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IBC Advanced Alloys receives update from Fundamental Research

IBC Advanced Alloys receives update from Fundamental Research

Fundamental Research has kept its $0.17 stock price fair value estimate and "hold" rating on IBC Advanced Alloys (CVE:IB)(OTCQX:IAALF).

In a research note, Fundamental Research analyst Siddharth Rajeev said ratings were being kept on hold "as the refinancing of the company’s debt remains uncertain."

The vertically integrated rare metals-based alloys and advanced cast product maker issued fiscal 2011 earnings for the period that ended June 30, announcing an 87 percent increase in gross profit and a 37 percent boost in sales from the prior year.

IBC makes and distributes rare metal alloys that are used in a variety of industries, including nuclear energy, automotive, telecommunications, and a range of industrial application. It has 80 employees, with production facilities in Indiana, Massachusetts, Pennsylvania and Missouri.

Gross profit for the year jumped a whopping 87 percent to $3.93 million, from $2.10 million, in fiscal 2010, on increased sales and improved operating practices, the company said.

Losses for 2011 were wider, however, at $4.66 million, or $0.02 per share, up 13 percent from the previous year, reflecting both business expansion and one-time expenses related to plant re-location.

Fundamental Research's Rajeev expects the company to report a net loss of $3.17 million, or loss of $0.01 per share for the 2012 fiscal year and a loss of $2.99 million, or loss of $0.01 per share, for 2013.

The capital markets firm maintained its 2012 revenue estimate at $24.0 million and pegged 2013 revenues at $25.7 million.

In late August, IBC's shares began trading on the OTCQX. Rajeev said: "We believe this is a good development for IBC and its shareholders as the cross listing will allow US investors easier access to the company's shares."

Recently, the company also signed a memorandum agreement with Ulba Metallurgical Plant, under which they intend to renew and extend their multi-year binding supply agreements for both beryllium metal and beryllium master alloys.

The report noted: "We believe this is a key strategic move in securing consistent beryllium supplies and expanding their complementary businesses."

In addition to its manufacturing division, the company also owns prospective beryllium properties in Juab County, Utah, to which the company has received permits, and approvals, starting a drilling program that targets the high interest zones identified in a previous airborne geophysical survey conducted in 2010.

The final lab results are expected to be complete in early 2012. The properties incorporate 371 claims, totaling about 7,630 acres and are located  next to the large Spur Mountain beryllium mine.

Meanwhile, the company is also involved in an agreement with Ceramic Tubular Products to jointly develop and advance their nuclear fuel technologies.

Rajeev said: "The research is complementary to IBC’s research on beryllium oxide enhanced fuel. Both research initiatives are aimed at improving the economics and safety of light water nuclear reactors...We believe, with the recent accident at the Fukushima light water reactor in Japan, there will be increased government support and initiatives for the commercialization of safer nuclear fuels."

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