Bellevue Gold Limited

 

 BGL Details
 
BGL Reveals Results of Maiden Indicated Resource: Bellevue Gold Limited (ASX: BGL) is involved in the exploration of gold from its Bellevue Gold Project, situated in Western Australia. Recently, the company notified regarding a Maiden Indicated Resource of 860,000oz grading 11.6g/t gold at its Bellevue Gold Project in West Australia. The Indicated Resource forms part of Bellevue’s total 2.3Moz global Resource at 10g/t. The company has completed a total of 240,000m of diamond drilling at the Project. Moreover, the company expects an increase in the Indicated Resource for the December quarter. The company expects that the completion of these studies will mark the transition to the project development phase, which, in turn, will indicate the combination of economic and technical strengths, thereby enhancing shareholder’s value.
 
Metallurgical Test Work: The company recently informed the market about the robust results of metallurgical test work at its Bellevue Gold Project in Western Australia. Notably, the test work has recorded recoveries averaging 97.8% across the multiple lodes, depictingthat the Bellevue lodes are excellent with respect to extracting gold using conventional gravity and CIL processing flowsheets.
 
Other Recent Updates: The company appointed two highly experienced resources Directors to its Board namely Fiona Robertson and Shannon Coates. The management stated the appointments marked an additional milestone in BGL’s strategy to develop its high-grade Bellevue gold mine.
 
March’20 Quarter Key Highlights: During the quarter, total Inferred Resource at the Bellevue Gold Project rose to 6.1Mt at 11.3 g/t for 2.2Moz, up by 23%. BGL also reported its quarterly cash flow highlights, wherein, the company reported payments for administration and corporate costs of $600K, while net cash used in operating activities at $873K.The company reported net cash used in investing activities at $8.813 million. The company reported its cash and cash equivalents at the end of the quarter at $37.819 million.
 

Cash Flow Highlights (Source: Company reports)
 
Growth Impetus: The company has been pro-active in responding to the COVID-19 crisis. In doing so, the company has executed number of measures to protect the health and wellbeing of its staff, contractors, and local communities. Drilling and dewatering activities are continuing as planned. The company has also commenced its economic studies on the Bellevue Gold Project.
 
Key Risks: The company is susceptible to certain risks such as credit risk, liquidity risk, and market risk, which includes currency risk, interest rate risk, etc. Further, the company is susceptible to fluctuations based on changes in global economic conditions and end-use markets.
 
Valuation Methodology: P/BV Multiple Based Relative Valuation (Illustrative)

P/BV Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)
 
Note: All forecasted figures and peers have been taken from Thomson Reuters, NTM-Next Twelve Months
 
Stock Recommendation: The stock of BGL is currently quoting at $1.00 with a market capitalisation of ~$664.02 million. The stock is trading at the upper band of its 52-week trading range of $0.285 to $1.225. As per ASX, the stock of BGL gave a return of 71.68% in the last six months (as at 06-07-2020). During Dec’19, current ratio of the company was 3.06x, as compared to the industry median of 1.81x. We have valued the stock using a P/BV multiple based illustrative relative valuation method and arrived at a target price of an upside of high single-digit (in % terms). Considering the above factors and current trading levels, we recommend a “Hold” rating on the stock at the current market price of $1.00 per share, up 3.093% on 7th July 2020.

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

Aeris Resources Limited

 

AIS Details
 
AIS Enters Into A$ Gold Hedging:Aeris Resources Limited (ASX: AIS) is a diversified mining and exploration company, with a clear vision to become a mid-tier mining company with a focus on gold and base metals. Recently, the company announced that Lion Mining Pty Ltd, a subsidiary of AIS, entered into unsecured A$ gold hedges with Macquarie Bank Limited for 36,000 ounces at a forward price of A$2,536.25 per ounce. The hedging is expected to mature in the coming 12 months, with scheduled monthly deliveries of 3,000 ounces. In another update, the company stated that First Sentier Investors Holdings Pty Limited, has become a substantial holder of the company, with a voting power of 5.69%.
 
FY20 Details & FY21 Outlook for Tritton: On 2 July 2020, the company stated that copper production at the Tritton Copper Operations for FY2020 stood at 25,041 tonnes, up ~2% as compared to the upper limit of the previously announced guidance, which was in the range of 23,500 and 24,500 tonnes. For FY21, the company expects an exciting year. The company expects copper production at the Tritton Copper Operations to be in the range of 23,500 to 24,500 tonnes at a C1 Cash Cost of $2.80/lb to $2.95/lb in FY21. Gold production at the Cracow Gold Operations is expected to be in the range of 70,000 – 75,000 ounces at a C1 Cash Cost of $980/oz for FY21.
 
AIS Completed Purchase of Cracow Gold Mine:  As per another update, AIS completed the purchase of Cracow gold mine from Evolution Mining Limited, for an upfront cash payment of $60 million. AIS has funded the transaction through a fully underwritten $40m equity raising and $30m bridge debt facility. The acquisition is in line with the Aeris’ strategy. Notably, the company remains on track to witnessed production and exploration prospects at Cracow and has dedicated ~$13 million to exploration in the coming two years.
 
Other Recent Updates: In another update, the company announced the completion of the retail shortfall bookbuild, under which ~246,933,258 entitlements were offered for sale.
 
1HFY20 Key Highlights: During the period, the company reported revenues $108 million, down 5% year over year, owing to decline in copper production. Gross profit for the period stood at $4.6 million, down 13% year over year. Net loss for period stood at $28.7 million, down 174% year over year. At the end of 31 December 2019, the company’s cash and short-term investments stood at ~$10.9 million, with total debt amounting to $55.3 million.
 

Key Highlights (Source: Company Reports)
 
Key Risks: The company is exposed to various kinds of risks such as fluctuation in foreign currency, increased competition, and uncertainty due to COVID-19 led disruption. The company derives revenues mainly from the sale of copper, gold, and associated minerals. Hence, the company’s business performance is highly depended on the demand for the same. Further, the acquisition of Cracow carries integration risks, which includes potential delays in implementing necessary changes, and difficulties in integrating various operations.
 
Stock Recommendation: The stock of AIS is quoting at $0.043 with a market capitalisation of ~$73.06 million. The stock is trading slightly below the average of its 52-week trading range of $0.023 to $0.067. As per ASX, the stock of AIS gave a return of 6.27% in the last six months. During Dec’19, debt to equity multiple of the company stood at 1.25x, as compared to the industry median of 0.21x. On the valuation front, the stock is trading at a P/BV multiple of 1.5x as compared to the industry average of 5.0x on TTM (Trailing Twelve Months) basis. Considering above factors, higher production, exploration prospects at Cracow, acquisition synergies, current trading levels and high debt level, we recommend a “Speculative Buy” rating on the stock at the current market price of $0.043 per share, up 10.256% on 7th July 2020.

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

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