LON:WTI | 0.9p | US$12m | Speculative Buy | TP : 1.2p
Debt Facility Rescheduled
Weatherly International announced that it had deferred the repayment of the US$4m Tranche D loan from Orion from 9 December 2016 to 28 February 2017. As a result, Tranches C & D, Totalling US$8m, are now both due for repayment on 28 February 2017. Other debt comprises the US$80m Tranche B debt to Orion, which is to be repaid in 13 equal quarterly instalments commencing on 28 February 2017. We estimate that repayments falling due on 28 February will sum approximately US$9.5m. Total debt (Tranches B, C & D), including rolled-up interest, was US$105m at the end of June 2016.
COMMENT: This is a further demonstration of the flexibility of the company’s lender, Orion Mine Finance, with respect to debt repayments; it previously deferred the repayment of Tranche C from August 2016 to February 2017.
The outlook for Weatherly has improved considerably since October. The company remains geared to changes in underlying performance, and we note that recently this has been working to its benefit. Not only has the copper price increased by almost 30% since October to the current level of around US$2.65/lb, but also operations were reported to have returned to steady-state levels earlier than expected (in October) after water inflows into the open pit affected production in the June and September quarters. Guidance for FY17 (to June) is for production of 17,000tpa of copper cathode at C1 costs of US$4,100-4,200/t (US$1.86-1.91/lb).
We reiterate our Speculative Buy rating and our target price of 1.2p.