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viewNQ Minerals PLC

NQ Minerals offers plenty of near-term appeal

Snapshot

The company is led by an experienced team that includes veteran venture capitalist Walter Doyle, who is CEO, and serial entrepreneur David Lenigas, who chairs the business

Gold in rock face

Quick facts: NQ Minerals PLC

Price: 6.1 GBX

AQSE:NQMI
Market: AQSE
Market Cap: -
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  • Project developer and miner with Australian assets
  • Holdings include the Hellyer mine in Tasmania, and the recently-acquired Beaconsfield gold mine
  • Serial entrepreneur David Lenigas chairs the business

What NQ Minerals does:

NQ Minerals PLC (LON:NQMI) is a project developer and miner with Australian assets that have plenty of near-term appeal.

The company is led by an experienced team that includes veteran venture capitalist Walter Doyle, who is CEO, and serial entrepreneur David Lenigas, who chairs the business.

Its holdings include the Hellyer mine in Tasmania, the Mount Block permit surrounding the project and the recently-acquired Beaconsfield gold mine.

NQ also owns the Ukalunda precious metals deposit in north Queensland, on which it has identified 33 prospects for follow-up work, including the Sunbeam mine, for which it has secured a mining permit.

At SquarePost, also in north Queensland, NQ has found both breccia and vein-hosted gold mineralisation. And it has increased its investment in battery metals specialist TEM.

How is it doing:

David Lenigas took over as NQ's chairman in December as Hellyer's operations continued to improve.

Since then the momentum has built. In July, the operation delivered throughput of 106,365 tonnes of ore, or 1.25mln tonnes annualised, to produce record monthly lead concentrate of 4,075 tonnes.

It also produced 1,509 tonnes of zinc concentrate, 461 ounces of gold and 89,854 ounces of silver.

Lenigas said this was “a welcome and dramatic improvement in Hellyer's operational performance and output”.

This step-change in production has been coupled with an overhaul NQ’s balance sheet. It has upgraded its debt facility for Hellyer, reducing annual interest payments by $3.4mln annually.

While the financial re-engineering was a welcome development, perhaps sexier -  for investors at least - was the latest update from the Beaconsfield gold mine.

NQ’s team has uncovered an average grade of 3.2 grams per tonne of gold from extensive surface stockpiles there. Excellent gold grades exist in around 80,000 tonnes of surveyed stockpiles in the historic Wetlands area.

Sampling will continue over the entire sites to determine the full extent of the contained gold in this area. At the same time, work is also underway for the refurbishment of Beaconsfield's 350,000 tonne per year capacity gold processing plant.

Engineers are now working on budgets and timelines to bring the facility back online as soon as possible. The ore is only a short trucking distance from the plant and will provide valuable low-cost, high revenue plant feed much sooner than management originally envisaged.

So, it’s all systems go at NQ. Yet the good news story appears to have been largely overlooked by the market. The shares have been range-bound this year: the stock is currently changing hands for 7.3p, giving a market capitalisation of just over £27mln. That valuation, on the face of it, would seem anomalous.

Inflection points:

  • Further news from Hellyer Mine
  • Progress on Beaconsfield refurbishments

What the broker says:

VSA, the company’s corporate broker, expects NQ to generate revenues of £33mln and underlying earnings (EBITDA) of £7.7mln this year, rising to £52mln and £22mln respectively in 2021.

And there is the additional kicker of Beaconsfield to add to the valuation equation.

Here in London the group trades on junior Aquis Stock Exchange, where liquidity is sometimes an issue.

A move to what insiders describe as a “more established exchange” has been mooted and may help alleviate a lack of momentum caused by the current thin trading volumes.

VSA said in June it reckoned the shares were worth around 21p each on a 12-month view, or three times their current value.

What the boss says:

In a recent update, NQ chairman David Lenigas said: “The revelation that significant gold exists in these stockpiles is a tremendous boost."

“Our engineers are now working on budgets and timelines to bring the Plant's CIL circuit back on-line as soon as possible to treat this material. These high-grade surface stockpiles are only a short trucking distance from the plant and will provide valuable low-cost high revenue plant feed much sooner than we originally envisaged," he added.

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NQ Minerals' (LON:NQMI) chairman David Lenigas speaks to Proactive London about plans to start exploration work at the Hellyer mine in Tasmania. After a 10-year hiatus he says the company can re-start exploration with the benefit of more advanced geophysical techniques. NQ is currently...

on 08/25/2020

4 min read