Update included at bottom of piece (9/5/2023) All figures in USD unless indicated otherwise: 1 AUD = 0.7 USD Stock Price: A$ 0.195 Sierra Rutile is one of the world’s largest natural rutile producers, controlling about ~25% of total global supply through a single mine named Area 1. The company was demerged from Iluka last year and has seen its share price collapse due to insensitive selling resulting from institutional mandates, jurisdictional ownership limitations etc. Area 1 is running on limited life, with 3-4 years of reserves left and SRX is currently undergoing feasibility studies for an adjacent mine named Sembehun (~13 year mine-life) with results set to be out year-end, enabling a definitive go-ahead investment decision to be made.
Any thoughts on last quarter? Surely not as appealing as before. I was expecting the inventory build-up from the previous quarters ahead of the wet season to start converting to cash this quarter. At least all this cash is mostly tied in inventory and they are profitable on a per ton basis. Central to the thesis is that STAM will push for some liquidity event in Sembehun (i.e., selling a stake of it) and the stock will price accordingly. Specially given STAM holds 20% but could have much more power as a fraction of shares were voted in the last AGM. This all is still on the table but industry conditions tightening is not good.
Any thoughts on last quarter? Surely not as appealing as before. I was expecting the inventory build-up from the previous quarters ahead of the wet season to start converting to cash this quarter. At least all this cash is mostly tied in inventory and they are profitable on a per ton basis. Central to the thesis is that STAM will push for some liquidity event in Sembehun (i.e., selling a stake of it) and the stock will price accordingly. Specially given STAM holds 20% but could have much more power as a fraction of shares were voted in the last AGM. This all is still on the table but industry conditions tightening is not good.
Any mention of a dividend or buyback being started?