Chairman of Alexandria Mineral Oils Company (AMOC) [AMOC.CA] announced, following a meeting with the Minister of Petroleum, that the company intends to go through with a USD50mn expansion plan aimed at improving the company’s product mix. The new project essentially aims at improving the quality of the output and shifting from heavier products to a lighter (higher quality) output, which is typically sold at a premium and generates higher margins. AMOC had announced earlier that it had signed an agreement with Axens Group to conduct the feasibility studies for the project, which management had indicated would be concluded by May or June.   Still too early to assess, but likely a positive move: In our earlier call with management, they had highlighted that the project will likely be accretive and would i) have a positive impact on AMOC's operating profits; and ii) offer favourable returns on capital and a healthy IRR. We think, however, that it is still too early for us to evaluate the exact impact of the project as its full details have not yet been released, which management noted would be conveyed once the results of the feasibility study are concluded. From a financing point of view, we think that AMOC's cash-rich, unlevered, balance sheet can easily accommodate a project of this size. We are also not alarmed by the project's USD CAPEX since AMOC holds a healthy USD cash balance, and as operations are essentially USD based. (Company disclosure, Ahmed Hazem Maher)   AMOC: EGP84.47 as of 1 Feb. 2017, Rating: Buy, TP: EGP65.00/share, MCap: USD388mn, AMOC EY/AMOC.CA