Additional mine life comes at a cost (By Canaccord)
HFR has delivered an optimisation study on its Muga potash deposit in Spain, building on DFS outcomes released earlier this year. The extent of the changes are considerable for a project as advanced as Muga, and while additional mine life is a positive, extra capex and increased operating costs have driven a reduction in our valuation. Granting of the mining permit for Muga and finalisation of funding remain the key near-term catalysts for HFR, and we expect to see outcomes in the MarQ’16. Despite our price target moving down, HFR still trades on a 0.69x P/NAV and accordingly, we maintain a BUY recommendation.