Daily Brief Australia: Emerald Resources Nl, Treasury Wine Estates, ADX Energy Ltd, Lepidico Limited and more

• Shareholders have approved Invocare Ltd (IVC AU)‘s acquisition by TPG and IVC is expected to stop trading after the close on 3 November.
• Invocare Ltd (IVC AU) will be replaced by Emerald Resources Nl (EMR AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 3 November.
• Boss Resources (BOE AU) misses out this time but should be added to the index late November or at the regular rebalance in December.

• Treasury Wine Estates (TWE AU) aims to raise up to US$525m (A$825m) via a renounceable fully underwritten entitlement offer.
• Proceeds from the placement will be used to part fund the acquisition of DAOU Vineyards, a luxury wine brand based in California.
• In this note, we will talk about the deal dynamics.

• ________________________________________ ADX Energy (ADX AU)C; target price of A$0.80 per share: Two high impact wells to commence drilling by YE23 – ADX is expected to start drilling the Anshof-2 appraisal well in November.
• Anshof is also estimated to hold 5.5 mmboe net 3C contingent resources (net to ADX).
• We have changed our target price to A$0.80 per share as we incorporate the recently announced 10 for 1 share consolidation.

• • 3Q23 production of 324 boe/d and cash of A$5.7 mm at the end of September were near our expectations.
• This includes 101 bbl/d gross production for Anshof that was shut-in on 19 September after reaching the regulatory limit for test production.
• Anshof-3 production will recommence after the drilling of the Anshof-2 well and the installation of a permanent production facility in February.

On 30 October, Lepidico announced the updated economics of its 2020 definitive feasibility study (DFS) on its integrated lithium hydroxide mine and chemical plant to show a base case NPV8 of US$457m post-tax, which equates to 9.4 Australian cents per share on a pre-funding basis. In our January 2019 report Gold stars and black holes, we calculated that companies with completed DFSs typically have an EV/NPV ratio of 30.9%, which would imply a pre-funding valuation for Lepidico of 2.9c/share, to which its shares are currently trading at a significant 69.0% discount.