Management Interaction Note
Sesa Goa Ltd.
Buy
Target Price: Rs192
CMP: Rs192.3
Downside: 0%
Positive vibes from WCL, Liberia
Sesa Goa (Sesa) recently announced the acquisition of balance 49% stake in Western Cluster Ltd (WCL), Liberia for US$33.5mn in cash from Elenilto Minerals & Mining LLC taking its stake in WCL to 100%. We had a detailed discussion with the Sesa management on the rationale for taking 100% ownership through residual stake purchase, the lower price for acquisition for residual stake which seemed to be a surprise and the prospects of WCL going ahead. We were impressed with the company's elaborate plans and see big potential for Sesa in future based on its development plans and comparison with ArcelorMittal’s Greenfield iron ore project in Liberia which started production recently. WCL is looking to start production from its Bomi Hills mine in the first phase with a production capacity of ~5 mtpa and is expected to announce the capex for the project (including development of port and railway logistics) soon. Please find below the excerpts of our interaction and comparison to the ArcelorMittal Liberia iron ore project which started shipments recently: