsheet, and indicative costs (both capex and opex).
CLA has current estimated cash of A$4.3M, which provides some funding towards
ongoing exploration.
Fig. 1: Key Project Location - Opuwo
Source: Celsius Resources Ltd
CLA has a 95%-
interest in the Opuwo
cobalt project in
Namibia
Opuwo is an emerging
cobalt-copper distr ict
which has received
very l i t t le modern
explorat ion
A maiden resource
estimate is due late
Q1 CY18
Dri l l ing is ongoing to
extend mineralisat ion
and grow resources
over t ime
On the current t iming
a Scoping Study is
planned to be
released in Q2 CY18
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
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OPUWO PROJECT
Fig. 2: Opuwo Project Snap Shot
Opuwo
Commodities:
Interest:
Location:
Tenure:
Project stage:
Type of deposit:
Permitting stage:
Infrastructure:
Exploration Upside:
Cobalt, Copper
95% interest
North-west Namibia, 30km from Opuwo
~1,470km2
Early to advance stage exploration
Sediment-hosted, sulphide-related
Granted exploration licences
Sealed roads, grid power, rail and port.
Extensive DOF horizon to test
Source: Celsius Resources Ltd
Location
The Opuwo Cobalt Project is located in north-western Namibia, ~800 km by road from
the capital, Windhoek, and ~750 km from the port of Walvis Bay. The Project has
excellent infrastructure, with the regional capital of Opuwo only 30 km to the south,
providing good services. Sealed roads connect Opuwo to Windhoek and Walvis Bay.
A hydro-power station (320 MW) is located nearby, and a transmission line (66 kV)
passes through the eastern boundary of the project. Project tenure currently spans
~1,470km2.
Fig. 3: Project Location – Opuwo Cobalt Project, Namibia
Source: Celsius Resources Ltd
CLA has a current
95% interest with 5%
held by local Namibian
Company Amor
Investments
Large, highly
prospect ive tenure
Proven mineral isat ion,
with good-grade
cobalt, copper
conf irmed in histor ical
and recent CLA
dri l l ing
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
Page 5 of 22
Moved to 95% project interest in September 2017
In early CY17, Celsius entered into an option agreement for the right to earn a
controlling interest in the Opuwo cobalt project in Namibia. An interest of 30% was
earned in the project in August 2017, following which the Company moved to a 95%
interest through the issuance of 31.25M CLA shares to Gecko Namibia. Gecko also
agreed to sell to CLA a 95% interest in three surrounding licences in the Opuwo region
covering 782 km2, taking the contiguous landholding of the expanded project area to
1,470 km2, for the consideration of 12.5M CLA shares.
Gecko is now CLA’s largest shareholder (with 50.75M CLA shares or ~8.6% of issued
capital). The remaining 5% in the project is held by local Namibian Company Amor
Investments.
Fig. 4: Opuwo Project Ownership Structure
Source: Celsius Resources Ltd
Geology (with reference to CLA releases)
The mineralisation at the Opuwo cobalt project is hosted in the Dolomite Ore
Formation (DOF) within Neoproterozoic sediments of the Kaoko Belt in northern
Namibia. The Kaoko Belt is considered by some as the western extension of the
Central African Copper belt.
Fig. 5: Key Copper Belts of Africa (LHS); DOF Horizon (RHS)
Source: MOD Resources Ltd (LHS); Celsius Resources Ltd
CLA holds 4
cont iguous explorat ion
permits over
1,470sqkm in the
Opuwo Project
The DOF is the key
host horizon for
mineralisat ion wi thin
the project area
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
Page 6 of 22
The DOF is an organic carbon rich, marly dolomitic horizon consisting of clastic and
carbonate lithologies. The DOF horizon has been mapped and sampled along a strike
length of +30 km, but the prospective horizon extends over 100km within the expanded
project area.
The DOF horizon is of variable dip and thickness, ranging up to ~17m thick in parts,
with extensive areas of outcrop. The DOF horizon appears to be mineralised
throughout its extent. The DOF horizon has now been drill tested over 15km with
potential for extensions along strike along with additional mineralised zones and
parallel lodes. Mineralisation outcrops at surface and is easily visible from
satellite/aerial photos. Mineralisation is also interpreted to continue undercover to the
east, which is supported by aeromagnetic data.
Fig. 6: DOF Horizon over satellite imagery (Google Maps)
Source: Celsius Resources Ltd; Google Maps
Fig. 7: DOF Horizon over satellite imagery (Insert)
Source: Celsius Resources Ltd; Google Maps
Sediment-hosted
mineralisat ion,
structurally inf luenced
Mineralisat ion
outcrops at surface
and is easily v isible
from satell i te/aeria l
photos
‘
Mineralisat ion is also
interpreted to continue
undercover to the
east, which is
supported by
aeromagnet ic data
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
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The mineralisation in the DOF unit is disseminated and vein hosted sulphide
mineralisation, with chalcopyrite (CuFeS2) the main copper mineral, linnaeite (Co2S4)
the main cobalt mineral, and zinc as sphalerite (ZnS). The mineralisation is relative
fine grained but is low in deleterious elements such as arsenic (As), cadmium (Cd)
and uranium (U).
Fig. 8: Common Cobalt bearing minerals (LHS); Key Cobalt Deposit Types (RHS)
Source: Cobalt Institute (LHS); British Geological Survey (RHS)
Maiden resource drilling completed, estimate pending
Celsius completed resource drilling in preparation of the maiden JORC-compliant
resource estimate in mid-December 2017. The initial resource remains on track for
release in late Q1 CY18.
The resource delineation program consisted of some 99 holes (76 RC and 23 DC) for
a total of 17,266m. Assays have now been received for over 75% of the samples
submitted, with the final batch of samples expected in early February 2018. Some of
the more significant results include:
17m @ 0.14% Co and 0.42% Cu from 11m;
10m @ 0.12% Co and 0.59% Cu from 17m and 4m @ 0.13% Co and 0.55% Cu,
from 32m;
7.7m @ 0.11% Co and 0.52% Cu from 44m;
7m @ 0.12% Co and 0.46% Cu from 59m;
5m @ 0.16% Co and 0.48% Cu from 204m
5m @ 0.12% Co and 0.52% Cu, from 162m;
5m @ 0.12% Co and 0.39% Cu, from 233m;
4.9m @ 0.12% Co and 0.40% Cu, from 28m;
4.5m @ 0.12% Co and 0.48% Cu, from 57m and 4.2m @ 0.15% Co and 0.45%
Cu, from 81m;
4.4m @ 0.17% Co and 0.46% Cu, from 136m;
4m @ 0.18% Co and 0.50% Cu, from 202m
Drilling has now recommenced within the project area, with one diamond rig testing
mineralised extensions to the west of the resource drill-out on a 200m x 100m grid.
This area is considered a priority target based on visual observations from recent
drilling. Three diamond holes have so far been completed and all report the
intersection of DOF mineralisation, highlighting potential resource extensions.
Linnaeite is a cobalt
sulphide mineral
discovered in 1845
named to honour Carl
Linnaeus
The maiden resource
remains on track for
release in late Q1
CY18
Assays cont inue to
demonstrate the
rather consistent
nature of the
mineralisat ion
Very large mineralised
system conf irmed
Latest batch of results
were some of the best
to date and included:
17m @ 0.14% Co and
0.42% Cu from 11m –
close to true widths
and near surface
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
Page 8 of 22
Drilling is also planned to infill some gaps between the eastern and western zones
(200m x 100m pattern). In addition, any priority conductors generated from the current
geophysical surveys will be tested.
Fig. 9: Resource Drill ing – Plan View
Source: Celsius Resources Ltd
Mineralisation to date has been largely disseminated but some zones of semi-massive
sulphides (potential veinlets) have been intersected. A recent semi-massive drill result
(DOFD0077) returned 4m @ 0.13% Co and 0.45% Cu, from 450m, proving the
continuity of mineralisation at depth.
The prospect of finding a potential ‘feeder zone’ of mineralisation gives substantial
upside to the exploration. Further work involves the completion of down-hole
electromagnetics (DHEM) and ground-based audio magnetotellurics (AMT), which
aims to locate conductors, which may represent accumulation of sulphides (potentially
higher grade massive sulphide mineralisation) at depth. Some of the planned DHEM
has already been completed, with modelling and interpretation now underway.
Fig. 10: DOFD0077 - Semi Massive sulphides – Cross Section (LHS); Core (RHS)
Depth – 492m
Depth – 493m
Source: Celsius Resources Ltd
CLA has calculated an
init ial Exploration
Target of 33-41Mt
grading 0.13-0.17%
Co and 0.45-0.65% Cu
over an 11km zone
down to depths of
150-250m
Mineralisat ion remains
open.
Zones of semi-
massive sulphides
have been intersected
at depth
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
Page 9 of 22
Favourable mineralogy and metallurgy, now being tuned
As the cobalt is hosted in sulphide minerals (linnaeite) it is envisaged that a
conventional flotation can be utilised.
Test-work to date has shown that using a flotation flowsheet, concentrate grades of
up to 1.11% cobalt can be created with 64.2% recovery. Recoveries can be lifted to
88% if the float time is extended however the grade of the concentrate falls.
Further optimisation work will aim to improve the concentrate grade along with
recoveries, whilst trying to remove any deleterious minerals. The work will include re-
grinding the concentrate and re-floating.
Other metallurgy test-work will include leaching to investigate the feasibility of
producing a cobalt sulphate chemical from the concentrates produced at the Opuwo
Cobalt project. The results of further test-work are due to be released this quarter.
Sulphide hosted cobalt deposits have many benefits over laterite deposits. These
benefits generally include lower initial capital expenditure assuming that a flotation
plant is constructed compared to a laterite cobalt hosted deposit which commonly
require a high-pressure acid leach (HPAL) facility. HPAL is a process which requires
preheating slurried ore and mixing it with concentrated sulphuric acid at high
temperatures and pressures. Generally speaking, the operating costs of sulphide ore
processing facilities are lower when compared to HPAL due to reduced need for
reagents and lower power requirements, as the process flowsheet requires crush,
grinding and flotation of the ore to create a cobalt concentrate.
An added benefit of the CLA’s mineralogy being cobalt sulphide (linnaeite) as opposed
to other cobalt sulphide minerals (such as cobaltite) is the low levels or total lack of
arsenic. This is significant as concentrates that contain arsenic can incur penalties
when sold to refineries and would therefore reduce the value of the concentrate. This
may compensate for the relatively low concentrate grade CLA plans to produce at this
stage.
Another unique aspect of CLA’s deposit is that ~74% of its in-situ value is in the cobalt
with the remainder in copper, this is compared to the majority of cobalt production
where cobalt is the by-product of copper and nickel. This gives CLA greater exposure
to cobalt than many of its developer peers.
On the current timing a Scoping Study is planned to be released in Q2 CY18, which
will incorporate a maiden resource, more detailed met-testwork, processing flowsheet,
and indicative costs (both capex and opex).
The mineralisation is
sulphide re lated and
as such amenable to
simple f lotation
processing, w ith
preliminary
metal lurg ical test -work
providing favourable
cobalt (up to ~88%)
and copper (up to
~87%) recoveries
More detai led met-
test-work is ongoing
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
Page 10 of 22
COMMODITY EXPOSURE Celsius is currently focused on cobalt and base metal exploration. The Company
currently has no operating mines.
Growth in Li-ion batteries, rising cobalt demand Batteries are made up of two electrodes, a cathode (positive (+)) and anode (negative
(-)), with an electrolyte acting as the medium for which electric charge flows. In the
case of lithium ion (Li-ion) batteries, lithium ions move between the cathode and the
anode as the batteries charges and discharges.
Nickel and cobalt are fast becoming key ingredients for lithium ion (Li-ion) batteries.
Both metals are used the cathode combination in successful Li-ion batteries, such as
NMC (Lithium-Nickel-Manganese-Cobalt Oxide (LiNiMnCoO2)) batteries and NCA
(Lithium-Nickel-Cobalt-Aluminium Oxide (LiNiCoAlO2)) batteries. With cobalt used in
LCO (Lithium-Cobalt Oxide (LiCoO2)) batteries.
LCO batteries dominate portable electronic devices (such as mobile phones, laptops
and cameras) due to its high specific energy. In contrast, NCM and NCA batteries are
increasingly becoming the industry standard for electric vehicles, due to their high
energy densities and power costs. The cathode combination for NMC is typically 33%
nickel, 33% manganese and 33% cobalt (1-1-1).
Another successful cathode combination for NCM is 50% nickel, 30% cobalt and 20%
manganese (5-3-2), but the battery appears to be moving to higher nickel contents, 6-
2-2 and 8-1-1, replacing some cobalt. However, demand for cobalt remains strong
despite some substitution risk. NCA batteries in contrast typically use a combination
of 80% nickel, 15% cobalt and 5% aluminium.
Both NCA and NCM batteries require high purity nickel sulphate (NiSO4.6H2O) and
cobalt sulphate (CoSO4.7H2O) to produce precursor materials.
Fig. 11: Cobalt demand outlook through EV uptake
Source: Hartleys Estimates
-
0.20
0.40
0.60
0.80
1.00
1.20
1.40
Cobalt NCM111 Cobalt NCM523 Cobalt NCM811Global Demand (all industries)
Cobalt is a key
ingredients for some
l i th ium ion (Li - ion)
batter ies
LCO Li- ion batteries
dominant portable
electronic devices
(mobi le phones,
laptops and cameras)
NCM and NCA
batter ies are
increasingly becoming
the industry standard
for electr ic vehic les
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
Page 11 of 22
Cobalt – hits 9 year highs as demand still soars Cobalt is a minor metal, widely used in superalloys (aircraft engines), electroplating,
glass and ceramics and batteries (LCO, NCA and NCM Li ion batteries). The power
to weight ratio of LCO batteries makes them ideal for consumer electronics (portable
devices such as smart phones, laptops, and tablets), and as mentioned NCA and NCM
Li ion batteries are fast becoming the industry standard for EVs. Cobalt demand is
now largely driven by rechargeable batteries (close to 49% of demand).
Currently 95% of the world’s cobalt is produced as a by-product of copper and nickel
mines. Cobalt is threatened by supply disruptions, as over 60% of the world’s cobalt
supply is currently sourced from the DRC. The DRC has a politically unstable history
and is seen by many as an unethical source of cobalt. As high as ~20% of mined
cobalt production in the DRC is from artisanal mining, many battery manufacturers
have indicated that they are currently looking to secure supply outside of the DRC.
The cobalt price was up over 115% in CY17 and recently hit a 9 year high of
US$82,120/t (US$37.25/lb Co) to be up over 6% already in CY18. Helped by plans to
raise royalties on cobalt in the DRC and output disruptions at the Ambatovy mine in
Madagascar. Some forecasters believe that within 3-4 years, 75% of all Li-ion batteries
will contain some level of cobalt. Cobalt is critical for increasing the energy density of
lithium ion batteries which is especially important for reducing the size and weight of
lithium ion batteries. It is interesting to note, that Telsa’s Gigafactory alone, once
operating at full capacity is expected to require over 7.5kt of cobalt per annum
(potentially more).
The current cobalt market is small however, ~100kt but forecast to more than double
within the next decade, especially as major vehicle companies invest heavily in electric
vehicles.
Fig. 12: Cobalt Price – 5 years
Source: Bloomberg
Small market but
expected to grow
signif icantly
Cobalt demand is
forecast to outstr ip
supply
Mercedes Benz: A
range of 10 electr ic
vehicles by 2022,
investing €10 bil l ion
Toyota: Sol id-state l i th ium ion bat tery,
800-1000 km range, 4
min recharge,
production 2022
China: Wor ld leading ~800,000 electr i f ied
vehicle sales in 2017
(up from ~90,000 in
2014)
Al l e lectr ic vehic les
wil l use Li- ion
batter ies with cobalt
cathodes
Telsa’s Model S
electr ic vehicle
current ly requires
~8kg of cobalt
Current cobal t pr ice is
~US$36.24/ lb (or
~US$79,895/t)
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
Page 12 of 22
GEOGRAPHIC EXPOSURE Namibia and Australia.
Fig. 13: Location of CLA ’s Projects
Source: Celsius Resources Ltd
RESERVES AND RESOURCES No current JORC-compliant reserves or resources. A maiden resource for Opuwo is
expected to be released in late Q1 CY18.
The Company has calculated an initial Exploration Target of 33-41Mt grading 0.13-
0.17% Co and 0.45-0.65% Cu over an 11km zone down to depths of 150-250m.
Currently focused on
the Opuwo project in
Namibia, but has
some exploration
ground (nickel assets)
in Austral ia
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
Page 13 of 22
PEERS AND COMPETITORS Cobalt exploration/developer’s peers can be seen in Figure 14. Important to note that
many of the larger cobalt deposits are laterite deposits. Laterite deposits historically
have higher opex and capex figures.
Fig. 14: Cobalt Peers – Market Capitalisation
Source: Hartleys Estimates – IRESS; Market close 31 Jan 2018
Fig. 15: Cobalt Peers – Enterprise Value
Source: Hartleys Estimates – IRESS
Fig. 16: Cobalt Peers – EV/Resource Cobalt Equivalent Tonnes
Source: Hartleys Estimates – IRESS
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
CLQ MLX AUZ PAN AML ARL ARV FCC JRV NZC EUC CLA GME CLL COB HAV LFR PGM BSX MEI AZS BAR CZI CZN HMX CNJ N27 CAZ BMT
Market Capitalisation
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
CLQ MLX AUZ PAN AML ARV ARL JRV NZC FCC CLA GME CLL EUC COB HAV LFR PGM MEI AZS BSX BAR CZI CZN HMX CNJ N27 CAZ MTH
Enterprise Value
934
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
MEI MLX CLQ FCC AUZ COB CLL LFR AML CZI NZC CLA PGM N27 ARL BMT GME BAR HAV CNJ CAZ
EV/Resource Co Eq t
NOTE : On our peer
comps we have used
the mid-point range of
the *Opuwo
Explorat ion Target , a
maiden resource is
expected to be
released soon (Q1
CY18)
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
Page 14 of 22
Fig. 17: Peer Analysis – Cobalt-equivalent grade and contained metal
Source: Hartleys Estimates – Company Reports: Bubble Size = EV
Fig. 18: Peer Analysis – Cobalt-equivalent grade and contained metal
Source: Hartleys Estimates – Company Reports: Bubble Size = Co Eq t
CLQ - Sunrise
AUZ - Sconi
ARL - KNP
CLL - Collerina
GME - NiWest
PGM - Owendale
BAR - CNJ - Mt Thristy
AML - Walford Creek
CLA - Opuwo*
NZC - Kalongwe**
COB - Thackaringa***
HAV - Mutooroo
N27 - Wollogorang
BMT - Lainejaur
JRV - Nico Young
CZI - Nebo-Babel
MLX - Wingellina
PAN - Savannah
MTH - Basil
HMX - Millennium
-0.10%
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
0.70%
0.80%
-100,000 0 100,000 200,000 300,000 400,000 500,000 600,000
Co
bal
t-e
qu
ival
en
t gr
ade
% C
o E
q
Cobalt-equivalent contained metal tonnes
Cobalt-equivalent grade and contained metal
CLQ - Sunrise AUZ - Sconi ARL - KNP CLL - Collerina GME - NiWest
PGM - Owendale BAR - CNJ - Mt Thristy AML - Walford Creek CLA - Opuwo* NZC - Kalongwe**
COB - Thackaringa*** HAV - Mutooroo N27 - Wollogorang BMT - Lainejaur JRV - Nico Young
CZI - Nebo-Babel MLX - Wingellina PAN - Savannah MTH - Basil HMX - Millennium
Bubble Size = EV
Laterite deposit
Sulphide deposit
CLQ - Sunrise
AUZ - Sconi
ARL - KNP
CLL - Collerina
GME - NiWest
PGM - Owendale
BAR - CNJ - Mt Thristy
CLA - Opuwo*
NZC - Kalongwe**
COB - Thackaringa***
HAV - Mutooroo
N27 - Wollogorang
BMT - Lainejaur
JRV - Nico Young
CZI - Nebo-Babel
MLX - Wingellina
PAN - Savannah
AML - Walford Creek
MTH - Basil
HMX - Millennium
-0.10%
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
0.60%
0.70%
0.80%
-100,000 0 100,000 200,000 300,000 400,000 500,000 600,000
Co
bal
t-eq
uiv
alen
t gr
ade
% C
o E
q
Cobalt-equivalent contained metal tonnes
Cobalt-equivalent grade and contained metal
CLQ - Sunrise AUZ - Sconi ARL - KNP CLL - Collerina GME - NiWest
PGM - Owendale BAR - CNJ - Mt Thristy CLA - Opuwo* NZC - Kalongwe** COB - Thackaringa***
HAV - Mutooroo N27 - Wollogorang BMT - Lainejaur JRV - Nico Young CZI - Nebo-Babel
MLX - Wingellina PAN - Savannah AML - Walford Creek MTH - Basil HMX - Millennium
Bubble Size = Co Eq t
Laterite deposit
Sulphide deposit
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
Page 15 of 22
Fig. 19: Peer Analysis – Cobalt grade and contained metal
Source: Hartleys Estimates – Company Reports: Bubble Size = Co t
Fig. 20: Peer Analysis – Cobalt-equivalent grade and contained metal
Source: Hartleys Estimates – Company Reports: Bubble Size = Co t
CLQ - Sunrise
AUZ - Sconi
ARL - KNP
CLL - Collerina
GME - NiWestPGM - Owendale
BAR - CNJ - Mt Thristy
CLA - Opuwo*
NZC - Kalongwe**
COB - Thackaringa***
HAV - Mutooroo
N27 - Wollogorang
BMT - Lainejaur
JRV - Nico Young
CZI - Nebo-Babel
MLX - WingellinaPAN - Savannah
AML - Walford Creek
MTH - Basil
HMX - Millennium
-0.10
-0.05
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 200,000
Co
bal
t gr
ade
% C
o
Cobalt contained metal tonnes
Cobalt grade and contained Cobalt metal
CLQ - Sunrise AUZ - Sconi ARL - KNP CLL - Collerina GME - NiWest
PGM - Owendale BAR - CNJ - Mt Thristy CLA - Opuwo* NZC - Kalongwe** COB - Thackaringa***
HAV - Mutooroo N27 - Wollogorang BMT - Lainejaur JRV - Nico Young CZI - Nebo-Babel
MLX - Wingellina PAN - Savannah AML - Walford Creek MTH - Basil HMX - Millennium
Bubble Size = Co t
Laterite deposit
Sulphide deposit
MLX - Wingellina
CLQ - Sunrise
AUZ - Sconi
ARL - KNP
CLL - Collerina
GME - NiWest
PGM - Owendale
BAR - CNJ - Mt Thristy
CLA - Opuwo*
NZC - Kalongwe**
COB - Thackaringa***
HAV - Mutooroo
N27 - Wollogorang
BMT - Lainejaur
JRV - Nico Young
CZI - Nebo-Babel
PAN - Savannah
AML - Walford Creek
MTH - Basil
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 50 100 150 200 250 300 350 400 450 500
Co
bal
t va
lue
% o
f to
tal v
alu
e
In-situ value per tonne
In-situ value per tonne vs Cobalt Value % of total value
MLX - Wingellina CLQ - Sunrise AUZ - Sconi ARL - KNP CLL - Collerina GME - NiWest PGM - Owendale
BAR - CNJ - Mt Thristy CLA - Opuwo* NZC - Kalongwe** COB - Thackaringa*** HAV - Mutooroo N27 - Wollogorang BMT - Lainejaur
JRV - Nico Young CZI - Nebo-Babel PAN - Savannah AML - Walford Creek MTH - Basil
Bubble Size = Co t
Laterite deposit
Sulphide deposit
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
Page 16 of 22
MANAGEMENT, DIRECTORS AND
MAJOR SHAREHOLDERS
Fig. 21: Economic Exposure of Board and Management
Source: Celsius Resources Ltd
Directors (as summarised from CLA’s website)
Bill Oliver, BSc (Hons), GDipAppFin (FINSA), Non-Executive Chairman
Mr. Oliver has 14 years’ experience in the international resources industry working
for both major and junior companies. He has led large scale resource definition
projects for Rio Tinto and previously worked in near mine exploration/resource
definition roles for Harmony Gold, Bellamel Mining and BC Iron.
More recently Mr. Oliver was the Managing Director of Signature Metals Ltd
responsible from taking the Konongo Gold Project into production within two years of
acquisition and growing the company from a market cap of A$6M to a transaction
where it was valued at over A$50M.
He has wide-ranging exploration experience including expertise in near-mine
exploration/resource extension and resource definition as well as significant
experience in the technical and economic evaluation of resources projects. He holds
an honours degree in Geology from the University of Western Australia as well as a
post-graduate diploma in finance and investment from FINSIA.
Mr. Oliver was appointed to the position of director on 23 December 2010.
Brendan Borg, BSc, MSc, MAusIMM, Managing Director
Mr. Borg is a highly respected consultant geologist who has specialised in the “battery
materials” sector including lithium, graphite and cobalt mineralisation, participating in
numerous successful projects, in an investment and/or operational capacity. Mr. Borg
has played a key role in the selection of the Opuwo Cobalt Project and exploration
conducted by Celsius to date.
Mr. Borg has 20 years’ experience gained working in management, operational and
project development roles in the Exploration and Mining industries, with companies
including Rio Tinto Iron Ore, Magnis Resources Limited, IronClad Mining Limited,
Lithex Resources Limited and Sibelco Australia Limited. Brendan is a Director of
geological consultancy Borg Geoscience Pty Ltd, and of a new energy minerals
marketing firm, Minemark Pty Ltd.
Bill Oliver Non-Executive Chairman 532,834 6,166,667 0 6,699,501 2
Brendan Borg Managing Director 16,000,000 9,333,333 0 25,333,333 1
Pine van Wyk Non-Executive Director 2,791,250 0 0 2,791,250 4
Ranko Matic Non-Executive Director 69,269 6,000,000 0 6,069,269 3
Melanie Ross Co. Sec. na na na na na
Total 19,393,353 21,500,000 0 40,893,353
Economic Exposure of Board and Key management
PositionOrd Shares Options
Performance
Shares
Direct
Directors Total Rank
Highly experienced
mining executives
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
Page 17 of 22
Pine van Wyk, Met. Eng., B.Com, MBA, Non-Executive Director
Mr van Wyk is a Metallurgical Engineer by profession, with extensive experience in
the mining industry and for the last 11 years, specifically in uranium. He holds
commercial qualification in B.Com and MBA, with a focus on project management.
He has spent eight years at Rössing Uranium, where his roll included Superintendent
Acid Plant and Metallurgical Services, Superintendent Strategic Projects and
eventually Engineering Manager. In 2005 he joined Paladin Energy Ltd at their Langer
Heinrich Uranium project as Operations Manager. This project was taken from
feasibility to full production and still is the flagship project for Paladin. At the time of
taking up his position with Gecko he held the position of Business Development
Manager for Paladin Energy. Pine brings extensive process and project management
knowledge to the Gecko Group and now holds the position of Project Director.
Ranko Matic, B.Bus, CA, Non-Executive Director and Company Secretary
Mr. Matic has over 20 years experience in the areas of financial and executive
management, accounting, audit, business and corporate advisory. Mr. Matic has
considerable experience in a range of industries with particular exposure to public
listed companies and large private enterprises.
He is a Director of a Chartered Accounting firm and a Corporate Advisory company
based in Perth, Western Australia and has specialist expertise and exposure in the
areas of audit, corporate services, due diligence, mergers and acquisitions, and
valuations.
Through these positions Mr. Matic has been involved in an advisory capacity in over
40 initial public offerings on the ASX in the last 10 years, as well as several
recapitalisations of public listed companies.
Non-Executive Director of East Energy Resources Ltd (ASX: EER), Non-Executive
Director of Argosy Minerals Ltd (ASX:AGY), Non-Executive Director of Valmec
Limited (ASX: VMX), Non-Executive Director of Antilles Oil and Gas NL (ASX:AVD)
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
Page 18 of 22
MAJOR SHAREHOLDERS Gecko Namibia (Pty) Ltd is CLA’s largest shareholder and currently holds ~50.75M
CLA shares for 8.6% of the issued capital (below % holdings were at 4 Jan 2018).
Fig. 22: CLA Shareholders – 4 Jan 2018
Source: Celsius Resources Ltd
OPTIONS, CONVERTIBLES AND UNPAID CAPITAL CLA currently has 140.1M options with expiry dates in FY19, FY20 and FY21.
Fig. 23: Options – CLA
Unpaid Capital
Year Expires No. (m) $m Avg. Price % ord
30-Jun-19 Listed 77.6 0.8 0.010 13%
30-Jun-20 Unlisted 20.0 1.3 0.065 3%
30-Jun-21 Unlisted 42.5 3.7 0.088 7%
30-Jun-22 0.0 0.0 0.000 0%
30-Jun-23 0.0 0.0 0.000 0%
TOTAL 140.1 5.8 0.041 24%
Source: Celsius Resources Ltd
Shareholder Number of Shares % Issued Capital
1 GECKO NAMIBIA (PTY) LTD 50,750,000 8.63%2 J P MORGAN NOMINEES AUSTRALIA LIMITED 25,114,735 4.27%3 MR BRENDAN JAMES BORG & MRS ERIN BELINDA BORG (BORG FAMILY SUPER A/C) 16,000,000 2.72%4 FEATHERBED AUSTRALIA PTY LTD (FEATHERBED AUST FAMILY A/C) 15,195,947 2.58%5 PHEAKES PTY LTD (SENATE A/C) 14,500,000 2.46%6 CITICORP NOMINEES PTY LIMITED 13,635,407 2.32%7 VANTAGE HOUSE LIMITED 11,000,000 1.87%8 ASIA PRINCIPAL CAPITAL - CORPORATE FINANCE PTY LTD 8,916,233 1.52%9 MR ABDUL NASER SIDDIQUI 8,850,000 1.50%
10 BRIJOHN NOMINEES PTY LTD (NELSONIO A/C) 8,784,549 1.49%11 MR NEIL GRAEME TOBIN 7,000,000 1.19%12 BNP PARIBAS NOMINEES PTY LTD 6,663,937 1.13%13 GOLDEN DAWN LIMITED 6,277,777 1.07%14 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 6,009,559 1.02%15 CELTIC CAPITAL PTY LTD (THE CELTIC CAPITAL A/C) 5,000,000 0.85%15 MR COLIN MACKAY 5,000,000 0.85%15 DR SALIM CASSIM 5,000,000 0.85%16 GREENSEA INVESTMENTS PTY LTD 4,600,000 0.78%17 MR CHING KHUNG & MRS BEE FUN KHUNG 4,100,000 0.70%18 KJLA PTY LTD 4,003,630 0.68%19 SILVER KNIGHT HOLDINGS PTY LTD (GANDOSSI FAMILY A/C) 4,000,000 0.68%19 RIGI INVESTMENTS PTY LTD (THE CAPE A/C) 4,000,000 0.68%19 MR PAUL HARTLEY WATTS 4,000,000 0.68%20 MR RYLAN SAVIO D'SILVA 3,000,000 0.51%20 MRS VERONICA BRESLAND TROTT 3,000,000 0.51%20 LENOIR CAPITAL PTY LTD 3,000,000 0.51%20 MR PETER CHRISTOPHER WALL & MRS TANYA-LEE WALL 3,000,000 0.51%20 5150 CAPITAL PTY LTD 3,000,000 0.51%20 METIS PTY LTD 3,000,000 0.51%20 MR DAVID JAMES WALL 3,000,000 0.51%
Top 20 holders of ORDINARY FULLY PAID SHARES (TOTAL) 259,401,774 44.09%Total Remianing Holders Balance 588,327,116 100.00%
Gecko Namibia is
CLA’s largest
shareholder
Gecko is a diversif ied
mining services,
mining and explorat ion
company operating in
Namibia
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
Page 19 of 22
PRELIMINARY PRICE TARGET
METHODOLOGY
Our CLA price target is considered highly speculative, as it is pre-scoping and pre-
resource for Opuwo.
Celsius moved to 95% project interest in September 2017, and controls over 100km
of the highly prospective cobalt-copper horizon within the project area (~1,470km2).
Opuwo is being advanced, with a scoping development study expected to be released
in CY18. CLA has confirmed mineralisation over a +15km zone, with strong potential
for adjacent and parallel systems. The Company has calculated an initial Exploration
Target of 33-41Mt grading 0.13-0.17% Co and 0.45-0.65% Cu over an 11km zone
down to depths of 150-250m. Mineralisation remains open. A maiden resource
estimate for Opuwo is due in the coming weeks.
Work completed by CLA indicates that the mineralisation is sulphide-related (with
cobalt present as linnaeite and copper present as chalcopyrite) and considered
amenable to simple, conventional flotation techniques. The sulphides are largely
disseminated and vein-hosted but coarser semi-massive sulphides have been
intersected.
Early metallurgical test-work by CLA has returned flotation recoveries of up to ~88%
on the cobalt and ~87% on the copper from a rougher concentrate, but a concentrate
grade of over 1% Co was not reported. A concentrate grade of 1.11% Co was achieved
within a short time frame with recoveries of 64.2% reported. Metallurgical test-work is
ongoing, aimed at improving the grade of the concentrate while maintain high
recoveries and cleaning the concentrate to reduce mass and increase grades. An
update on metallurgy is expected early in CY18. The Company has an internal target
of recoveries in excess ~80% Co and cobalt concentrate grade well above of 1% Co.
The concentrate is low in deleterious elements such as arsenic (As), cadmium (Cd)
and uranium (U) and as such could attract good payable terms.
Our preliminary valuation is largely derived from a 2Mtpa sulphide plant generating a
desirable bulk concentrates. We assume favourable cobalt recoveries of +75% and
copper recoveries +85%, and assume grades at the mid-point of the current
exploration target. The release of the maiden resource, more detailed metallurgy and
scoping developments will update our preliminary estimates. Our modelling at this
stage does not consider potential value add opportunities such as further downstream
processing to produce cobalt sulphate products or copper cathodes.
Our preliminary price target of 19cps is derived from both a discounted cashflow
analysis of a scaleable cobalt operation at Opuwo and perception of exploration value
in the search of more mineralisation.
Fig. 24: Hartleys CLA Price Target
Source: Hartleys Research
Price Target Methodology Weighting Spot 12 mth out
55% $0.13 $0.14
35% $0.29 $0.31
5% $0.07 $0.08
Cash Backing 5% $0.01 $0.01
Risk weighted composite $0.18
12 Months Price Target $0.19
Shareprice - Last $0.130
12 mth total return (% to 12mth target ) 44%
95% Opuwo (NPV 14%) Base + Exploration value
95% Opuwo (NPV 14%) Spot + Exploration value
Exploration value - no development
Our CLA valuation and
price target is
considered highly
speculative
Preliminary price
target of 19cps
Current estimated
cash of ~A$4.3M
provides some funding
towards ongoing
explorat ion
Our preliminary
model l ing assumes no
other potential by-
product credi ts
Our base valuat ion
uses Consensus
pric ing for cobalt and
copper , which are
considered
conservative
At current spot
commodity pr ices the
project has signif icant
value
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
Page 20 of 22
RECOMMENDATION & RISKS
INVESTMENT THESIS & RECOMMENDATION We initiate coverage of CLA with a Speculative Buy recommendation, and price target
of 19cps.
The Opuwo project has potential to develop into a long-life cobalt-copper operation,
which could be scalable to exploit growing demand in the cobalt market. Cobalt
remains in high demand, especially new reliable sources of supply outside of the DRC.
Significant cobalt price appreciation was seen in CY17 and has been maintained into
CY18, with the current spot price still over US$79,800/t (US$36.2/lb Co).
The project has favourable mineralogy, with the mineralisation sulphide-related, cobalt
present as linnaeite and copper present as chalcopyrite, both considered highly
amenable to conventional flotation and extraction techniques (significantly lower
capex and opex when compared to laterite operations). The Company’s largest
shareholder (Gecko) has extensive operating experience, especially within Namibia,
which is considered a politically stable, mining friendly destination with excellent
infrastructure.
The Company’s modest EV provides strong leverage to positive exploration results
and new discoveries. With advanced stage exploration underway, we anticipate good
near-term catalysts for share price appreciation including further results for resource
definition drilling, testing new mineralised trends within the greater Opuwo project
area, and release of the maiden resource estimate. On the current timing a Scoping
Study is expected to be released for Opuwo in Q2 2018.
We consider the Company to be in the high-risk, high-reward exploration phase,
reflective of recent trading.
SIMPLE S.W.O.T. TABLE
Fig. 25: Hartleys SWOT Table for CLA
Strengths - Proven mineralisation, extensive horizons to test
- Mineralisation from surface and remains open
- Favourable sulphide mineralogy
- Highly experience board and management
- Highly prospective ground and team to execute
Weaknesses - No JORC reserves - mine life unknown
- No processing infrastructure
- No cash flow generation
Opportunities - Potential cobalt (copper) development
- Exploration upside
- M&A activity
Threats - Exploration downside
- Commodity prices and market sentiment
- Potential takeover
- FX
Source: Hartleys Research
We ini t ia te coverage
of CLA with
Speculative Buy
recommendation and
price target of 19cps
Has already made
high-grade discoveries
Exploration Upside
Threat of commodity
price weakness
Hartleys Limited Celsius Resources Ltd (CLA) 1 February 2018
Page 21 of 22
RISKS Key risks for CLA include making an economic discovery at the Opuwo project and
obtaining funding for ongoing exploration. Weather, land access, drill rig availability,
retaining key people are all risks.
Fig. 26: Key Risks
Assumption Risk of not realising
assumption
Downside risk to share price if assumption is
incorrect Comment
Funding for ongoing exploration
Med
Med-High
We estimate CLA has a current cash position of ~A$4.3M. The Company has a number of options to raise additional funds for future
exploration, including new equity issuances. The Company operates under a lean corporate structure (low cost base). The Company is
funded for some planned exploration drilling in 2018.
Discovery Success
Med-High
Med
The Company has confirmed extensive mineralisation within the project area, and has
strong potential for additional mineralised zones. A large exploration target has been reported which is in the process of being updated by latest drilling. The maiden resource once
released is considered to be interim, as the full strike and depth potential of the system is yet to
be defined.
Viable resource progresses through development studies
Med-High
High
We assume a viable resource estimate can be released for the project. On the current timing a
Scoping Study is planned to be released in CY18, which will incorporate the maiden
resource, processing flowsheet, and indicative costs (both capex and opex). Preliminary met-testwork has been favourable but needs to be
refined.
Commodity Prices Med
Med-High
The projects remain highly sensitive to commodity price movements and sentiment.
Current exploration focus is cobalt and copper.
Conclusion At this stage we consider the assumptions have a medium to high risk of not being achieved. At this stage we have only a preliminary speculative valuation for CLA. The Company’s extensive project portfolio
with high prospectivity and low current market cap, implies the Company is undervalued.
Source: Hartleys Research
Page 22 of 22
HARTLEYS CORPORATE DIRECTORY Research Trent Barnett Head of Research +61 8 9268 3052
Mike Millikan Resources Analyst +61 8 9268 2805
John Macdonald Resources Analyst +61 8 9268 3020
Paul Howard Resources Analyst +61 8 9268 3045
Aiden Bradley Research Analyst +61 8 9268 2876
Oliver Stevens Research Analyst +61 8 9268 2879
Michael Scantlebury Junior Analyst +61 8 9268 2837
Janine Bell Research Assistant +61 8 9268 2831
Corporate Finance Dale Bryan Director & Head of
Corp Fin.
+61 8 9268 2829
Richard Simpson Director +61 8 9268 2824
Ben Crossing Director +61 8 9268 3047
Ben Wale Associate Director +61 8 9268 3055
Stephen Kite Associate Director +61 8 9268 3050
Scott Weir Associate Director +61 8 9268 2821
Scott Stephens Associate Director +61 8 9268 2819
Rhys Simpson Manager +61 8 9268 2851
Registered Office
Level 6, 141 St Georges TcePostal Address:
PerthWA 6000 GPO Box 2777
Australia Perth WA 6001
PH:+61 8 9268 2888 FX: +61 8 9268 2800
www.hartleys.com.au [email protected]
Note: personal email addresses of company employees are
structured in the following
manner:[email protected]
Hartleys Recommendation Categories
Buy Share price appreciation anticipated.
Accumulate Share price appreciation anticipated but the risk/reward is
not as attractive as a “Buy”. Alternatively, for the share
price to rise it may be contingent on the outcome of an
uncertain or distant event. Analyst will often indicate a
price level at which it may become a “Buy”.
Neutral Take no action. Upside & downside risk/reward is evenly
balanced.
Reduce /
Take profits
It is anticipated to be unlikely that there will be gains over
the investment time horizon but there is a possibility of
some price weakness over that period.
Sell Significant price depreciation anticipated.
No Rating No recommendation.
Speculative
Buy
Share price could be volatile. While it is anticipated that,
on a risk/reward basis, an investment is attractive, there
is at least one identifiable risk that has a meaningful
possibility of occurring, which, if it did occur, could lead to
significant share price reduction. Consequently, the
investment is considered high risk.
Institutional Sales Carrick Ryan +61 8 9268 2864
Justin Stewart +61 8 9268 3062
Simon van den Berg +61 8 9268 2867
Chris Chong +61 8 9268 2817
Digby Gilmour +61 8 9268 2814
Veronika Tkacova +61 8 9268 3053
Wealth Management Nicola Bond +61 8 9268 2840
Bradley Booth +61 8 9268 2873
Adrian Brant +61 8 9268 3065
Nathan Bray +61 8 9268 2874
Sven Burrell +61 8 9268 2847
Simon Casey +61 8 9268 2875
Tony Chien +61 8 9268 2850
Tim Cottee +61 8 9268 3064
David Cross +61 8 9268 2860
Nicholas Draper +61 8 9268 2883
John Featherby +61 8 9268 2811
Ben Fleay +61 8 9268 2844
James Gatti +61 8 9268 3025
John Goodlad +61 8 9268 2890
Andrew Gribble +61 8 9268 2842
David Hainsworth +61 8 9268 3040
Murray Jacob +61 8 9268 2892
Gavin Lehmann +61 8 9268 2895
Shane Lehmann +61 8 9268 2897
Steven Loxley +61 8 9268 2857
Andrew Macnaughtan +61 8 9268 2898
Scott Metcalf +61 8 9268 2807
David Michael +61 8 9268 2835
Jamie Moullin +61 8 9268 2856
Chris Munro +61 8 9268 2858
Michael Munro +61 8 9268 2820
Ian Parker +61 8 9268 2810
Matthew Parker +61 8 9268 2826
Charlie Ransom
(CEO)
+61 8 9268 2868
Mark Sandford +61 8 9268 3066
David Smyth +61 8 9268 2839
Greg Soudure +61 8 9268 2834
Sonya Soudure +61 8 9268 2865
Dirk Vanderstruyf +61 8 9268 2855
Samuel Williams +61 8 9268 3041
Jayme Walsh +61 8 9268 2828
Disclaimer/Disclosure
The author of this publication, Hartleys Limited ABN 33 104 195 057 (“Hartleys”), its Directors and their Associates from time to time may hold
shares in the security/securities mentioned in this Research document and therefore may benefit from any increase in the price of those securities.
Hartleys and its Advisers may earn brokerage, fees, commissions, other benefits or advantages as a result of a transaction arising from any advice
mentioned in publications to clients.
Hartleys has assisted in capital raisings in the past 12 months for Celsius Resources Limited ("Celsius") for which it has earned fees. Hartleys has
a beneficial interest in 16 million options in Celsius.
Any financial product advice contained in this document is unsolicited general information only. Do not act on this advice without first consulting
your investment adviser to determine whether the advice is appropriate for your investment objectives, financial situation and particular needs.
Hartleys believes that any information or advice (including any financial product advice) contained in this document is accurate when issued.
Hartleys however, does not warrant its accuracy or reliability. Hartleys, its officers, agents and employees exclude all liability whatsoever, in
negligence or otherwise, for any loss or damage relating to this document to the full extent permitted by law.