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ASX Junior Miner - Excellent Drilling Results - Gold - WA - Thundelarra (ASX: THX)

GARDEN GULLY CONTINUES TO BLOOM Ongoing work by Thundelarra Limited (ASX: THX, “Thundelarra” or “the Company”) has continued to return excellent results from their Garden Gully Gold Project (“Garden Gully” or “the Project”), located 20km from Meekatharra in the Eastern Goldfields of Western Australia. The Project, which was picked up in late 2015, has seen little historical work, and only limited follow up from completed reconnaissance activities, however is located in a prolific gold producing region and near operating mills and infrastructure. The results achieved by Thundelarra carry on from the excellent results (including 7m @ 24.5g/t Au) from the initial drilling programme as reported in our October 2016 Initiation Report, and have confirmed the potential for the Project to host a major deposit. The third programme of drilling over a number of the prospects has recently been completed, with interpretations and assaying currently under way. KEY POINTS Excellent drilling results: Since our October 2016 Initiation Report, the Garden Gully gold project, located near Meekatharra in Western Australia has continued to deliver very positive results, including an intersection of 80m @ 1.9g/t Au at the Lydia prospect. Multiple prospects: The work has identified multiple prospects, with mineralisation at all being open, and with work only in early stages. Analogies to known deposits: The results of work to date and interpretations of the geology have highlighted the analogies and similarities to defined resources in the Archaean of Western Australia, including Gold Road’s (ASX: GOR) Gruyere deposit and Gascoyne Resources’ (ASX: GCY) Gilbeys deposit. Also prospective for VMS mineralisation: Historic work at Garden Gully, along with recent interpretations, indicates the potential for volcanogenic massive sulphide (“VMS”) mineralisation, with results of this work including anomalous base metal geochemistry in shallow drilling, conductive horizons (potentially reflecting sulphide-rich units) and the postulated presence of a buried internal granite (a driver for a VMS system). Early days yet: Exploration is at a relatively early stage – the Project has seen little historical drilling, and thus there is significant potential to define yet more prospects and to delineate significant mineralisation at the known prospects. Scientific approach: Thundelarra take a rigorous scientific approach to exploration, and do not just drill for the sake of drilling – programmes are planned based on a thorough interpretation of exploration data. Strong management and technical team with skin in the game: The Company’s personnel, including board, management and technical team have extensive technical and financial experience in the junior resources sector; in addition they have significant shareholdings in the Company, thus aligning their interests with those of other shareholders. News flow: With results from the recent drilling at Garden Gully and updates expected from Red Bore there will be steady news flow over coming months. Leveraged to exploration success – With an EV of $20 million, Thundelarra is well leveraged to exploration success – notable examples over the past few years include Sandfire’s 2008 Doolgunna VMS discovery, which took the price from $0.05 to $4.08 on the initial run, with subsequent movements to over $8.00/share, Sandfire’s/Talisman’s (ASX: TLM) Monty VMS discovery, which took Talisman from A$0.15 to A$0.785 in May-July 2015, and Breaker Resources (ASX: BRB) making the recent Lake Roe gold discovery that has moved its share price from A$0.06 to a high of $0.76 over the twelve months to September 2016.

  • 13 Apr 17
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Proteomics International LaboratoriesLtd

ASX Health Care Co - ASX: PIQ -Early Detection of Diabetic Kidney Disease - Commercialisation of Diagnostic Test Kits

STUDYING PROTEINS TO IMPROVE DIAGNOSIS OF DISEASE PIQ is a biological research and drug discovery company working on the development of simple diagnostic tests for common diseases and the discovery of new therapeutic drugs to treat pain and infection. The company’s primary focus is the expansion of its protein analysis services for biosimilars and clinical trials and the commercialisation of PromarkerD, the breakthrough diagnostic test for kidney disease in diabetics. KEY POINTS Early Detection of Diabetic Kidney Disease: Using its Promarker technology platform, the company has identified the biomarkers in the blood (biological fingerprints) of kidney disease in diabetics, specifically Type 2 diabetes. Using this information the company has developed PromarkerD, a diagnostic test that accurately predicts whether people with diabetes will develop chronic kidney disease. With diabetes being one of the leading causes of kidney disease and less than 10% of people with kidney disease aware they have the condition, early detection allows the disease to be managed to ensure that the damage to kidney function is significantly reduced or potentially avoided. Commercialisation of PromarkerD: The company is seeking to commercialise PromarkerD through sourcing partners to distribute the diagnostic test. The company has provided an exclusive licence to Omics Global Solution and its sister company Macrotech Farmaceutica to assemble the test kits and distribute PromarkerD in the Dominican Republic. The ingredients for the diagnostic test kits will be manufactured in Melbourne and assembled in Puerto Rico, a US territory and therefore will fall under the umbrella of the US FDA guidelines providing a pathway into the US market. The NPV of the deal over the first 9 years has been valued at USD$1.5m by the company. The company has also signed an agreement with Newsummit Biopharma, a Chinese pharmaceutical company, to work together to manufacture PromarkerD in China. To receive approval from the Chinese regulator the ingredients must be made and the kits must be assembled in China. While the development and approval process will take some time, the Chinese market is significant with close to 10% of the population (~114m people) diagnosed with diabetes. Analytical Services Continues to Grow: The Analytical unit is the primary revenue generating division of the company. Revenue was up 34.3% in FY16 and is expected to continue to grow on the back of a growing biosimilars (generic form of protein based treatments) market and the company expanding its services to offer advanced analytical testing services for clinical trials. PIQ will be one of only three companies to provide this specialist testing service in Australia. PIQ has signed a non-exclusive agreement with Linear Clinical Research Ltd to provide testing services for clinical trials at Linear, of which there are currently approximately 30 per year. First Laboratory to be Granted ISO 17025 Accreditation: The company is headquartered in Perth, where it has a state of the art facility to conduct its research and development activities. The laboratory was the first laboratory in the world to receive ISO 17205 accreditation for protein analysis services and is one of only a small number of laboratories globally that can provide these services, putting it in a unique position to take advantage of the growing biosimilars market. Investment Case: We have assigned PIQ a valuation of $0.60. The valuation reflects a sum of parts based on the NPV of Analytical Services unit, the NPV of the licence agreement for the distribution of PromarkerD in the Dominican Republic, and a risk adjusted value of PromakerD in the US and China. The company is yet to find a partner in the US and China for the distribution of PromarkerD, however the company is currently in discussions with parties and targeting these two regions. The breakthrough diagnostic test has the potential to provide the company with significant upside value if the partners for the distribution of the diagnostic test in significant markets can be found. PromarkerD is the first diagnostic test developed that can predict the prevalence of kidney disease in someone with diabetes. This test has the potential to reduce the occurrence of kidney failure in diabetics and reduce the billions of dollars spent on the treatment of chronic kidney disease worldwide

  • 10 Apr 17
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Oneall International

ASX - Oneall International Limited (ASX: 1AL) Industrial - Outdoor Furniture - Global Footprint - 42 Countries

GLOBAL PLAYER IN THE OUTDOOR FURNITURE MARKET - Oneall International Limited (ASX: 1AL) designs, manufactures and distributes outdoor furniture, selling its products in 42 countries. The company was established in 2001 and listed on the ASX in December 2015 to provide it with access to capital markets and the opportunity to expand. KEY POINTS High Margin Manufacturer and Distributor of Outdoor Furniture: 1AL designs, manufactures and distributes outdoor furniture around the world. The company owns and operates its manufacturing facility in Guangdong, China, where the company’s key products are produced. The company has historically had a focus on the mid-tier and high-end markets. This combined with the company’s distribution model of primarily selling direct to retail customers sees the company generate earnings margins that are significantly higher than its peers. Global Customer Base: The company distributes its products to 42 countries. Europe is the largest market for the company, however the company is focusing on reducing the concentration of this market through growth in other regions. One area of focus is Australia, in which the company currently only has a small market share. The company is currently seeking to enter into distribution relationships with some local retail distributors to increase sales in Australia. Increasing the presence in Australia is important from a strategic viewpoint, with sales in this market offering the potential to smooth out the sales cycle, given the majority of revenue is generated from sales in the Northern Hemisphere during the warmer months. North America is also a market in which the company has indicated as a potential growth prospect. Moving to Original Brand Manufacturer Model: The company is in the process of transitioning its business model from Original Design Manufacturer (ODM) to Original Brand Manufacturer (OBM). Under the OBM model, the company’s products are identified with its own branding. 35% of revenue in FY16 was generated from OBM business. The OBM model gives the company more control over the distribution chain and greater brand recognition with customers. Vertical Integration of Distribution Chain: The company is seeking to secure demand through the acquisition or joint venture with wholesalers. This will secure demand through ensuring the wholesaler will distribute 1AL’s product range. Further to this, the company may potentially look to acquire retail chains in markets where the company is seeking to grow it’s presence to secure demand. Capacity Expansion: The company is currently at full capacity at its manufacturing facility in China. As such, in order to grow sales the company will need to expand its facilities, which management currently intend to do in 2017. Capacity is expected to be expanded by 20%- 25%, which would increased in the manufacturing capacity at the company’s China facility to 528,000 - 550,000 pieces of furniture per year. Protectionist Policies May Impact Growth: The move towards protectionist policies in recent times may impact the growth prospects of the company in some markets. The company has indicated it’s appetite to expand in North America, however, if President Trump delivers on his election promise to impose a 45% tariff on all Chinese produced products, this may make the company’s products uncompetitive in this market. Investment View: We have assigned 1AL a target price of $1.32 per share. This represents a 39.7% premium to the share price at 30 March 2017. The target price was determined using a DCF methodology over the next five financial periods. The target price is based on the assumption that the company will complete the expansion of its manufacturing facility in 2017 and will ramp up capacity usage to 95% in 2019. In the event this is not achieved the company will not achieve the expected future cashflows. The company has a tight shareholder register with the only a small portion of shares on issue as free float. As such there is low levels of liquidity in the stock. This will remain until further shares are issued or until the executive team releases a parcel of shares.

  • 07 Apr 17
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