Company Overview: Great Boulder Resources Limited is a mineral exploration company, with a primary focus on exploration, discovery and delineation of gold deposits. The Company's Balagundi Project is located approximately 20 kilometers east of the Kalgoorlie Super Pit and the township of Kalgoorlie in the Eastern Goldfields District of Western Australia. Its Broadwood Project is located between the historical Binduli gold mining center and the Golden Mile/Kalgoorlie Super Pit alongside the township of Kalgoorlie. Its Jundee South Project is located east of Wiluna in the Eastern Goldfields district of Western Australia, approximately 10 kilometers along strike from the Jundee Gold Mine operated by Northern Star Resources Limited. Its Tarmoola Project is located over 40 kilometers north-west of Leonora. Its Yamarna project is located approximately 130 kilometers east of Laverton, and over 30 kilometers west of the Gruyere gold deposit in the Eastern Goldfields District of Western Australia.


GBR Details

Following on Strategic Plan: Great Boulder Resources Limited (ASX: GBR) happens to be a new mineral exploration company. Its primary focus revolves around exploration, discovery as well as delineation of nickel-copper-cobalt and gold resources within the Eastern Goldfields Region of Western Australia. The management and exploration team of Great Boulder Resources has a combined experience of over 150 years in the mineral resources sector. Mr. Stefan Murphy is the Managing Director of Great Boulder Resources, and Mr. Greg Hall is the company’s Non-Executive Chairman. The company’s stock is listed on Australian Securities Exchange or ASX under the symbol “GBR” and, on February 22, 2019, has the market capitalization of around $14.82 million. The company’s stock is trading slightly towards the lower level. As per the Australian Securities Exchange, the company is having earnings per share (or EPS) of A$-0.019. Over the past three years, the company has been demonstrating uptrend in the interest income and the same have grown at CAGR of 1,319.0% during FY16-18 on the back of following the strategic plan as outlined in the prospectus. The company’s exploration plans are implemented at Yamarna-Mt Venn, Tarmoola, and Jundee South project. After conducting the review, the company decided to withdraw from Balagundi and Broadwood gold joint ventures so that they can focus on successful copper, nickel, cobalt exploration strategy in Mt Venn-Yamarna region. The company had managed to garner $2.5 million (before costs) with the help of share placement at 27 cents per share and this was done to support maiden drill program at Eastern Mafic and extensional drilling at Mt Venn discovery, as well as continued metallurgical testwork. As per the financial performance, the company’s interest income was $70,676 in FY 2018 reflecting a YoY rise of 24.3% from the prior year where it was at $56,871. The company’s loss before income tax amounted to $1,372,170 in FY 2018 up from $697,578 in FY 2017 primary because of increased expenses like depreciation, impairment of exploration and evaluation expenditure, corporate fees, marketing and share-based payment. The company enjoys a robust liquidity position as reflected in its current ratio for FY 2018 of 11.81x which is higher than the industry median of 1.66x placing it in the strong position to meet its short-term obligations. Also, there has been a significant improvement in its current ratio in the span of three years to FY 2018 (FY 2016- FY 2018) as, in FY 2016, the current ratio was 2.90x. The company’s annual report demonstrated that it is maintaining the tight capital structure with only 80.1 million ordinary shares on issue, cash of $3.7 million at the end of June 2018 and nil debt.

 
 
Income Statement (Source: Company Reports)

GBR Receives Ministerial Approvals: In FY 2018, The Great Boulder Resources had got Ministerial approvals to start the exploration activities at Mt Venn project. In early September 2017, a ground based moving loop EM (or MLEM) survey as well as concurrent aircore geochemistry program was started which happens to be the first exploration activities undertaken by GBR.
   
A Look at December 2018 Quarter: The Great Boulder happens to be well-funded with regards to planned exploration as it had $1.8 million of cash at the quarter end. In December, the company got R&D rebate amounting to $827k. However, it would be receiving WA Government EIS drilling grant amounting to $150k in the quarter ended March on the completion of drilling. For December 2018 quarter, the company stated that, with respect to Yamarna Project, the Eastern Mafic is newly-discovered copper-nickel-cobalt system adjacent to Mt Venn and the new drill results. The results included 4m at 1.3% copper, 0.2% nickel, 0.02% Co at the depth of 4m; 1.0% Cu, 0.1% Ni, 0.04% Co at the depth of 2.5m; and 0.5% Cu, 0.4% Ni, 0.04% Co at the depth of 10m. With respect to Winchester, Great Boulder Resources stated that first drill holes from Winchester, located 40km north of the Yamarna Project, have returned exceptional early results that include 0.9% copper, 0.3% nickel, 0.02% Co at the depth of 13m; 1.1% Cu; 0.2% Ni, 0.01% Co, 0.13g/t PGE, 0.19g/t Au at the depth of 7m. The revised interpretation concluded that the Eastern Mafic ideally appears to have formed at depth. An intersection of the top of the intrusion has occurred from drilling till date, however, the main body of the intrusion is not yet tested. Moreover, the company’s net cash used in the operating activities amounted to $0.604 million in the December 2018 quarter. The company had incurred significant payments towards exploration and evaluation, staff costs as well as administration and corporate costs. It incurred payments amounting to $1.83 million for the purposes of exploration and evaluation. However, the company had also received $0.827 million in lieu of research and development refunds.
 

Quarterly Operating Cash Flow (Source: Company Reports)

Drilling Commenced at Eastern Mafic Complex: The Great Boulder Resources had stated that drilling has commenced at Eastern Mafic complex, part of GBR’s larger Yamarna Project in Western Australia. The initial diamond hole is being drilled into Zermatt prospect to target depth of 700m downhole (~600m below surface). The drill hole is designed in order to test core of the Eastern Mafic in an area which is considered prospective for the high-grade nickel as well as copper mineralization. The company added that drilling program’s goal happens to revolve around the identification of additional mafic intrusions with high-tenor nickel and copper sulphide mineralization, which are important to the formation of high-grade sulphide deposits. The drilling would also test the modelled extents of Eastern Mafic complex and try to identify the base of intrusion where accumulations of massive sulphide mineralization may form.

A View of Recent Update: Great Boulder Resources had recently responded to the query which was made to them. The question happens to be that ‘whether or not Great Boulder Resources is aware of the information which has not been announced to market which, if known by some in a market, could explain recent trading in the securities?’. However, to this, the company responded that they are not aware of any information concerning it that has not been announced, which, if known, could be an explanation for the recent trading in the company’s securities.

However, the query also stated that if the answer to the question is no, is there any other explanation that the company may have for recent trading in the securities? To this, Great Boulder Resources had referred to the announcement which was made on February 18, 2019, regarding the commencement of drilling at Eastern Mafic complex. However, the company also stated that it considers the targets being drilled as part of this program happens to be highly prospective and no results have been received from the program.

On September 26, 2018, GBR had made a confirmation that it earned 75% interest in its Yamarna JV and its JV partner Eastern Goldfields Mining Company Pty Ltd will be holding an interest of 25%. 

Stock Recommendation: On the daily chart of Great Boulder Resources, Exponential Moving Average or EMA has been applied and default values were used for the purposes. After careful observation, it was noted that the company’s stock price has crossed the EMA and had trended in the upward direction after the crossover which signifies the bullishness. Therefore, there are expectations that the company’s stock price might witness a rise moving forward. However, the company’s stock price is presently trending in the downward direction.

On the other hand, the company might be supported by its robust liquidity levels as represented in its FY 2018 current ratio. Therefore, the strong liquidity levels provide sufficient headroom for making deployments towards the operational activities which might prove to be long-term growth catalysts. Also, the company stated that it happens to be in a strong funding position for exploration. Also, in December 2018 quarter, the company had received R&D refunds which might further strengthen the company’s liquidity position moving forward. In December 2018 quarter, the company had also got joint venture receipts amounting to $0.447 million. However, the company’s stock had delivered the return of -54.32% in the span of the previous 6 months. By looking at the current trading scenario and its liquidity position along with decent results from Winchester and Mt Venn-Eastern Mafic project, we give a “Speculative Buy” recommendation on the company’s stock at the current market price of A$0.170 per share (down 8.108% on 22 February 2019).

 
GBR Daily Chart (Source: Thomson Reuters)

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