Category: Stock Market

The Northern Star Resources Ltd (ASX: NST) share price is rocketing higher on Friday afternoon. It appears investors have changed their sentiment on the company following a spike in gold prices last night.

At the time of writing, Northern Star shares are swapping hands for $9.48, up 5.92%.

Other fellow gold miners have also taken charge, with Newcrest Mining Ltd (ASX: NCM) shares fetching for $23.77, up 5.09%, and Evolution Mining Ltd (ASX: EVN) shares trading at $3.98 apiece, up 5.29%.

What’s driving Northern Star shares higher?

Investors are rallying up the gold mining company after the expensive metal rose overnight. Yesterday, the price of gold was hovering around US$1,780 an ounce. However, following the United States’ Federal Reserve tapering announcement, gold has currently shot up to US$1,802 an ounce.

The Federal Reserve advised that its stimulus program will be coming to an end soon as inflation begins to rise. As such, the central bank will be buying $60 billion of bonds each month starting next year in January. In contrast, this is about half of the amount it bought before November and $30 billion less than in December.

In addition, the Federal Reserve also signalled as many as three rate hikes in 2022 to limit the increase in inflation. Supply and demand imbalances due to COVID-19 along with the reopening of the economy have led inflation to spike.

In 2021, inflation is expected to jump by 5.3% compared to a previous forecast of 4.2%. For 2022, inflation is predicted to settle at a more reasonable level of 2.6% as a result of the Federal Reserve’s policy changes.

Recently, Northern Star managing director and CEO, Stuart Tonkin made an on-market transaction buying more of the company’s shares. What was considered as a bargain buy for $8.86 per share has now been confirmed.

Shareholders were also able to get in on the action as the Northern Star share price fell to $8.74 yesterday.

For those investors who followed in the CEO’s footsteps, the investment is already starting to pay off.

About the Northern Star share price

Over the last 12 months, the Northern Star share price is down by around 25%, with year-to-date the same.

On valuation grounds, Northern Star commands a market capitalisation of approximately $11.04 billion, with roughly 1.16 billion shares outstanding.

The post Why is the Northern Star (ASX:NST) share price surging 6% today? appeared first on The Motley Fool Australia.

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• Why are the ASX 200 gold miners losing ground this past month
• 5 things to watch on the ASX 200 on Wednesday
• Are Northern Star (ASX:NST) shares cheap? The CEO must think so, here’s how many he snapped up last week
• 5 things to watch on the ASX 200 on Tuesday
• Macquarie (ASX:MQG) upgraded these ASX gold shares to ‘buy’ for 2022

Motley Fool contributor Aaron Teboneras owns Northern Star Resources Limited. 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 Strike Energy Ltd (ASX: STX) are set to close the week more than 21% in the green and are currently trading at 21.25 cents apiece.

Whilst there’s been no market-sensitive information released by the company today, Strike’s share price popped on Wednesday after it advised that its Project Harber received major recognition from state and federal authorities.

Why’s Strike Energy charging higher this week?

Given the recent market turbulence caused by the AdBlue crisis, Strike’s Project Harber has received Lead Agency Status from the Western Australian Government as a potential domestic urea manufacturer.

Adding to this, the federal government has also thrown a $2 million grant Strike’s way as a part of its supply chain resilience initiative.

The Adblue saga has been bought about as Australia is about to run out of the mixture in a number of weeks. Urea is a major ingredient in AdBlue, and Strike is poised to benefit as a domestic producer of the chemical should its Project Harber successfully commercialise.

Moreover, Intec Pivot Ltd (ASX: IPL), owner of Australia’s sole urea production facility, will be closing its urea operations as of next year, adding to the scarcity of the product.

This poses a risk to both Australian vendors and users of urea as prices are susceptible to volatility in foreign markets and to exchange rate risks.

And with many agricultural commodities in the midst of a cyclical upswing, one might be right to correctly fear those risks. Wheat prices are up 21% this year to date for instance, whereas palm oil, canola, cotton, corn and even rice are all ranging 20-60% higher since January 1 also.

Project Harber is set to be a 1.4mpta urea fertiliser production facility built near Geraldton in WA’s Mid Wes Region. Strike says the venture would replace Australia’s reliance on more than $1 billion of fertiliser imports each year, by providing a “local producer, top quality fertiliser that would improve Australian agriculture’s competitiveness and reduce the carbon intensity of Australian farming”.

It is in the Pre-FEED stage, with design work being carried out by Technip Energies. Earlier in May 2021, Strike closed expressions of interest for fertiliser offtake from Project Haber, which was oversubscribed 2.5x the proposed plant’s capacity.

Strike has plans to undertake a competitive process in Q4 2021 to seek interest from equity partners to fund the capital requirement of the project, with Strike expecting to retain a 30% interest.

Aside from this, Project Haber will be a large hydrogen-consuming facility and is, therefore, a key player in the value chain for hydrogen production and usage.

Investors piled into the company following the news, sending its share price north on the day. The buying has continued until today, on tremendous volume that’s surmounted to 183% of its 4-week average.

Strike Energy share price summary

In the last 12 months Strike Energy has posted a loss of 24%, spurred on by a 25% drop this year to date.

Over the past single month, it has reversed course and is 25% in the green after reclaiming some territory this week.

The post Strike Energy (ASX:STX) share price leaps again, up 21% this week. Here’s why appeared first on The Motley Fool Australia.

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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 Carnaby Resources Ltd (ASX: CNB) share price is blasting off today after a major copper discovery.

Shares in the mining company were trading at 43 cents at the time of writing, up 46.55%.

Carnaby is a mineral exploration company focused on developing gold, copper and other mineral deposits in Australia, Norway and Sweden.

What did Carnaby announce?

In today’s release, Carnaby informed the market it has made a spectacular copper discovery within the Nil Desperandum Prospect. This project is located within its Greater Duchess Copper-Gold Project in Mount Isa, Queensland.

The company reported that its drilling program had intersected a 24m zone of “semi massive copper sulphide mineralisation”.

This is the largest copper mineralisation zone discovered by the company at this exploration site to date.

However, Carnaby said further drilling would be required to verify the orientation and length of the copper mineralisation.

The company will continue drilling until December 20 and start again in early 2022.

Carnaby said it would boost its exploration efforts at the project in light of the copper discovery announced today.

The company plans to complete further IP surveys and secure more drill rigs to target more copper mineralisation.

Management comment

Speaking on the copper find, Carnaby managing director Rob Watkins said:

Nil Desperandum is rapidly emerging as a major copper gold discovery in one of Australia’s premier copper districts located only 70km from Mt Isa and surrounded by world-class infrastructure.

The deposit appears to be getting bigger and better at depth and we are now fast-tracking further IP geophysical surveys to help guide a follow-up drilling program, which will commence in Q1 2022.

Carnaby share price snap shot

The Carnaby share price has surged more thaN 41% in the past 12 months.

The value of the company’s shares has shot up 46.5% in the past month and a mammoth 57% in the past week.

The mining explorer has a market capitalisation of around $50 million based on its current share price.

The post Carnaby Resources (ASX:CNB) share price explodes 46% on ‘spectacular’ copper find appeared first on The Motley Fool Australia.

More reading

• Carnaby (ASX:CNB) share price rockets 33% on lithium update

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 Downer EDI Limited (ASX: DOW) share price is edging higher on Friday afternoon. This comes after the company announced an update on the divestment of its Open Cut Mining East business.

At the time of writing, the integrated services company’s shares are 1.45% higher to $5.97.

Downer concludes divestment

In its release, Downer advised it has completed the sale of its Open Cut Mining East business to Bukit Makmur Mandiri Utama (BUMA).

Established in 1998, BUMA is currently the second largest independent coal mining contractor in Indonesia. The company holds around 20% market share in the country, providing coal mining services to large Indonesian firms.

BUMA’s operations are supported by roughly 12,000 employees as well as being equipped with over 2,500 units of heavy equipment.

Downer will receive about $150 million in cash proceeds for its Open Cut Mining East business. So far, BUMA has paid a deposit of $16 million with the remaining amount to be paid in the immediate future.

The transaction includes the transfer of the assets, liabilities, employees and all existing contracts.

This is Downer’s last step in exiting its capital-intensive mining businesses. The divestment includes the Open Cut Mining West, Downer Blasting Services, Underground mining, Otraco, the Snowden consulting business and the RTL Mining and Earthworks joint venture.

Together, the total proceeds from the company’s divestment program amount to $778 million.

It appears that the additional cash injection has rallied investors, having a positive effect on the Downer share price.

About the Downer share price

Over the past 12 months, the Downer share price has gained 11% with year-to-date around 12% in the green. Interestingly, the company’s shares fell from their 52-week high of $6.87 in October after announcing the sale of the Open Cut Mining East business.

Based on today’s price, Downer commands a market capitalisation of around $4.09 billion and has approximately 685.62 million shares outstanding.

The post Downer (ASX:DOW) share price lifts on $150 million payday appeared first on The Motley Fool Australia.

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• Is the A2 Milk (ASX:A2M) share price now too cheap to ignore?
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• Why the De Grey Mining (ASX:DEG) share price is storming 7% higher today
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• ReadyTech (ASX:RDY) share price leaps on $14 million acquisition

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 A2 Milk Company Ltd (ASX: A2M) share price has sank just over 50% in 2021 (to today).

It has fallen so much, could it actually be an opportunity because investors have gone too pessimistic and it’s now good value, even with its problems?

Broker ratings on the A2 Milk share price

One of the latest brokers to have their say on A2 Milk is Credit Suisse.

The price target from the broker on A2 Milk is $5.75. That is higher than where it is today, but it doesn’t signify a huge return over the next 12 months, just a mid-single digit rise.

A2 Milk may be seeing lower sales on lower demand because of a slowing birth rate in China. However, a positive is seemingly higher prices for its products in China.

Based on Credit Suisse’s numbers, the A2 Milk share price is valued at 27x FY23’s estimated earnings.

However, some brokers are far more positive on the infant formula and milk business.

For example, Citi currently rates it as a buy with a price target of $7.30. That suggests that the A2 Milk share price could rise by more than 30% over the next year if the broker is right.

Citi notes that A2 Milk’s inventory is getting better and it has changed things with distributors to improve the situation.

Actions taken to improve things

A2 Milk says that the 2021 result was disappointing. However, it has taken a number of actions to try to address the COVID-19 disruption.

It has recognised stock write-downs and deliberately slowed down sales, together with other planned initiatives, to reduce inventory levels and rebalance English label infant formula pricing across channels.

A2 Milk has swapped older distributor inventory with more recent stock to improve the on-shelf product freshness.

The company has also done other things like spending on more marketing, improved its leadership team and re-organised its Asia-Pacific division.

Profit margin expectations

A2 Milk has an ambition to grow sales to over NZ$2 billion and improve margins. The earnings before interest, tax, depreciation and amortisation (EBITDA) margin target is “probably in the ‘teens’ in the medium term” due to market conditions and in the longer-term the target is in the “low-to-mid-20s” subject to a better recovery.

Trading update

In terms of sales, English label infant formula sales in the first quarter of FY22 were down on the first quarter of FY21, but “significantly up” on the fourth quarter of FY21. FY22 first half English label sales are expected to be down year on year, but ahead of expectations.

Chinese label infant formula sales in the first quarter were “constrained” to reduce channel inventory levels. Sales were down significantly year on year and on the fourth quarter of FY21. Chinese label infant formula sales are expected to be significantly down in the FY22 first half.

However, tier 1 inventory levels are now at required levels for both English and Chinese label products.

ANZ fresh milk volumes were up in the first quarter of FY22 year on year, though in New Zealand dollar terms the sales were flat because of foreign currency fluctuations.

US liquid milk volumes were down in the first quarter of FY22 compared to the first quarter of FY21 after the reduction of ranging by a club channel customer. Distribution cost pressures continue in the US market.

A2 Milk share price valuation

Getting back to Citi’s thoughts, on the broker’s numbers, A2 Milk shares are valued at 27x FY23’s estimated earnings.

The post Is the A2 Milk (ASX:A2M) share price now too cheap to ignore? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison 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 recommended A2 Milk. 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 Aussie airline Qantas Airways Limited (ASX: QAN) have been at the back end of the pandemic-induced frenzy in financial markets this year.

The ‘reopening trade’ has been tried and tested on several occasions, however new COVID-19 variants and volatile case numbers have put a dent in its full lift-off each time.

With most commentary pointing to a gradual return to full mobility in global borders by 2022, we seek to answer if Qantas is worth the allocation of investors’ hard-earned capital right now.

Following the company’s trading update yesterday, it has been attracting upgrades en masse from leading brokers. So is it a buy? Let’s take a look.

What’s the verdict on Qantas shares?

The team at Jefferies were happy with the takeouts from Qantas’ trading update. They noted movement on the company’s debt position, even whilst trimming its earnings expectations at the same time.

The firm is a long-term bullish supporter of Qantas. It values the company at $5.95 a share after paring its target by about 9% today.

Qantas came in with a deeper underlying EBITDA forecast for 1H. It expects a loss of $250 million to $300 million versus Jefferies’ estimate of $101.5 million.

As such, the firm updated its modelling to reflect a pre-tax loss of $1.05 billion. This is a substantial increase on the previous $623 million loss forecasted previously.

However, Jefferies was impressed by Qantas’ efforts at reigning in its debt to $5.65 billion towards the end of December.

“While the 1H EBITDA is below expectations – driven by cost increases from the restart of international flying and longer lockdowns – recovery of travel demand is expected to remain uneven, offering opportunities,” Jefferies says.

Analysts at Macquarie also upgraded their price target and rated Qantas a buy with a valuation of $6.10 per share.

The firm notes that domestic and international border policies are loosening, which is setting the company up for a “snap-back in profitability in 2H FY22”.

It actually sees earnings in FY23 surpassing pre-Covid levels, considering the raft of structural changes and asset divestments in recent times.

JP Morgan also rates Qantas a buy with a $6.50 price target for June 2022. The firm notes that Qantas appears to be well-positioned to weather the airline industry’s recovery.

It takes this view because Qantas has taken a material $1 billion in costs per annum out of its business. This is likely to become an ongoing saving from FY23, JP Morgan says. Further, the broker favours Qantas’ high proportion of earnings from domestic and loyalty at approximately 70-75% of earnings.

It also likes Qantas’ balance sheet and its more favourable competitive position both domestically and internationally.

Fellow broker Citi also chimed in and valued Qantas at $5.86 per share in a note to clients today. Citi acknowledged concerns about the Omicron variant but still believes the risk-reward equation is skewed towards investors’ favour.

The broker reckons the market is yet to price in the international division reopening, which could bode well for the Qantas share price.

Meanwhile, Credit Suisse raised its price target on Qantas by 12% to $4.60 per share. Ord Minnett retained its buy rating on the stock, noting it remains comfortable with the prognosis for the aviation industry.

Of the list of analysts provided by Bloomberg Intelligence, 11 rate Qantas a buy and just 1 says hold. Out of this spread, the consensus price target is $6.07 on Qantas shares. This is a 27% return objective from the current market price of $4.77.

So consulting this list, the sentiment appears to be bullish on Qantas shares, particularly after its most recent trading update. Time will tell if the thesis plays out in full.

Qantas share price summary

It’s been a year to forget for Qantas shareholders, with a share price loss of 6% in the past 12 months.

In the past month, Qantas shares have plunged by almost 15% into the red.

The post Could Qantas (ASX:QAN) shares prove to be a compelling investment in 2022? appeared first on The Motley Fool Australia.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. 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 recommended Macquarie Group Limited. 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 De Grey Mining Limited (ASX: DEG) share price is charging higher, up almost 7% to $1.16 in early afternoon trade.

The All Ordinaries Index (ASX: XAO) is in the green as well, up 0.5%.

Below we take a look at the latest gold results from the ASX resource explorer that look to be spurring investor interest.

What gold results were announced?

The De Grey Mining share price is leaping after the company reported strong gold results from its Diucon deposit at Hemi, located in Western Australia.

The new resource definition results include:

• 63 metres at 4.3grams of gold per tonne from 87 metres in drill hole HERC770
• 9m @ 3.0g/t Au from 83.2m in HEDD106, and
• 27m @ 5.3g/t Au from 55m in HERC787

According to the release, extension and infill drilling are both currently underway at the miner’s Diucon and Eagle projects. Reverse circulation (RC) and diamond holes are targeting depth extensions and additional lodes to the south.

Management commentary

Commenting on the results, De Grey’s general manager exploration, Phil Tornatora said:

Recent drilling at Diucon has increased the depth of mineralisation to approximately 550 metres below surface. Zones of higher gold grades, commonly associated with visible gold, continue to be intersected.

The southern lodes have been tested to a maximum depth of only around 200 metres vertically, and drilling is extending these at depth. In addition, the main zones of mineralisation continue to be extended along strike to the west and at depth, all of which are expected to contribute to an upgraded resource base at Diucon.

Tornatora added that De Grey is also conducting infill drilling it increase the resource confidence from JORC Inferred to Indicated classification.

De Grey Mining share price snapshot

The De Grey Mining share price is up 9% since this time last year. That’s right in line with the 9% gains posted by the All Ords over the past 12 months.

Over the past month, shares in De Grey Mining are down 5%.

The post Why the De Grey Mining (ASX:DEG) share price is storming 7% higher today appeared first on The Motley Fool Australia.

More reading

• Macquarie (ASX:MQG) upgraded these ASX gold shares to ‘buy’ for 2022

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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Friday is proving to be disastrous for the Openpay Group Ltd (ASX: OPY) share price, and the buy now, pay later (BNPL) sector in general.

The industry’s pain comes amid the launch of an inquiry into BNPL companies by the United States’ Consumer Financial Protection Bureau (CFPB).

At the time of writing, the Openpay share price is 84.5 cents, 6.11% lower than its previous close.

For context, the broader market is currently in the green. The S&P/ASX 200 Index (ASX: XJO) is up 0.56% while the All Ordinaries Index (ASX: XAO) has gained 0.47%.

Let’s take a look at what’s going on with ASX-listed BNPL providers on Friday.

Openpay share price tumbles alongside BNPL peers’

The Openpay share price is suffering today, but at least it’s not alone.

Right now, the share price of the sector’s biggest participant, Afterpay Ltd (ASX: APT) is experiencing a 7% fall, while that of Zip Co Ltd (ASX: Z1P) has tumbled 5%. Sezzle Inc‘s (ASX: SZL) stock is also trading 6% lower.

Interestingly, the Humm Group Ltd (ASX: HUM) share price is bucking the trend, recording a 1.4% gain.

Looking internationally, the Affirm Holdings Inc (NASDAQ: AFRM) share price fell 10.5% overnight, while that of Paypal Holdings Inc (NASDAQ: PYPL) slipped 1%.  

CFPB launches inquiry into BNPL services

United States’ financial law implementation and enforcement body, CFPB, is concerned about the burgeoning BNPL industry’s effects on the health of the financial sector and consumers’ finances.

In reaction to its worries, it has launched an inquiry into the industry. The inquiry will focus on debt levels, regulatory conformity, and data collections.

It’s put the call out to 5 industry giants, Afterpay, Zip, Paypal, Affirm, and Klarna, to provide information on the pros and cons of their services.

According to CFPB director Rohit Chopra, the body will use the information collected from the companies to “report to the public about industry practices and risks”.

The entity is working with its international partners to conduct the inquiry. It specifies such partners exist in Australia.

Right now, the Openpay share price is 64% lower than it was at the start of 2021. It has also slipped 27% since this time last month.

The post Openpay (ASX:OPY) share price sinks 6% in grim day for ASX BNPL shares appeared first on The Motley Fool Australia.

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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. owns and has recommended AFTERPAY T FPO and ZIPCOLTD FPO. The Motley Fool Australia owns and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended Humm Group Limited and PayPal Holdings. 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 ReadyTech Holdings Ltd (ASX: RDY) share price is marching higher today, up almost 3% at the time of writing.

The All Ordinaries Index (ASX: XAO) is in the green too, up a more subdued 0.48%.

ReadyTech, an SaaS business, is focused on providing cloud-based software to the education, employment and government sectors.

Below we take a look at the acquisition announcement that looks to be driving investor interest in the ASX tech share.

What acquisition was announced?

The ReadyTech share price is gaining after it reported it has acquired Open Windows Software Pty Ltd.

Open Windows provides source-to-contract management modules to private and government customers, with most of its customers in local and state government.

According to the release, ReadyTech will pay $4.8 million upfront for the acquisition. That consists of just over $4 million in cash from its cash reserves, with the remaining $768,000 to be paid in ReadyTech shares.

ReadyTech will also pay up to $9.5 million in deferred consideration, which it reports “will be structured into milestone earnouts over 4.5 years”. That will be paid in a combination of shares and cash.

The acquisition was completed yesterday. The company expects it to deliver recurring revenue of $1.5 million in FY22.

Commenting on the acquisition, ReadyTech CEO Marc Washbourne said:

Open Windows has a strong reputation for its modular SaaS based approach, unique workflow process design, modern user interface, and ability to handle the complex requirements of multi-party contract management and procurement supply chains.

Open Windows further fortifies ReadyTech’s product-market fit and is suitable to cross-sell to a broad range of our customer base. In particular, Open Windows’ focus on local government makes it a highly strategic and compelling fit for our Government & Justice segment.

ReadyTech share price snapshot

At $3.66, the ReadyTech share price is up an impressive 80% since this time last year. By comparison, the All Ords has gained just over 9% in the last 12 months.

Over the past month, ReadyTech shares have lost around 8%.

The post ReadyTech (ASX:RDY) share price leaps on $14 million acquisition appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Readytech Holdings Ltd. The Motley Fool Australia has recommended Readytech Holdings Ltd. 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 Latrobe Magnesium Limited (ASX: LMG) share price is heading south on Friday. This comes after the magnesium producer announced an update on the revised terms of a project finance facility.

During early afternoon trade, Latrobe Magnesium shares are swapping hands for 9.4 cents, down 5.05%. It’s worth noting that the Latrobe Magnesium share price has lost more than 20% in value over the past month.

Latrobe Magnesium renegotiates contract terms

Investors are selling Latrobe Magnesium shares despite the company successfully renegotiating more favourable contract terms.

In its release, Latrobe Magnesium advised that the interest rate on its $23 million project finance facility has been amended. The reduced 12% interest payable follows close discussions with RnD Funding, which has agreed to the new terms.

Latrobe Magnesium noted that the lower interest rate is a function of the additional security available to RnD Funding. This follows Latrobe Magnesium’s purchase this week of the property at 20 Tramway Road, Hazelwood North for $4.5 million.

In addition, the company is expecting to receive between $12 million to $15 million of R&D tax refunds until 23 October 2023. Depending on the amount and time that the incentivised payment is collected, Latrobe Magnesium stated that the effective interest rate could be closer to 10%.

When the loan is first drawn down, the term is 5 years. However, the company intends to refinance the balance to make it as cost-effective as possible. Latrobe Magnesium estimates that this will occur in or about October 2023 at an interest rate of about 6% per annum.

About the Latrobe Magnesium share price

Over the past 12 months, Latrobe Magnesium shares have accelerated by 370%.

Based on today’s price, Latrobe Magnesium presides a market capitalisation of $147.28 million. It has approximately 1.57 billion shares outstanding.

The post Why is the Latrobe Magnesium (ASX:LMG) share price on the slide today? appeared first on The Motley Fool Australia.

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• What’s happening to the Latrobe Magnesium (ASX:LMG) share price today?
• Here’s why the Latrobe Magnesium (ASX:LMG) share price is sinking 7% today

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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