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Original-Research: Newfield Resources Ltd. - from Sphene Capital GmbH
14.08.2024 / 14:36 CET/CEST
Dissemination of a Research, transmitted by EQS News - a service of EQS
Group AG.
The issuer is solely responsible for the content of this research. The
result of this research does not constitute investment advice or an
invitation to conclude certain stock exchange transactions.
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Classification of Sphene Capital GmbH to Newfield Resources Ltd.
Company Name: Newfield Resources Ltd.
ISIN: AU000000NWF9
Reason for the research: Initiation of Coverage
Recommendation: Buy
from: 14.08.2024
Target price: AUD 0.47
Target price on sight of: 36 months
Last rating change: -
Analyst: Peter Thilo Hasler, CEFA
A high-grade diamond mine with 8.3 mn carats
We are initiating research coverage of Newfield with a Buy rating and a
price target of AUD 0.47 per share (based on the basic number of shares),
representing substantial upside from the current share price of AUD 0.14.
Our price target is derived from the speculative diamond resources of its
Tongo and Tonguma projects ("Tongo diamond mining project"), for which we
calculated a probability weighted discounted cash flow (DCF) value. Other
assets were not included in our valuation, representing thus a potential
upside to our price target. The latest pullback in the company's share price
should be considered as an interesting entry point for investors, in our
view. We believe Newfield is on the brink of re-entering the production
process in the current fiscal year and strongly believe the share price
should quickly re-rate towards our price target.
Newfield Resources is an Australian based diamond exploration and mine
development company at pre-production stage, operating in the West African
republic of Sierra Leone. Covering an area of 134 km2, Newfield is the 100%
owner of the fully permitted high-grade Tongo diamond mining project, a
kimberlite fissure dyke diamond deposit in the Lower Bambara Chiefdom,
Kenema District, in the diamond-rich Eastern Province of Sierra Leone,
similar in style to numerous South African mines. The licence areas are host
to 11 kimberlite dykes, five of which have been declared as a JORC-compliant
Indicated and Inferred diamond resource of 8.3 mn carats at a +1.0 mm bottom
cut-off (including a reserve of 1.1 mn carats) of diamonds. Assuming an
average diamond price of USD 225 per carat, we calculate a net asset value
of Tongo of AUD 2.8 bn or AUD 2.93 per share.
While the average world diamond price currently is around USD 114 per carat,
Tongo's average sales to date are USD 216 per carat, emphasising the
high-quality product at the Tongo mines, in our view. Tongo diamonds are
predominantly high-end gems suitable for luxury jewellery (top brands) which
has seen growth and demand despite global market uncertainties. Lab-grown
diamonds, which are now selling at 90-95% discount, are therefore no threat
to Newfield's natural diamonds for retail usage, in our view.
A feasibility standard Front End Engineering Design (FEED) study
demonstrates a robust 17-year life of mine with average annual production of
350,000-500,000 carats. According to our estimates, this production could
lead to peak revenues and peak EBITDA (2040/41e) of AUD 347.9 mn and AUD
223.0 mn, respectively.
You can download the research here: http://www.more-ir.de/d/30473.pdf
Contact for questions:
Peter Thilo Hasler, CEFA
+49 (152) 31764553
peter-thilo.hasler@sphene-capital.de
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1968207 14.08.2024 CET/CEST
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