Kogi Iron Limited

A Quick Look at Q1 FY20:Kogi Iron Limited (ASX: KFE) is engaged in the testwork activities and evaluation studies at the Agbaja Cast Steel Project. The market capitalisation of the company stood at A$34.5 Mn as on 6^th November 2019. Recently, the company has issued 821,002 ordinary shares on 5^th November 2019 at the consideration of $0.0543 per share. The shares have been issued in lieu of payment for professional services provided to the company by consultants. The company has released its results for the Q1 FY20, wherein, it stated that Farnborough Engineering Consulting Services (FEC) has wrapped up a review on potential capital and operating costs of the Agbaja Cast Steel Project.  As part of review, FEC considered thorough testing regime conducted by Tenova including the processes and technologies identified for producing Direct Reduced Iron (or DRI), and for smelting and refining DRI. The following picture provides an idea of cash flows for Q1 FY20:

 
Cash Flow (Source: Company Reports)

What to Expect:KFE is moving forward with raising a total of $10 Mn for the Bankable Feasibility Study (BFS) and working capital to take the project to financial close. The company is continuing its negotiations with various parties regarding this targeted amount.

Stock Recommendation:At the end of the September 2019 quarter, KFE possessed cash at bank of $441,000. In addition, the company had 663,548,234 fully paid ordinary shares and 142,328,948 listed options on the issue as at 30^th September 2019.  The key margins of the company have witnessed an improvement on a YoY basis in FY 2019. On the stock’s performance front, it delivered negative returns of 37.35% in the last six months. As per the ASX, the stock of KFE is trading towards its 52-week lower levels. Therefore, considering the volatility in the stock, price movement in last 6 months and other development, we have a watch stance on the stock at the current market price of A$0.060 per share, up 15.385% on 6^th November 2019, probably taking ques from the issue of shares in lieu of payment for professional services provided to the company by consultants.
 

Titanium Sands Limited

Company’s Update on Mannar Project: Titanium Sands Limited (ASX: TSL) is a mineral sands exploration company. The market capitalisation of the company stood at $10.17 million as on 6^th November 2019. RC aircore drilling is continued at the company’s existing Mannar Island licenses. The resource infill and extension drilling are aiming beneath the water table under parts of the shallow resource drilling. The company is also expecting to announce a resource update for the shallow surface exposed high-grade resources situated above the water table.

Acquisition of an Additional Mannar Island Tenure: The company announced a proposed acquisition of tenure with high grade minerals sands surrounded and adjoining by the company’s existing Mannar Island tenure.The acquisition tenure adjoins the current tenure held by the company on Mannar Island and contains high grade drilling results along strike from high grade resource zones defined on the company tenure.

Appointment of CPS Capital Group: The company has appointed CPS Capital Group as its Corporate Advisor. CPS was appointed as the managing lead broker in 2018 to the company’s successful prospectus raise and they have been constant supporter of TSL since reinstatement to trading in December 2018.


Proposed Acquisition Tenure (Source: Company Reports)

What to Expect from TSL: The company has a potential to be in production by CY2020 with low capex, access to skilled labour, clear pathway to obtain mining approvals, attractive in-country fiscal incentives and proximity to existing infrastructure.Now with the support of CPS, TSL hopes to deliver good news by way of further resource upgrades and company’s growth in the coming 12 months.

Stock Recommendation:The company has an asset to equity ratio of 1.02x and its current ratio stood at 15.98x in FY19, which is above the industry median of 1.75x. The stock has gained 33.33% on YTD basis. Currently, the stock is trading towards the 52-week higher levels. Considering the above facts, we have a watch stance on the stock at the current market price of $0.018 per share, up 12.5% on 6^th November 2019 and suggest investors to wait for further catalysts.

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