Rox Resources Limited
Demerger of Nickel and Base Metal Assets: Rox Resources Limited (ASX: RXL) is an explorer and developer of gold and nickel projects- the Mt Fisher Gold, Youanmi Gold and the Fisher East and Collurabbie Nickel. As of 1 April 2021, the market capitalisation of the company stood at ~$89.83 million. RXL recently intimated the investors regarding the change in its official address to Level 2, 87 Colin Street, West Perth Western Australia 6005. On 31 March 2021, RXL confirmed its decision to spin-out its Fisher East and Collurabbie nickel and base metal assets to remain focused on the Youanmi gold project’s development. RXL will demerge these projects and form into a new firm, Cannon Resources Limited (CRL). RXL has also proposed a share consolidation in 1:15 before the demerger and formation of CRL to have a simplified share structure subject to its shareholders’ approval. RXL shareholders are expected to receive one ordinary share in CRL for every ~4.3 shares held in RXL on a post-consolidation basis. RXL is in discussions with the Australian Tax Office (ATO) to seek demerger relief under Division 125 of the Income Tax Assessment Act 1997 (ITAA 1997).
Youanmi Gold Project (YGP) Extension: RXL and its JV partner, Venus Metals Corporation (VMC), provided an update on its drilling campaign in the OYG Joint Venture area (RXL 70%). RXL updated on the assay results received from the three holes drilled under the campaign. It has confirmed the extension of the mineralisation area known by 100 metres to the south at the Grace prospect. RXL has designed the drilling to test the southern extension of the deposit and other high-grade and high priority targets - Junction and Link.
Look at the December Ending Half-Yearly Results: The company reported a net loss after tax of $6.30 million during 1HFY21 on account of the exploration expenditure incurred on activities, total corporate expenses, and share-based payments. During 1HFY21, RXL undertook exploration on all the four JV projects held with VMC. The OYG JV, plans to extend the high-grade mineralisation at Link and Junction targets to increase the resource ounces. The other three projects also returned gold intersection at the drilled targets. RXL is strategizing to unlock the portfolio value via an assets’ sale or spin-off via a new entity regarding its nickel portfolio. During 1HFY21, RXL issued 41.66 million shares to pick up a 20% higher stake in the OYG JV at the YGP. It raised $222k during the period via the exercise of 9.25 million options at $0.024 per option. RXL held a cash and cash equivalents balance of $5.24 million as of 31 December 2020.
1HFY21 P&L Results (Source: Company Reports)
Key Risks: The company runs the risk of discovery of gold deposits and estimating the reserves, achieving desired assay results and their correct interpretation, and the risk of raising finance for drilling campaigns.
Outlook: The company plans to undertake substantial diamond, reverse circulation drilling and various studies for the resource estimation and an optimised development plan in FY21. RXL also intends to conduct diamond drilling on its FY21 targets again and has hired a new drilling contractor for the same.
Stock Recommendation: The stock of RXL gave a positive return of 15.15% in the past one month and a negative return of 25.49% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level of $0.016-$0.098. The stock of RXL has a support level of ~$0.033 and a resistance level of ~$0.042. Considering the absence of revenue and net loss for 1HFY21, the news of the demerger of the nickel projects we suggest keeping an eye on the proposed transaction and give an ‘Avoid’ rating on the stock at the current market price of $0.038 on 1 April 2021.
Redbank Copper Limited
Grant of Tenements at RBC Project: Redbank Copper Limited (ASX: RCP) is an exploration firm and a developer of the Redbank Copper project (RBC) and Millers Creek Copper (MCC) project. RCP’s segments consist of Exploration, Care and Maintenance, and Corporate. As of 1 April 2021, the market capitalisation of the company stood at ~$54.14 million. RCP announced the recent grant of seven tenements (a district spanning tenement package) for a six-year initial term at its RBC project in the McArthur Basin. It is in the process of being granted other tenements.
1HFY21 Results Announced: RCP announced a net loss after tax of $716k attributable to its shareholders. At the RBC project, RCP applied for exploration licences to cover the eastern McArthur Basin and they are being processed under the Northern Territory’s (NT) regulations for approval. At the RBC project, RCP has analysed its re-sampled field program results, historical drill core results and build a digital database to use in a JORC2012 compliant MRE (mineral resource estimate). It plans to undertake various studies to determine copper mineralisation. In December 2020, RCP appointed Mr Bruce Hooper to the strategy Board to advance its McArthur Basin ‘district spanning’ exploration program. RCP is also studying the Sandy Flat mine site along with the NT government to restore and rehabilitate the site in FY21. RCP also plans to hire geologists and deploy modern exploration methods to identify the copper deposits within its project area. At the MCC project, RCP has been granted the exploration licences for Millers Creek- EL6247 and Kingoonya- EL6321. It held a cash and cash equivalents balance of $2.29 million as of 31 December 2020.
1HFY21 P&L Highlights (Source: Company Reports)
Key Risks: The company faces the risk of mineral resource estimate on its projects, grant of approvals from the authorities, the risk of identifying the copper targets timely to drill and raise funds timely for exploration activities.
Outlook: At the RBC project, RCP in the process of analysing its fieldwork program results of FY20 and historical drill core database via geological consultants to revise its existing MRE (mineral resource estimate). It was expecting delivery of results in Q2FY21. RCP has planned an extensive program to drill test the copper targets.
Stock Recommendation: The stock of RCP gave a positive return of 37.14% in the past three months and a positive return of 57.37% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level of $0.048-$0.155. The stock of RCP has a support level of ~$0.09 and a resistance level of ~$0.102. Considering the early licence seeking stage of the company’s flagship project (RBC), absence of revenue and net loss-making business, we give an ‘Avoid’ rating on the stock at the current market price of $0.96, down by 8.752% on 1 April 2021. We also suggest to wait for better catalysts to drive the stock.
Environmental Clean Technologies Limited
Trading Halt Announced: Environmental Clean Technologies Limited (ASX: ECT) is engaged in reconstructing its Bacchus Marsh plant and developing resource and energy technologies leading to zero-emissions. On 1 April 2021, ASX informed the market regarding a trading halt placed on its shares at its request. The shares will remain under halt until the earlier of a news update by ECT or normal trading commencement on 7 April 2021. The shares have been placed under a trading halt in preparation for capital raising by ECT.
A Look at ECT’s 1HFY21 Financials: For 1HFY21, the company reported a net loss after tax to $217k and nil revenue due to the absence of product sales from the Bacchus Marsh facility. ECT incurred far lower total expenses ($217k) for 1HFY21 due to the production halt in October 2019, a business continuity plan due to the pandemic and cash retention. ECT was rebuilding the facility and reported much of the expenditure of capital nature. ECT made capacity improvements to its pilot plant and added new equipment and plant on the Coldry Upgrade (CU) project. During 1HFY21, inked a Supporting Participant Agreement with Future Energy Exports Cooperative Research Centre (FEnEx CRC). ECT will use FEnEx program to confirm the scale-up of COHgen in partnership with producers and users and find performance goals to produce hydrogen from brown coal.
1HFY21 P&L Highlights (Source: Company Reports)
Key Risks: The company faces the risk of procurement and shipment delays due to the COVID-19 restrictions, working with safety and required permitting protocols at the site. It also meets the risk of bushfires, natural calamities in Australia and business strategy execution as per plans.
Outlook: Currently, ECT is redeveloping its Bacchus Marsh plant, and upon the CU project completion, it expects to drive the sale of char product and solid fuel. ECT also has plans to build a HydroMOR plant in India and is engaging in discussions for the same. However, due to the COVID-19 travel restrictions, it cannot schedule and progress on in-person meetings.
Stock Details: The stock of ECT gave a positive return of 33.33% in the past month and a positive return of 100% in the past three months. The stock is currently trading at its 52-weeks’ high level of $0.002. As of 1 April 2021, the market capitalisation of the company stood at ~$19.20 million. The company has requested ASX to place its securities under a trading halt until the earlier of a news update by ECT or normal trading the commencement on 7 April 2021. The stock last traded at $0.002.
Comparative Price Chart (Source: Refinitiv, Thomson Reuters)
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