GWR Group Limited

GWR Details

Signing of Agreement with PML: GWR Group Limited (ASX: GWR) is a diversified minerals company, engaged in exploring and evaluating mining projects in Australia and overseas. The market capitalisation of the company stood at ~$135.77 million as on 5^th January 2021. Recently, the company notified the market about the commencement of production with alliance partner Pilbara Resource Group for the first shipment of iron ore from its 100% owned flagship C4 Iron Ore deposit in Wiluna. On 16 December 2020, the company inked an offtake agreement with Pacific Minerals Ltd (PML) for production and sales of 1,000,000 tonnes from the C4 Iron Ore Project. The company added that sales arrangements are now in place for 100% of iron ore production from Stage 1 - C4 Iron project production.

Successful Capital Raising: During the quarter ended 30^th September 2020, the company achieved substantial progress on its strategy to utilise low capex pathways and infrastructure to advance their Wiluna West Iron Ore Project. Following an internal review, the company undertook the opportunity to implement numerous costs cutting measures. This includes a significant decrease in tenement rent and rates costs as well as a further cash reduction of Director and Executive fees and salaries. Net cash outflow from the operating activities stood at $366k. The company also finished equity raising of $3.3 million (before costs) via the issue of 18,333,333 fully paid ordinary shares at an issue price of $0.18 per share from qualified, institutional, and professional investors after the end of the quarter. For the year ended 30^th June 2020, the company reported revenue amounting to $1,830,506 as compared to $1,901,456 in FY19. Loss for the year after income tax stood at $2,200,899 against $3,067,161 in FY19.

Cash Flow (Source: Company Reports)

Outlook: Looking forward, the company is planning to undertake mineral exploration and investment activities within the exploration and mining sector. In addition, it would also be focused on advancing its flagship project.

Stock Recommendation: The company closed the quarter with a healthy balance sheet supported by access to liquidity and funding. As on 30 September 2020, the company's cash reserves and investments stood at $1.8 million and $11.05 million (in ASX listed securities), respectively. In addition, the company closed the quarter with a nil debt position. In the last three and six months, the stock has surged 133.33% and 546.15%, respectively. As a result, the stock is trading towards its 52-week high of $0.470. In addition, the stock is trading at a price to book value multiple of 14.8x as compared to the industry median (Basic Materials) of 3.0x on TTM basis. Thus, it seems that the stock is overvalued at the current trading level. On a technical analysis front, the stock has a support level of ~$0.145 and a resistance level of ~$0.471. Therefore, considering the steep price movement in the past months, current trading level and valuation, we are of the view that most of the positive factors have been discounted at the current trading level and give an “Expensive” rating on the stock at the current market price of $0.415 per share, down by 7.778% on 5^th January 2021. We further suggest investors to wait for better entry levels.

GWR Daily Technical Chart (Source: Refinitiv, Thomson Reuters) 

Golden Deeps Limited

GED Details

Completion of Placement: Golden Deeps Limited (ASX: GED) is engaged in the exploration of minerals. The market capitalisation of the company stood at ~$8.52 million as on 5^th January 2021. On 21^st December 2020, the company announced that it has wrapped up the capital raising of $3,288,917 (before associated costs) via the issue of 234,922,646 fully paid ordinary shares at $0.014 per share and 78,307,548 free attaching option. During the quarter ended 30^th September 2020, the company has achieved progress on studies and generated new targets at the Tuckers Hill and Havilah projects in NSW in preparation for the commencement of fieldwork. The company recorded net cash outflow from operating and investing activities of $249k and $43k, respectively. During FY20, the company recorded a loss amounting to $867,934 as compared to $1,799,033 in FY19.

Cash Flow (Source: Company Reports)

Outlook: The company would continue to explore its tenements in Australia, Namibia and Canada going forward. In addition, the company has scheduled to conduct a general meeting on 29^th January 2021.

Stock Recommendation: As on 30^th September 2020, the cash balance of the company stood at $2.553 million. In the last nine months, the stock has moved up by 37.50%. The 52-week low-high range for the stock stands at $0.004 - $0.027, respectively. On a technical analysis front, the stock has a support level of ~$0.009 and a resistance level of ~$0.017. Hence, in light of the low market capitalisation, loss-making business, and absence of revenue, we advise investors to ‘avoid’ the stock at the current market price of $0.012 per share, up by 9.090% on 5^th January 2021.

GED Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Disclaimer  

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.