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Sunkar Resources SKR

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Thanks to bozmo on advfn for this:

 

Research note published 7-Dec by Canaccord Adams

 

Sunkar Resources (SKR : AIM): Sino-Kazakh grain agreements highlight key role for Sunkar -- reiterate BUY, target price 110p

 

 

Sunkar Resources

SKR : AIM : £0.40 | £57.6M | Buy, £1.10

Sino-Kazakh grain agreements highlight key role for Sunkar -- reiterate BUY, target price 110p

 

Damien Hackett, 44.20.7050.6641

 

 

 

Event

Three important and recent events have encouraged us to revisit Sunkar Resources' phosphate investment potential.

 

The Kazakh Ministry of Agriculture agreed grain exports to China at the end of October, while China expressed a desire to lock this new source of grain into a formal quota. This initiative was to be followed by more detailed discussions at the Kazakhstan-Chinese Inter Governmental Commission meeting scheduled in late November – early December.

The Prime Minister of Kazakhstan, Karim Massimov, recently instructed the Ministry of Agriculture and KazAgro to focus on the infrastructure needed to facilitate the export of its grain to China.

Most interesting of all is the plan outlined at the end of November to restructure the existing subsidy away from a volume-based measure to a yield-based measure. In a nutshell, the new subsidy should encourage a return to efficient use of fertilizer in grain production.

Impact

In this note, we look at the broader problem of global food supply as well as recent policy changes in Sunkar's potential market – that of Kazakhstan and its surrounding markets – which highlight the importance of Sunkar's fertilizer project at Chilisai in Northern Kazakhstan. We are reinforcing our BUY recommendation on the stock.

 

Valuation

Our target price is reinforced at £1.10/share by these recent events and we suggest the start of the feasibility study early next year is likely to be the next major stimulus in Sunkar Resources' share price.

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Looking good. We have resource, money, adjusted subsoil use contract...

 

Sunkar Resources plc (AIM:SKR) is pleased to announce that it has secured a

three year Equity Line Facility ("ELF") of up to GBP10 million with Dutchess

Opportunity Cayman Fund, Ltd ("Dutchess"). The ELF has been arranged by First

Columbus LLP ("First Columbus"), Dutchess's joint venture partner in the UK.

 

The ELF offers the Company ongoing access to capital as it enables the Company

to obtain funding from Dutchess at any time during the next three years by way

of subscription for new ordinary shares in the Company. Subscriptions will be

priced at a 6 per cent. discount to the market price and will take place at

timings and intervals and in sizes determined by the Company, subject to the

agreed mechanisms specified under the ELF.

 

The ELF may be drawn down in tranches linked to the Company's average daily

trading volume in the three days prior to the notice of draw down or in other

specified amounts. The Company is able to specify a minimum acceptable price for

each tranche to prevent shares being sold in the market at an unacceptable

discount.

 

In consideration for the ELF, Sunkar has agreed to pay First Columbus LLP a

Commitment Fee and issue Dutchess and First Columbus LLP 1,000,000 warrants in

aggregate with an exercise price of 30 pence, being a 50 per cent. premium to

the Company's middle market closing price on 28 June 2010.

 

Donald Sinclair, CFO of Sunkar Resources plc, commented: "alongside our existing

funds, this facility will allow the Company to continue its rapid development.

Importantly the facility allows the Company flexibility to draw only as needed

and therefore protect our shareholders from unnecessary dilution".

 

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bit of action in the sector due to BLT approach of potash? SXX well up and SKR moving today up 15%.

 

Hopefully the pre BFS will be out soon for SKR, should help give the share price a boost

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By SKR standards quite a few shares traded today, near 7.5mill. Shame the early rise didnt stick but well up of late

 

I believe this now has a pretty good future, as I have for the last 18 months but a lot of the uncertainties have now been removed (with not a lot of that reflected in the share price.) IMO serious undervalued.

 

Hopefully get the BFS PIM shortly

 

 

 

 

Sunkar Resources (LON:SKR) (30p/£47.95m)

 

Phosphate fertilizer manufacturers are obviously a highlight at the moment with investors looking across sector operators following the acquisitive move by BHP on Potash Corp (and the increasing likelihood of a counterbid from China). Sunkar’s shares have risen 55 per cent since our last positive comment on 22 June.

 

Today Sunkar announced a Memorandum of Understanding with Eurasian Development bank (a Russian and Kazakhstan government backed institution) to finance Sunkar’s Chilisai phosphate project in Kazakhstan. The MOU envisages providing up to $200m of debt for 12 years and will add significant credibility for investors when the current bankable feasibility study is completed and announced. Being a fertilizer company, we would not be surprised to see the shares grow faster than their rivals!

 

http://www.stockopedia.co.uk/content/sunka...sinclair-47323/

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another tip

 

http://sharecrazy.com/beta/Tips/4242/buy-s...es-skr-at-2975p

 

gmp values skr at 75p with massive discounting (GMP Resources values the company using a discounted cash flow model with a discount rate of 18%. It then further discounts the net present value of the project at a rate of 80%, arriving at a valuation of 75p per share) and that was before they had signed the new SUC, the £10m equity finace and the MOU. I am sure that if the BFS comes back +ive (Nurdin's £200k share purchase tell me it will most probably) then surely 75p let alone 30p will be an absolute bargain? For that matter cana had them vlaued at £1.10 before those events!

 

Anyone out there following this?

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up 14% on rising volume

 

news due soon

 

a) BFS PIM

 

B.) Flour sales/Plant finsihed

 

c) revised jorc

 

d) off take news

 

e) News on finance

 

f) something else?

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The answer was e

 

 

Sunkar Resources plc (AIM:SKR) is pleased to announce it has signed an agreement

with UniCredit Bank AG ("UniCredit") for project finance advisory services.

UniCredit will be the Company's sole advisor in relation to debt financing for

its Chilisai Phosphate Fertilizer Project in Kazakhstan

And I pretty certain I can ask it again

 

news due soon, will it be?

 

a) BFS PIM

 

B.) Flour sales/Plant finsihed

 

c) revised jorc

 

d) off take news

 

e) News on finance

 

f) something else?

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Well News B came out on X Mas eve, a little late but quite stylish way of releasing it

 

"In congratulating the Chilisai DAR project team, President Nazarbayev specifically emphasised the importance of phosphate fertilizers for agriculture in the country."

 

Nice rise in price too, long may it continue, News A due very soon

 

 

 

 

MILLING AND LOADING COMPLEX COMMISSIONED

 

Sunkar Resources plc (AIM:SKR) is pleased to announce that the first of two lines of its Milling and Loading Complex ("MLC") at the Chilisai site was officially commissioned on 21 December 2010. The plant has received all official approvals and passed authorities' inspections, and the Deed of Commissioning, the approval required to run an industrial installation in Kazakhstan, has been duly executed. Once completed, the MLC has a production capacity of 200,000 tonnes of Direct Application Rock ("DAR") per annum.

 

The Chilisai MLC and DAR project was recently included into the Kazakhstan Government Support Program for Accelerated Industrial Development (the "Program"), and the official switch-on ceremony was conducted during a live teleconference by the Government of Kazakhstan. Among 8 distinguished projects, the Chilisai MLC was selected for switch-on during the teleconference, a country wide event organised by the Government to raise public awareness of the Program's progress and broadcast on all major national television channels.

 

21 December 2010 was designated as "Industrial Day" in Kazakhstan. 80 new industrial plants were commissioned countrywide within the Program. The President of Republic of Kazakhstan, Nursultan Nazarbayev and members of the Government attended the live teleconference presenting the most important new industrial projects.

 

During the teleconference, Nurdin Damitov, Director of Sunkar Resources and General Director of Temir Service LLP, reported to the President of Kazakhstan:

 

"This project has a goal to increase food security of the country. We have conducted field trials and obtained the following results: grain yield increased by 30%, and oil crops by 50%. Prices for our Direct Application Rock will be very competitive with those of other manufacturers".

 

In congratulating the Chilisai DAR project team, President Nazarbayev specifically emphasised the importance of phosphate fertilizers for agriculture in the country.

 

A recording of the teleconference can be seen using the following link: http://kaztrk.kz/rus/news/news.php?SECTION...LEMENT_ID=48940.

 

Nurdin Damitov, Director Corporate Affairs, Sunkar Resources plc commented:

 

"It was an honour for Sunkar Resources plc that the Chilisai DAR Milling and Loading Complex was selected for switch-on during the Governmental media event with the participation of the President of the Republic of Kazakhstan. It signifies the importance of Chilisai DAR and the Chilisai Phosphate Fertilizer Project for the local community and the country."

 

Commissioning of the DAR plant is the start of the development of an integrated Phosphate Fertilizer Project at Chilisai.

 

Sunkar intends to announce the preliminary results of its Bankable Feasibility Study for the Chilisai Phosphate Fertilizer Project shortly, in early January 2011.

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Well we are now no longer early Jan and still no news, but volume picking up and price up everyday for the last 17 days bar 2, the 40p range has gone in no time and some seriously large AT trades (for SKR) 100k - 150k gone through today after breakout

 

 

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I emailed Mr Damitov today and got a quick response

 

"Thanks for your letter. The PIM is on the final stage and it is taking some time to get all sign offs. As soon as we get it we will publish the RNS.

 

Please bear with us."

 

 

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Well, after returning from suspension we have some positive news at last...

The Board of Sunkar Resources plc (AIM:SKR) announces that its wholly owned subsidiary, Temir-Service LLP, has signed an agreement with a Russian fertilizer manufacturing company to supply 16,000 metric tons of bulk Chilisai phosphate rock for shipment during April - May this year. The buyer plans to convert Chilisai rock into complex chemical fertilizers. The sales are made on FCA Chilisai basis. Delivery commenced on 18 April 2012.

 

The phosphate rock, which will grade at least 17% P2O5 (phosphorus pentoxide), is ground to meet required technical conditions at the Chilisai milling and loading complex from the existing stock of phosphate concentrate. This complex, as announced on 3 April 2012, has been test run after an idle period and the Company expects that it will be running at full rate by the end of April.

 

About $850,000 for that. Hopefully these sales will see longer term offtake arrangements with the company. Assuming it is MMU that was mentioned in previous RNSes that bought the rock.

 

You still in Burbelly?

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Detailed Feasability Study released

 

 

DETAILED FEASIBILITY STUDY

Sunkar (AIM: SKR) is pleased to announce that the Detailed Feasibility Study (the "Study") on its Chilisai Phosphate Project (the "Project"), compiled by SNC-Lavalin International, Inc. ("SNC-Lavalin"), has been completed. This is expected to form the foundation for a prospective project financing arrangement in due course. SNC-Lavalin believes that the Study is within a level of accuracy of +/-15% in respect of capital expenditure and operating costs.

HIGHLIGHTS

Project economics

-- An estimated Project Internal Rate of Return ("IRR") of 14.1% after tax and 17.2% before tax, on a 100% equity financed basis.

-- When discounted at 10%, the Net Present Value ("NPV") of the Project is estimated to be US$715.2m (after tax) on a 100% equity financed basis.

-- Estimated EBITDA of US$278m per annum in 2017 and US$533m per annum by 2025.

-- Total revenue over the life of the Project is estimated at approximately US$22.3bn.

-- Nominal cash cost of DAP production is estimated at US$195 per metric tonne in 2017 and at US$232 per metric tonne in 2025.

-- Nominal cash cost of MAP production is estimated at US$171 per metric tonne in 2017 and at US$219 per metric tonne in 2025.

Capital costs

-- Estimated total construction cost for both phases of the Project (including initial plant and final plant) of approximately US$1.94bn (escalated).

-- Includes US$889.7m on Equipment & Material Supply, US$749.2m on Site Works, US$297.6m on Engineering and US$5.6m on Pre-Commercialisation ramp-up costs.

Serik Utegen, Chief Executive of Sunkar, commented:

"The Study outlines robust economics for this major Project with attractive IRRs, drawing on Chilisai's natural advantages of low cost mining, proximity to sulphur and well established regional infrastructure, as well as attainable markets both locally in Kazakhstan and internationally to Western China and through Black Sea ports.

The Study has identified no major technical hurdles with the Chilisai Project and we currently anticipate announcing the award of the basic engineering contract in the second half of this year, leading to Stage I production by the last quarter of 2016."

The Executive Summary from SNC-Lavalin's Study will shortly be made available to download from the Company's website at www.sunkarresources.com.

As in all aspects of mining evaluation, there are uncertainties inherent in the interpretation of geological and technical data and economic factors. All conclusions and recommendations by SNC-Lavalin and the other consultants cited in the Study represent only their informed professional judgements.

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I feel sick

 

Nice spike. Should have cured you, hope you got some at the lows too?

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