Silver Mines Limited

Positive Cues form Barabolar and Bowdens Projects: Silver Mines Limited (ASX: SVL) is engaged in exploration activities of precious metals at Barabolar Project and Bowdens Silver Project.

Recently, SVL issued 100,000,000 fully paid ordinary shares at an issue price of A$0.10 per share to institutional, professional and sophisticated investors under the placement announced on 9 September 2019. The company raised $10 million from the share placement which will be used for the expansion of exploration activities, including drilling at Bowdens Silver Project and Barabolar Project.

Fourth Quarter Performance Highlights:SVL reported its Q4FY19 cash flow activities wherein the company posted $2.22 million of cash used in operating activities, $2.65 million net cash from financing activities and $0.63 million of cash in hand during the quarter. The company has provided guidance of Total estimated cash outflows for the next quarter at $1.3 million including $0.75 million to be used for exploration and evaluation, $0.3 million for staff costs and $0.250 million for administration and corporate costs. During the June 2019 quarter, the company received laboratory assay results from the first round of drilling at the Cringle and Kia Ora West prospects. The drilling program consisted of seven reverse circulation (RC) holes for a total of 1,386 metres at Cringle (BAR19002 – BAR19008), and two RC holes with one diamond tail for 475 metres at Kia Ora West. Exploration work is continuing to expand at the Barabolar project area with a regional soil sampling program commenced to the west of the Mt Laut Pyrophyllite alteration zone, and west of the Cringle Prospect.


Q4FY19 Cash Flow Highlights (Source: Company Reports)

Outlook:The Management is positive for the upcoming Bowdens project where the company will explore high grade silver and sulphide, commencing during September 2019. Barabolar is an outstanding exploration playto see up to 4000 metres deeper drilling program, commencing during the fourth quarter of 2019.

Stock Recommendation:The stocks of SVL is quoting at $0.105 with a market capitalization of $80.52 million. The stock is trading at the upper circuit of its 52-week trading range of $0.024 to $0.155. The stock has generated exuberant return of 138.64% and 75% in last three-months and six-months, respectively. The stock is down 12.50% in last 5 days. The company expects favorable exploration results from the Bowdens project and Barabolar project which are likely to add value to the business in coming years. Considering the upcoming operational activities at different projects, capital raised to support the development, substantial potential of the Silver Mines asset base and in particular the Bowdens Silver Project and the Barabolar Project, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.105, with no change as on 13 September 2019.
 

Sheffield Resources Limited

Fund Raising to Boost Upcoming Operations: Sheffield Resources Limited (ASX: SFX) operates in mineral sands exploration and development within Australia. The company is engaged in Thunderbird Mineral Sands Project, located near Derby in the Canning Basin region of Western Australia.

Recently, SFX announced that the company has received commitments capital raising worth $18.0 million through the issue of 46.2 million fully paid ordinary shares at an issue price of 39 cents per share. The Placement will be executed in two tranches. In the first tranche, the company will raise approximately $10.4 million followed by $7.6 million in the second tranche. The second tranche will be completed on receiving shareholder’s approval in mid-October 2019.
FY19 Financial Highlights:Sheffield Resources Limited announced its FY19 results for the period ended 30 June 2019 wherein it incurred an operating loss of $10.25 million as compared to a net loss of $4.3 million in FY18. Net cash used in operating activities during the year stood at $6.160 million while the company reported $30.59 million as net cash used in investing activities. The company reported cash in hand at $2.698 million, total assets at $79.54 million and net assets at $72.64 million as on 30 June 2019. The company reported Maiden Inferred Mineral Resource at Mindarra Springs of 2,200 million tonnes @ 1.6% HM and executed US$175 million project finance facility with Taurus Mining Finance. The company executed Thunderbird LNG supply agreement during FY19. SFX reported Maiden Inferred Mineral Resource at Night Train of 130 million tonnes @ 3.3% HM. The company executed EPC contract with GR Engineering Services and received mining lease for Thunderbird Mineral Sands Project.


FY19 Financial Highlights (Source: Company Reports)

Outlook:As per the Management guidance, SFX is targeting initial production in 2021. The initial planned production profile is aligned with consensus emerging supply deficit in global zircon markets. The company will be looking for supply of high-quality products to a range of potential customers form the Thunderbird project.

Stock Recommendation:The stocks of SFX is trading at $0.425 along with a market capitalization of $110.38 million. The stock is trading towards the lower end of its 52-week trading range of $0.300 to $1.275. The stock has delivered a return of 41.67% and -22.02% in last 3-months and 6-months, respectively. The stock is up 7.59% in last 5 days trading sessions. The prospects of Thunderbird project are positive, and recent fund-raising activity is likely to help the business for commencing the project. Considering the aforesaid facts, current price movement and development activities at the projects, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.425, up 1.19% as on 13 September 2019.

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