Company Overview: Tempus Resources Ltd (ASX: TMR) is engaged in the exploration of mineral resources. The flagship project of the Group is the Blackdome-Elizabeth Project, which is a high-grade gold producing project located in Southern British Columbia. The other key projects of the company are the Rio Zarza and Valle del Tigre projects located in southeast Ecuador. It operates in the three geographical regions of Australia, Canada and Ecuador. The company is listed on ASX (‘TMR’), TSX.V (‘TMRR’), and OTCQB (‘TMRFF’) stock exchanges.

TMR Details

Decent Investor Traction Witnessed in the Recent Placement Round: The company is exploring projects located in Canada and Ecuador. Its Valle del Tigre project is currently undergoing a sampling program in order to develop anomalies that were identified through geophysical work.

Application For Underground Drilling:

On 13 September 2021, the company has updated that it has filed an amendment to the Notice of Work (NoW) for its Elizabeth Gold Project.

• This is in regard to re-establish the existing Lower Portal underground adit for underground exploration drilling.
• The present drill program is focused on the Southwest Vein and extended access from the Lower Portal adit will create an ideal scenario for drilling along strike to the north of the South West Vein.

Strong Demand for $6.28 million Placement:

On 19 August 2021, the company has updated that it has received decent interest for placement of $6.28 million, and was oversubscribed from international and Australian institutional Investors, including specialist gold investment funds.

• TMR has issued 24.99 million shares during the placement at an average price of $0.251 per share.
• The funds will aid the company to complete the 12,000-metre drilling program at Elizabeth and develop access for drilling extensions.

Activities During June 2021 Quarter & FY21 Performance:

• During the quarter, the company commenced a drilling program up to 12,000 metres in the Elizabeth Gold Project.
• It also completed an aeromagnetic survey for 115 sq km license area with the objective to identify known structures permissive for gold mineralisation.
• Two of the holes drilled exhibited the presence of gold in the site.
• It held ~$1.019 million in cash reserves as of 30 June 2021, with receivables of $247,097.
• The net loss in FY21 stood at $3.10 million, compared to a loss of $2.69 million in the pcp.

Trend in Cash & Short-Term Investments (Source: Analysis by Kalkine Group)

Alteration Study Depicts Exploration Potential:

As per a recent update, the company has received positive results from an alteration study and review on the Blackdome Gold Mine. The findings reflect potential to host further gold mineralisation based on the review of drill core photographs and data by Dr. Jeffrey Hedenquist.

Presence of Gold & Copper Observations at Valle Del Tigre:

The company has announced that it has received assays from the phase 1 geochemical sampling program at its Valle del Tigre Project, located in south eastern Ecuador. This includes anomalous gold and copper observations. The company plans to follow up the results with a sampling program over the larger geochemical and geophysical target area.

Top 10 Shareholders: The top 10 shareholders together form around 19.23% of the total shareholding, while the top 4 constitute the maximum holding. AIMS Asset Management Sdn Bhd  and Izurieta (Rodrigo Arturo) are holding a maximum stake in the company at ~5.72% and ~3.40%, respectively, as also highlighted in the chart below:

Top 10 Shareholders (Source: Analysis by Kalkine Group)

Key Metrics:  The company reported a current ratio of 5.82x in FY20. The asset to equity during the year stood at 1.52x, compared to 15.17x in FY18.

Growth Profile and Leverage Profile (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to the following risk factors:

• Regulatory Risk: The company’s operations are prone to the strict purview of regulatory bodies and can impact its profitability in the long run.
• Climate Risk: It is also exposed to the risk of causing potential damage to the environment and climate.
• Revenue Risk: TMR is also investing a large amount for its research & exploration purposes and any adverse impact on its operations might be a challenge for its revenue-generating capabilities.

Outlook: The company has projected high-grade gold results from the Elizabeth Project from the second batch of assay results. The mineralised intersections include 6.60m at 8.40g/t gold from 102.40m - EZ-21-02 hole, 6.40m at 7.22g/t gold from 88.60m - EZ-21-03 hole, 1.80m at 6.37g/t gold from 94.80m - EZ-21-01 hole. Moreover, the company plans on utilising the existing underground development adit in the Elizabeth Project, which will provide access for drilling in the lower extension of the South West Vein.

Stock Recommendation:  As per a recent announcement, AIMS Asset Management SDN BHD has become an initial substantial holder in the company with a voting power of 5.716%. As per ASX, the stock of TMR is trading below its average 52-weeks’ levels of $0.145-$.310. The stock of TMR gave a positive return of ~8.108% in the past three months and a negative return of ~14.89% in the past nine months. Considering the current trading levels, strong demand for its placement round, positive alteration study results, technical analysis, and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.195, down by 2.501% as on 24 September 2021.

Technical Insights:

TMR prices broke the downward sloping trend line by upside in the month of August 2021 and prices are sustaining above the breakout point since then. Prices are also trading above the upward sloping trend line indicating bullishness in the prices. RSI (14-period) is hovering near to moderate zone ~47.14 that indicates indecision in the stock. Immediate support levels are $0.165 and $0.150, while immediate resistance levels are $0.250 and $0.280.

TMR Monthly Technical Chart, Data Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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