Azure Minerals Limited

AZS Details

Profit Booking: Azure Minerals Limited (ASX: AZS) is engaged in exploration and mine development of gold, silver, nickel, and zinc located in Western Australia and Mexico. As on 16 October 2020, the market capitalization of the company stood at ~$93.24 million. During FY20, other income of the company increased from $45.9k in FY19 to $510k in FY20 and the company reported loss after tax amounting to $5.67 million, declined from $9.73 million in the pcp. The cash and cash equivalents ended June 2020 stood at $0.84 million in FY20 as compared to $0.65 million in FY19.

June 2020 Financial Highlights (Source: Company Reports)

Portfolio expansion and Exploration of Significant Nickel-Copper Sulphides at Andover Nickel Project: The company has recently reported decent sulphide mineralized intersection at its first drill hole ANDD0001 and observed more significant nickel and copper sulphide mineralization at the second drill hole on the Andover Project. The intersections consist of sulphides as pentlandite, chalcopyrite and pyrrhotite and similar mafic rocks of the Andover mafic-ultramafic intrusive complex. The company has expanded its portfolio by acquiring Barton Gold Project in Kookynie-Ulysses Gold Corridor.

Outlook: The company is looking at market opportunities to diversify across geographies and commodities, and re-starting exploration and mining activities in Western Australia with Andover, and Turner River as their key Projects. With acquisition of 4 new gold and nickel projects from Creasy Group, the company has diversified its portfolio.

Stock Recommendation: Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the group is may face uncertainty in the coming period. The stock of AZS gave a positive return of 394.44% in the past six months and a return of 102.27% in the past one month. The stock is trading close to its 52-weeks’ high levels of $0.475. The stock of AZS has a support level of ~$0.31 and a resistance level of ~$0.473. On TTM basis, the stocks of AZS is trading at 14.7x higher than the industry (Basic Materials) median of 2.6x and thus seems overvalued. Considering the current trading levels and higher Price to Book multiple, we suggest our investors to book profit on the stock and recommend a ‘Sell’ rating on the stock at the current market price of ~$0.445, up by 15.584% on 16 October 2020.

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

Troy Resources Limited

TRY Details

Spectacular exploration & drilling results, Increase in Gold revenue and prices: Troy Resources Limited (ASX: TRY) is engaged in the mining, exploration and production of gold in Australian and South America. As on 16 October 2020, the market capitalization of the company stood at ~$97.96 million. The company reported 45.7% decrease in the total revenue from $103.61 million in FY19 to $56.30 million in FY20. It was due to shutdown of mining activities from October 2019 to Early January 2020 and pit-wall stability issues at Smarts 3 Pit. The total production of gold fell to 23,580 ounces in FY20 from 58,118 ounces in FY19 and the Group’s Gold Sales witnessed a decline from 57,798 ounces in FY19 to 23,726 ounces in FY20.

FY20 Operational Highlights (Source: Company Reports)

Production Update: The company has provided update for its September 2020 Quarter, wherein it treated 201,812 tonnes of gold at an average grade of ~1.03 g/t Au. This was partly affected by wet weather and travel restrictions due to COVID-19. However, it resumed drilling for Smarts Underground (UG), Goldstar and Gem Creek projects and gold mining at Karouni in Guyana. In July and October, it achieved excellent results from its drilling exercise at Smarts Underground and plans to further the drilling program for gold mineralization. The firm estimates to produce 35,000-40,000 ounces for FY2021 at an AISC of US$1,450-$1,550 per ounce.

Stock Recommendation: The company reported 4% fall in Loss after tax to $43.8 million in FY20 from $45.83 million in FY19 and a decline in the balance of cash and cash equivalents to $4.91 million in FY20. As per ASX, the stock of TRY gave a return of 55.55% in the last one month and 68.47% in the past three months. The stock is also inclined towards its 52-weeks’ high level and thus retains limited potential for further growth. On a Technical front, the stock of TRY has a support level of ~$0.13 and a resistance level of ~$0.16. On a TTM basis, the stock of TRY is trading at price to book value multiple of 62.3x, higher than the industry average of 2.6x, and thus seems overvalued. Considering the current trading levels, falling revenues and production, softer market conditions and higher price to book multiple, we suggest a ‘Sell’ rating on the stock at the current market price of $0.155 on 16 October 2020.

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

Note: Troy Resources Limited (Company) is a client of Kalkine Media Pty Ltd (Kalkine Media), an affiliate of Kalkine. However, under no circumstances have Kalkine or its related entities been, directly or indirectly influenced in making any related insights concerning Company as contained in this report, and no form of compensation is or will be received by Kalkine, Kalkine Media or Kalkine’s other related entities for the publication of this report.

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