Westgold Resources Limited

WGX Details

New Appointments & Resignation: Westgold Resources Limited (ASX: WGX) is involved in the exploration, development, and operation of gold mines, majorly in Western Australia. The company operations include Fortnum Gold Operations (FGO), Meekatharra Gold Operations (MGO) and Cue Gold Operations (CGO). On 24^th May 2022, Ms Debbie Fullarton has resigned as the Company’s Chief Executive Officer and Wayne Bramwell has been accepted to the role of Managing Director in the company, both effective immediately.

• Change in Substantial Shareholding: Recently, Ninety One UK Ltd became the initial shareholder and Connor, Clark & Lunn Financial Group Ltd. (CCL Ltd) and its related bodies corporate changed the voting power from ~5.0079% to 6.2652%.

1HFY22 Highlights: During the half-year ended 31 December 2021, the company experienced decent performance with record gold production of 132,861oz in 1HFY22. The revenue up 3% to $311M and the company gave a maiden cash dividend of 2.0 cents per share and totalling $8.5 million to shareholders.

Key Metrics (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to risks arising from the uncertainties in relation to the COVID-19 pandemic and adverse movements in the prices of gold as it is a main revenue generation stream.

Outlook: For FY22, WGX expects its gold production to be over 270,000 oz @ AISC A$1,500 – A$1,700 and for FY24 +400,000 oz @ AISC of less than A$1,600. The company’s recent equity raising of $100 million is expected to aid its future growth strategy including the expansion of Murchison Projects and Bryah Expansion Projects, Regional Corporate Targets and General Working Capital and Costs of the Placement. During 2HFY22, the company would seek prudent cost management, consistent production, increased mined grade and milling optionality.

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of WGX is trading near its 52-week low level of 1.265, offering a decent opportunity for accumulation. The stock has been corrected by ~18.85% in the past one month. The stock has been valued using a P/E multiple-based illustrative relative valuation method and arrived at a target price of low double-digit (in percentage terms). The company might trade at a slight discount to its peers’ average, considering the COVID-19 uncertainties and volatility in the gold prices, etc. For the purpose of valuation, a few peers like Dacian Gold Ltd (ASX: DCN), Ramelius Resources Ltd (ASX: RMS), OceanaGold Corp (ASX: OGC), and others have been considered. Considering the expected upside in valuation, growing production, optimistic long-term outlook, rising revenue, recent capital raising, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $1.420, down by ~1.388% as on 25 May 2022.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

WGX Daily Technical Chart, Data Source: REFINITIV 

Tribune Resources Limited

TBR Details

3QFY22 Highlights: Tribune Resources Limited (ASX: TBR) is engaged in the exploration, development, and production activities at its East Kundana Joint Venture (EKJV) tenements. During the third quarter ended March 2022 (Q3FY22), TBR documented significant high-grade intercepts from drilling at the EKJV project, involving results from the Mary fault of 3.3 m @ 7.7 g/t, 4.1m @ 4.4 g/t, and 0.5 m @ 17.1 g/t gold.

• A potential for a mineralised sulphide gold system was found from the assay results arising from the drilling campaign at Seven Mile Hill project.
• The company closed the quarter with $27.08 million as its cash receipts from customers and cash and cash equivalents of $3.073 million.

Financials (Source: Analysis by Kalkine Group)

Key Risks: The company’s business could be impacted by adverse movement in the prices of commodities in which it deals. In addition, the business is exposed to risks arising from the change in the climate.

Outlook: Looking forward, the company would undertake step-out drilling to the East to test for a down-dip and lateral extensions to the Balite Vein system.

Stock Recommendation: The stock of TBR is trading near its 52-week low level of $4.00, offering a decent opportunity for accumulation. The stock has been corrected by ~17.45% in the past month. On a TTM basis, TBR has Price/Book Value multiple of 0.9x against the industry median (Metals & Mining) of 2.1x. Thus, it looks like the stock is undervalued at the current trading levels. Considering the valuation on a TTM basis, decent performance in Q3FY22, further drilling plans, current trading levels and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $4.020, down by ~0.740%, as of 25 May 2022.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

TBR Daily 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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