BBX Minerals Limited

BBX Details

Quarterly Update: BBX Minerals Limited (ASX: BBX) is engaged in the exploration and development of mining assets in Brazil. As on 11 November 2020, the market capitalisation of the company stood at ~$144.75 million. During the quarter ended 30 September 2020, the company entered into an agreement with IPT to assist in the final development of a robust analytical method, utilising a technology which is not available to BBX at its facilities in Rio de Janeiro -ICP-MS. Despite the impact of COVID-19 related to logistical disruptions, mobilisation of the drill rig to the site was completed and initiated the drill programme of 2500m. During the quarter, the company used cash of $366k from operating activities.

Cash Flow Statement (Source: Company Reports)

Outlook: The company is focused on the continued development and enhancement of its analytical and extraction techniques for gold. Despite a difficult year due to the global health pandemic, BBX seems to have decent funding with additional capital issued to LDA Capital of $199k and may emerge in a strong position.

Stock Recommendation: During FY20, the group incurred a loss after tax of $2.93 million and reported a decline in net assets of $888.62k. As per ASX, the stock of BBX is trading slightly below the average of its 52-weeks’ trading range. The company will hold its AGM on 27 November 2020. The stock of BBX gave a return of 78.94% in the past three months but a negative return of 23.59% in the last one month. On a technical front, the stock of BBX has a support level of ~$0.298 and a resistance level of ~$0.386. Considering the returns, market uncertainty due to the COVID-19 pandemic, decline in net assets, and key investment risks, we suggest investors to keep an eye on business activities and recommend an ‘Avoid’ rating on the stock at the current market price of $0.340 on 11 November 2020.

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

Impact Minerals Limited

IPT Details

Quarterly Highlights (For the Period Ended 30 September 2020): Impact Minerals Limited (ASX: IPT) is engaged in the exploration of Uranium, Gold and Nickel. As on 11 November 2020, the market capitalisation of the company stood at ~$35.54 million. During the September quarter, the company started drilling on a major programme of aircore and reverse circulation drilling at the Broken Hill Ni-Cu-PGE project to test the trend of Red Hill, Platinum Springs, and the Little Broken Hill Gabbro-Rockwell. Under the Commonwealth Project, the company fast tracked its exploration to identify specific drill targets and reported a significant potential for high grade gold-silver epithermal mineralization. During the quarter, the company raised $3.2 million before costs and reported a cash balance of $4.6 million. At the end of the period, the company used cash of $222k from operating activities.

Statement of Cash Flows (Source: Company Reports)

Encouraging Signs at Platinum Springs: The company has recently identified a geochemical vector which increases group element mineralization towards higher grade nickel-copper-platinum at its Platinum Springs prospect in New South Wales. The vector may rank the high grade drill intercepts spread over metres.

Stock Recommendation: The company has continued to witness the impact of COVID-19 pandemic that suggest uncertainty with regards to future operations. As per ASX, the stock of IPT is trading close to its 52-weeks’ high levels of $0.029 and seems to have reached its market potential. The stock of IPT gave a return of 53.84% in the past three months but a negative return of 13.04% in the last one month. On a technical front, the stock of IPT has a support level of ~$0.018 and a resistance level of ~$0.024. On a TTM basis, the stock of IPT is trading at a price to book value multiple of 2.7x, higher than the industry average (Metals & Mining) of 2.0x, and thus seems overvalued. Considering the current trading levels, uncertain market conditions, key investment risks, and volatile returns in the past one month, we suggest investors to wait for a better entry level and give an ‘Expensive’ rating on the stock at the current market price of $0.020 on 11 November 2020.

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

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