Category: Stock Market

The Santos Ltd (ASX: STO) share price has been a disappointing performer in 2021.

Despite merging with Oil Search, the energy producer’s shares are down 2% year to date.

Is the Santos share price weakness a buying opportunity?

One leading broker that believes the Santos share price is in the buy zone following its merger with Oil Search is Morgans.

According to a note this week, after running the rule over the merger, the broker has put an add rating and $8.65 price target on the company’s shares.

Based on the current Santos share price of $6.29, this implies potential upside of almost 38% for investors over the next 12 months.

What did Morgans say?

Morgans has boosted its earnings estimates to reflect the merger. And while it does appear to believe the Oil Search business will be a drag on its free cash flows due to higher capital expenditure, it isn’t enough to put it off.

It explained: “The merger with OSH has seen our group EBITDAX estimate increase 54% to US$4,135m, indicative of the new earnings platform STO holds post-merger. While over the next three years it is likely STO will have to carry a neutral to negative FCF performance from the OSH business if it progresses development at Pikka (Alaska) and Papua LNG, with capex to 2024 of US$1.2bn combined expected.”

The broker also highlights that Santos is expecting synergies of US$90 million to US$115 million after the merger from organisational optimisation. However, it suspects the company could do better than this.

Morgans commented: “STO estimates synergies of US$90-$115m (ex-Alaska) after the merger, from organisational optimisation. We expect the reality will prove better than the promise, with STO’s 6-year track record of driving efficiency gains and lean approach at odds with OSH’s outsized corporate overheads (despite OSH only operating small parts of its business).”

All in all, its analysts feel this leaves the Santos share price trading at a very attractive for investors. In fact, it believes its lofty price target is reasonably modest.

The broker concluded: “We view our target price as conservative, with a case for value upside from de-risking of growth projects and securing of synergies. The merger leaves STO well positioned to control its own future in increasingly difficult ESG-driven debt and equity markets. We maintain our Add rating.”

The post Is the Santos (ASX:STO) share price good value after the Oil Search merger? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• These 3 ASX 200 shares are topping the volume charts on Wednesday
• Here are the 3 most heavily traded ASX 200 shares this Tuesday
• Santos (ASX:STO) share price jumps on divestment speculation
• These 3 ASX 200 shares are topping the volume charts on Monday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Medibank Private Ltd (ASX: MPL) share price is seesawing today after the company said it would be deferring its premium increase.

At the time of writing, the private health insurance giant’s shares are exchanging hands for $3.38, the same as yesterday’s closing price. However, they have spent time in the red and the green today.

Medibank pushes back date on premium increase

According to the update, Medibank has returned roughly $135 million in COVID-19 savings to customers. This comes after it decided to defer next year’s premium increase for 5 months.

Originally, Medibank and Ahm health insurance premiums were set to lift by an average of 3.1% from April 2022. The adjustment will be the lowest average premium increase in the last 21 years. However, this now won’t happen until 1 September 2022.

The latest financial support package boosts the company’s reputation in becoming socially responsible. So far, Medibank has returned about $435 million of relief to policyholders. However, the news hasn’t done much for the Medibank share price.

Medibank CEO David Koczkar commented:

We have worked hard to deliver our lowest average premium increase in 21 years, recognising the importance of keeping private health insurance affordable.

While we know no one likes their premium to go up, healthcare costs are continuing to increase at a rate much higher than general inflation.

We support the Government’s commitment to reform the prostheses list, which could save the industry up to $500 million, with savings expected to be realised over the next 4 years. We remain committed to passing on any related savings to our customers through lower premium increases and we will continue to advocate for changes that support the long-term sustainability and affordability of private health insurance.

Medibank share price snapshot

Over the last 12 months, the Medibank share price has been on par with the market, up 12%. In comparison, the S&P/ASX 200 Index (ASX: XJO) has also risen by 12% over the same time frame.

It’s worth noting that Medibank shares reached a 52-week high of $3.62 in September, before moving in a sideways channel.

Medibank has a market capitalisation of roughly $9.3 billion, with approximately 2.75 billion shares on issue.

The post What’s happening to the Medibank (ASX:MPL) share price today? appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Medibank and NIB rise, Bega sinks
• Why this top broker says the Medibank (ASX:MPL) share price will hit new, all-time highs in 2022
• Here are the top 10 ASX shares today
• The Medibank (ASX: MPL) share price has gone backwards this past month. Is it a buy?
• 2 ASX shares that tick all the right boxes for the long term: expert

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Hydrogen, particularly the ‘green’ kind, has been the talk of the ASX in 2021, and many shares involved with the energy source have boomed.

With some of the ASX’s largest companies now having jumped on the hydrogen train, will the momentum continue in 2022?

Let’s take a look at what experts are predicting the new year will bring the hydrogen sector.

What might 2022 bring the hydrogen industry?

According to experts, the new year will likely see more companies moving into the hydrogen space. But does that mean the sector is a good investment?

Analysts from global research firm, Wood Mackenzie predicts 2022 will see established companies stepping in to bat for hydrogen – a trend we seem to be seeing in Australia.

The firm’s senior vice present of corporate research, Tom Ellacott, believes European majors will join the likes of Australia’s Fortescue Metals Group Limited (ASX: FMG) and Woodside Petroleum Limited (ASX: WPL) to commit to the greener energy source.

The United States’ renewable energy sector is also looking strong, according to Deloitte. The firm is predicting green hydrogen will continue its upwards trajectory in 2022, driven by renewables’ penetration of the energy grid.

Turning back to Australia, the Federal Government’s Resources and Energy Major Projects report for 2021 found that there’s already $185 billion invested in Australian hydrogen, carbon capture and storage, as well as ammonia projects. Therefore, new projects could soon be popping up all over the country.

But, according to Ausbil, while the hydrogen sector has huge potential, it also houses major risks. The investment manager’s analysts commented:

When we look across the hydrogen value chain there are still many unknowns regarding the competing technologies, but if you believe that green hydrogen will be successful, on the infrastructure side we see the biggest opportunities in the renewable energy sector …

Investing in renewable energy generation is a way for investors to benefit from the hydrogen thematic without underwriting a specific technology or speculative start-up risk.

The outlook for ASX 200 companies involved in hydrogen

Fortescue Metals

While Fortescue isn’t a renewable energy stock, its subsidiary, Fortescue Future Industries, is aiming to become a leader in the hydrogen industry.  

However, according to Morgans senior analyst, Adrian Prendergast, Fortescue’s focus on its renewable energy leg might be detrimental to its core iron ore business.

As the broker is predicting 2022 might be a tough year for iron ore, it’s maintained its ‘hold’ rating on the company’s shares and slapped them with a $16.90 price target.

Woodside Petroleum

While Woodside is copping major criticism from environmental groups, mostly over its Scarborough Development, the company is branching out into green energy technologies.

It’s planning to build what could be one of the world’s largest hydrogen and ammonia production facilities near Perth. It also holds numerous other hydrogen projects.

Prendergast believes the company’s hydrogen activities, as well as its other renewable energy branches, could “prove material” for the Woodside share price.

Morgans has rated the company’s shares an ‘add’ with a $29.95 price target.

How did smaller ASX hydrogen shares perform in 2021?

Other ASX shares involved in hydrogen include Pure Hydrogen Corporation CDI (ASX: PH2), Provence Resources Ltd (ASX: PRL), and Hazer Group Ltd (ASX: HZR).

Over 2021, their share prices have grown 500%, 1,320%, and 37% respectively.

No doubt, there will be plenty of eyes watching their movements in 2022.

The post What are experts saying to expect for ASX hydrogen shares in 2022? appeared first on The Motley Fool Australia.

More reading

• Woodside (ASX:WPL) just signed a key hydrogen export MOU. What does this mean for its shares?
• 5 things to watch on the ASX 200 on Thursday
• Own Fortescue Metals (ASX:FMG) shares? Here’s what to watch in 2022
• These 5 ASX shares grew revenue by more than 70% in the last year
• 5 things to watch on the ASX 200 on Wednesday

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in tech and resources player Strategic Elements Ltd (ASX: SOR) are shooting higher today after an announcement the company released earlier today regarding its Stealth AxV Automation & Robotics Platform.

At the time of writing, the Strategic Elements share price is trading 23.2% higher at 26.5 cents apiece.

Here are the details.

What did Strategic Elements announce?

In today’s release, Strategic advised that its 100% owned Stealth AxV Automation & Robotics Platform successfully achieved multiple development and program milestones across 3 applications under development. These include the autonomous security vehicle (ASV), autonomous CBRN agent detection and autonomous mining applications.

Stealth Technologies is collaborating with software-industrial company Honeywell to develop autonomous security vehicles for the correctional sector.

The company says that the ASV seamlessly integrates into the prison’s security management platform and can autonomously test key perimeter intrusion detection systems (PIDS) like photo-electric beams, microphonic sensors and fibre-optic fence sensors.

Strategic Elements also reported that the ASV has successfully completed “thousands of operational tests of advanced perimeter intrusion detection systems at a Western Australian prison facility”.

The release noted that the ASV successfully fed hundreds of hours of mobile HD surveillance video to the prison’s Patrol Control Centre while autonomously testing and patrolling the secure perimeter.

Stealth intends to run the ASV at a Western Australian prison until the end of 2021 and then conduct a full review and assessment of ASV missions made to date. Discussions on a commercial agreement between Stealth Technologies and Honeywell are continuing.

Mining probe to start

The company also notes that its Stealth platform will start a phased pilot investigation with a global mining company that owns “tier-1 world-class assets” on its books.

Phase 1 of the investigation involves validating the potential suitability of a Stealth technology solution and therefore incurs no payment milestone. It is intended that Phase 1 will complete in the first quarter of 2022, according to the announcement.

Management commentary

Speaking on the announcement, Strategic Elements managing director Charles Murphy said:

Stealth Technologies has built a world first automation and robotics technology for the correctional sector to increase security, save costs and re-deploy staff away from mundane, repetitive tasks. It is satisfying that real world outcomes are starting to be reported that indicate the robustness and reliability of the ASV.

Murphy concluded:

It’s a good example of a start-up with innovative IP, a large company with domain knowledge and a research organisation with deep expertise coming together to solve a real, customer identified problem.

We have a direct line with domain knowledge for Autonomous CBRN Detection by working with DSTG and are keen to replicate this experience in the mining sector where we are in the early stages of a relationship with a global mining company.

Strategic Elements share price snapshot

The Strategic Elements share price is catching bids in response to the announcement today, trading as high as 28 cents per share before smoothing off to its current levels.

The Strategic Elements share price has gained more than 65% in the last 12 months after rallying another 32.5% this year to date.

The post Here’s why the Strategic Elements (ASX:SOR) share price is rocketing 23% today appeared first on The Motley Fool Australia.

More reading

• What are experts saying to expect for ASX hydrogen shares in 2022?
• Blackstone Minerals (ASX:BSX) share price climbs on nickel news
• Why Afterpay, Bega, FAR, and WiseTech shares are falling
• What are experts saying to expect for the South32 (ASX:S32) share price in 2022?
• Which days is the ASX open and trading over Christmas?

The author has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Blackstone Minerals Ltd (ASX: BSX) share price is in the green today after the company provided a nickel update about its project in Vietnam.

Shares in the mining exploration company were swapping hands at 56 cents apiece in afternoon trading, up nearly 1%. They were as high as 59 cents in early trade.

What did the company announce?

The Blackstone Minerals share price is climbing after the company provided an update on its Ta Khoa nickel project in northern Vietnam. The company holds a 90% stake in the project.

This resource includes the Ban Phuc and Ban Khoa disseminated sulphide (DS) deposits and the Ban Chang and King Snake massive sulphide vein (MSV) deposits.

A drilling expedition over the past year has uncovered 485 kilotonnes of nickel at the project, representing a 73% increase.

Commenting on the news driving the Blackstone Minerals share price, managing director Scott Williamson said:

An aggressive drill over the past 12 months has culminated into a global Ta Khoa mineral resource of enviable scale and increased confidence. Our mineral resource is an early indication of the potential of the Ta Koa nickel sulphide district, with further agressive testing already ongoing.

Ban Phuc, our large bulk tonnage disseminated sulphide deposit, will underpin base load feed to a large concentrator that is being examined in our upstream pre-feasibility study.

Ban Chang and King Snake are the first of many high-grade massive sulphide opportunities and the company continues to work diligently to increase surety of nickel supply for our downstream refinery in Vietnam, with exploration and resource delineation at Ta Khoa being a core part of our strategy.

What else is happening?

After releasing the nickel update to the market, Blackstone Minerals advised investors it has completed a share placement.

The company placed 56,692,782 new shares on the market at 58 cents, raising nearly $33 million before costs. Shareholder approval for this placement was received on December 16. An earlier share placement on November 10 raised $55 million.

Blackstone Minerals share price snapshot

The Blackstone Minerals share price has soared in the past 12 months, gaining 53%. Year to date, the company’s shares are up 47%.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has returned more than 11% to investors in the past year.

Shares in the Blackstone have stagnated over the past month and are down 4% in the past week.

The company commands a market capitalisation of roughly $218 million based on the current share price.

The post Blackstone Minerals (ASX:BSX) share price climbs on nickel news appeared first on The Motley Fool Australia.

More reading

• Why Afterpay, Bega, FAR, and WiseTech shares are falling
• What are experts saying to expect for the South32 (ASX:S32) share price in 2022?
• Which days is the ASX open and trading over Christmas?
• Here’s why the Antipa Minerals (ASX:AZY) share price jumped 6% today
• Here’s why the Prospect Resources (ASX:PSC) share price just rocketed 27%

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) is on course to record another gain. In afternoon trade, the benchmark index is up 0.35% to 7,391.6 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are falling:

Afterpay Ltd (ASX: APT)

The Afterpay share price is down 2.5% to $85.26. This follows a pullback by the Square/Block share price overnight despite solid gains in the tech sector. As Afterpay has agreed to be acquired by Square in an all-scrip deal, the value of the takeover will rise and fall with its share price.

Bega Cheese Ltd (ASX: BGA)

The Bega share price has sunk 10% to $5.05. Investors have been selling the diversified food company’s shares after the release of underwhelming FY 2022 guidance. Bega has provided guidance for normalised EBITDA in the range of $195 million to $215 million. While this will be an increase of 37% to 51% year on year, it was well short of the market’s expectations.

FAR Ltd (ASX: FAR)

The FAR share price is down a massive 51% to 36.5 cents. Investors have been selling this energy explorer’s shares after its search for oil was fruitless. According to its update, the company has been drilling the Bambo-1ST1 well offshore The Gambia. However, after drilling to a depth of 3317 metres, no live oil columns were found to be present.

WiseTech Global Ltd (ASX: WTC)

The WiseTech share price is down 2.5% to $58.70. This morning the logistics solutions company announced that its founder and CEO, Richard White, has entered into a transaction involving the sale of 4.3 million WiseTech shares. This equates to approximately 1.3% of the total issued capital of WiseTech.

The post Why Afterpay, Bega, FAR, and WiseTech shares are falling appeared first on The Motley Fool Australia.

More reading

• ASX 200 (ASX:XJO) midday update: Medibank and NIB rise, Bega sinks
• Here’s why the FAR (ASX:FAR) share price is sinking 51% to an all-time low
• Why the Bega (ASX:BGA) share price is sinking 9% today
• Why is the Afterpay (ASX:APT) share price soaring 5% today?
• Why Afterpay, Lovisa, Liontown, and Pilbara Minerals shares are racing higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended AFTERPAY T FPO and WiseTech Global. The Motley Fool Australia owns and has recommended AFTERPAY T FPO and WiseTech Global. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Even though there is still more than a week to go until the end of 2021, we can say with relative confidence that the South32 Ltd (ASX: S32) share price is heading for a very successful year. In 2021 year to date, the South32 share price has appreciated by roughly 59.8%. That’s including today’s 0.76% increase thus far to $4 a share at the time of writing.

So unless some catastrophic share price crash happens with Sotuh32 over the next week or so (we can never rule these things out entirely), South2332 will end the year on quite a high. This was a company that started 2021 at $2.62 a share, after all. South32 now has a 52-week range of between $2.44 and $4.07. As you can tell, today it is a lot closer to that high than the low.

But now that 2021 is almost in the rear-view mirror, what could 2022 hold in store for this diversified ASX 200 resources share? Well, South32 is a mining company, and as such, its fortunes largely rest on the prices of the commodities it mines. Higher prices mean higher profits and vice versa. South32 has significant operations extracting lead, silver, nickel, aluminium and manganese, amongst others.

ASX experts give South32 shares a ‘buy’ rating

Well, one expert investor reckons the best could still be to come for South32. ASX broker Goldman Sachs currently rates Sotuth32 as a ‘conviction buy’. It has a 12-month share price target of $4.40 for South32, which implies a potential upside of another 10.55% on current pricing.

This upside is to be driven by commodity pricing, according to the broker. Goldman sees an especially strong environment for aluminium, nickel and manganese in particular over at least the next year. Further, Goldman likes South32’s strong free cashflow outlook, anticipating a free cashflow yield of 16-18% over FY2022 and FY23. This, the broker anticipates, will enable South32 to fund significant dividends and share buybacks as well. It is expecting South32 to pay out dividends worths around a 12-13% yield in FY22 and FY23.

As my Fool colleague James covered earlier this month, Goldman isn’t the only broker bullish on South32. Morgans also has this ASX 200 miner on its buy list, this time with a share price target of $4.10. Morgans likes South32’s diversification compared to the iron ore-dominated portfolios of BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG).

So that’s what a couple of expert investors anticipate for the South32 share price in 2022. No doubt investors will have their fingers crossed their predictions are accurate!

The post What are experts saying to expect for the South32 (ASX:S32) share price in 2022? appeared first on The Motley Fool Australia.

More reading

• These 3 ASX 200 shares are topping the volume charts on Monday
• Here are the 3 most heavily traded ASX 200 shares this Friday
• These 3 ASX 200 shares are topping the volume charts on Thursday
• 2 excellent ASX 200 dividend shares to buy
• Where next for the South32 (ASX:S32) share price after rising 54% in 2021?

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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With the holiday season nearly upon us (or perhaps already begun for some lucky folks out there), many investors might be wondering just how they can trade the markets over the holiday period. As the saying goes, ‘money never sleeps’, but the share market certainly does. That’s why most of us can only buy or sell our ASX shares between 10 am and 4 pm, Monday to Friday.

But trading during the Christmas period is definitely not a dead rubber. Those of you readers that have been investing long enough might remember the ‘taper tantrum’ market correction that we saw back in 2018. Well, that saw the ASX 200 fall around 14% between October and late December. And the markets found their low point just around Christmas time, offering up a slew of festive bargains for those of us who could pry ourselves away from the Christmas Even ham. So sometimes it can pay to keep an eye on the markets over the holiday season!

So when exactly will we be able to buy and sell shares over the next week or two?

ASX share market to close for Christmas, New Years

Well, the ASX tells us that the first adjustment to expect is a shortening of trading hours on Christmas Eve (this Friday). Instead of the normal closing time of 4 pm, the ASX markets will instead close at 2 pm. So make sure you get any planned buys or sells done before that time if you don’t want to miss out.

After that, the ASX will be closed completely on Monday 27 December to account for Christmas Day being on a Saturday. It will also be closed on 28 December for Boxing Day.

Trading will then resume on 29 December and will go as normal until 31 December. But New Year’s Eve will also have a shorter trading day, with the markets again closing early at 2 pm.

Following that, the share market will again close completely for New Year’s Day on Monday 3 January, with normal trading to resume on Tuesday 4 January.

Remember, the good people at ASX Ltd (ASX: ASX) need a holiday too. So keep these dates in mind if you are planning some last-minute trades for the 2021 calendar year.

The post Which days is the ASX open and trading over Christmas? appeared first on The Motley Fool Australia.

More reading

• ASX shares to buy for the Omicron COVID outbreak
• Here’s why the ASX (ASX:ASX) share price struggled on Wednesday

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Antipa Minerals Ltd (ASX: AZY) share price is roaring higher on Thursday. This comes after the mining exploration company announced an update on the farm-in agreement on the Paterson Project.

At the time of writing, Antipa shares are swapping hands for 4.9 cents apiece, up 6.52%. In comparison, the All Ordinaries (ASX: XAO) is up 0.35% to 7,709.1 points.

What did Antipa announce?

Investors are buying up the Antipa share price after the company revealed a favourable decision by IGO Ltd (ASX: IGO).

According to its release, Antipa advised that IGO Newsearch will assume management of the farm-in agreement on the Paterson Project.

Based in the Paterson Province of Western Australia, the Paterson Project covers a 423 square kilometre tenement. The site is considered to have considerable gold, copper and silver deposits similar to the Newcrest Mining Ltd (ASX: NCM) world-class Telfer gold-copper mine.

IGO’s decision to manage the Paterson Project follows its initial $4 million exploration expenditure commitment. The funds were well ahead of the January 2023 due date stipulated in the Paterson Project farm-in agreement. No joint venture interest was earned by the incurring of this amount.

The next stage requires IGO to spend a further $26 million of exploration expenditure by January 2027. This will see it earn a 70% joint venture interest, which it has elected to manage.

Once the joint venture is formed, IGO is expected to free-carry Antipa to the completion of a feasibility study.

Antipa share price in review

In 2021, the Antipa share price has gained around 10%, but has fallen almost 26% in a month. The company’s shares have noticeably been trending lower since mid-November, nearing a 6-month low of 4.1 cents.

Based on valuation grounds, Antipa commands a market capitalisation of roughly $153.85 million, with 3.14 billion shares outstanding.

The post Here’s why the Antipa Minerals (ASX:AZY) share price jumped 6% today appeared first on The Motley Fool Australia.

More reading

• Drinking, banking, and EVs: 3 value ASX shares I’d buy right now
• Why is the IGO (ASX:IGO) share price in the doldrums today?
• What’s going on with the strange Newcrest (ASX:NCM) share price today?
• Here’s why the Antipa Minerals (ASX:AZY) share price is sliding today
• Top brokers name 3 ASX shares to sell next week

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Prospect Resources Limited (ASX: PSC) share price shot out of the blocks early in the session today.

The company’s shares were up 27% at 97 cents shortly after market open. However, they have since retreated are now swapping hands for 79 cents apiece, up 3.27%

Investors are responding positively to a company announcement that Prospect has sold its 87% shareholding in Prospect Lithium Zimbabwe (PLZ) Limited, owner of the Arcadia Lithium Project in Zimbabwe. Here are the details.

What did Prospect Resources announce?

Prospect advised it has executed a binding share sale agreement (SSA) with Huayou International Mining Limited for the sale of its stake in the Arcadia project.

Huayou has agreed to purchase Prospect’s 87% shareholding in PLZ and associated intercompany loans for approximately US$377.8 million (A$524.2 million) via an upfront cash consideration, equating to approximately A$1.23 per Prospect ordinary share.

The company notes this valuation represents a premium to Prospect’s 10-day volume weighted average price (VWAP) of approximately 78%.

Prospect says the transaction represents the “culmination of the strategic partnership process undertaken by [the company] since August 2021”.

Arriving at this outcome wasn’t an easy one for the company. Along the way, Prospect received seven non-binding proposals for the advancement of Arcadia from a range of international parties. These proposals “encompassed structures including development joint ventures, offtake prepayment debt funding and acquisition of Prospect’s interest in Arcadia”.

After “careful evaluation”, the Prospect board formed the view that the sale of its stake in PLZ to Huayou delivers the most attractive risk-adjusted, post-tax value outcome for Prospect shareholders.

What are the details?

There are a number of key conditions to complete the transaction. These include Prospect shareholder approval, requisite Chinese regulatory approvals being obtained by Huayou, and several other precedents outlined in the release.

Payments will be made over several tranches beginning with a deposit of US$20 million immediately payable by Huayou. This is non-refundable in certain circumstances where the transaction does not complete. A break fee of US$20 million payable by Prospect in certain circumstances of non-completion also applies.

Prospect intends to distribute the remaining net proceeds to its shareholders, and anticipates the transaction completing in late Q1 or early Q2 2022.

Prospect Resources share price summary

In the past 12 months, the Prospect Resources share price has soared by around 520%. It has also rallied by 355% this year to date.

It has gained 15% in the past month and is also up by 23% in the past week of trading.

Prospect Resources has outpaced all major benchmarks in these time frames.

The post Here’s why the Prospect Resources (ASX:PSC) share price just rocketed 27% appeared first on The Motley Fool Australia.

More reading

• Which days is the ASX open and trading over Christmas?
• Here’s why the Antipa Minerals (ASX:AZY) share price jumped 6% today
• The Neometals (ASX:NMT) share price is on fire, up 10% today. Here’s why
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