Resolute Mining Limited

Decent Outlook:Resolute Mining Limited (ASX: RSG) has added around 8Moz of global mineral resources from 2010 to 2018 in the wake of growing demand for Gold across the globe. Further, its Global Ore Reserves increased from 2.4 Moz in 2010 to 5.9 Moz in 2018. Global investment demand for Gold worldwide has gone up by an average 18% per year and Resolute looks well positioned to capitalize on that with increased capacity. Among all the countries, emerging markets have seen the highest demand for the Yellow metal. During the development phase, the company managed to earn a profit and also pay dividends. Net profit after taxation for the company came in at A$78 Mn in FY18. The Board of Directors declared 2.0 cents per share cash or gold dividend payment which equates to 3.3% of the FY18 revenue. The payment date for the dividend has been set to 12 October 2018 with record date of September 03, 2018.


NPAT (Source: Company Report)

For 2019, the company is determined to complete its Syama underground development and start open pit mining at Tabakoroni. Resolute has also entered into an agreement with Sandvik for full automation of the Syama underground which in turn would enhance the machine productivity and performance. Further, the number of machines required at present would also be reduced thereby cutting down the capex and maintenance cost. Automation would also give way to longer operating hours which would, in turn, increase the tonnage and bring down the unit cost.  In the latest announcement, Resolute stated that Ms. Sabina Shugg AM has been appointed as a non-executive director of the company. Meanwhile, the stock price has generated negative YTD of 2.99% and has breached its immediate support level of $1.234. As the stock approaches its next support level of $0.963, a fresh wave of boost can be witnessed because risk-reward ratio improves. Moreover, 14-day RSI has just bounced back from the oversold band, signaling bounce back in the stock. We recommend a “Buy” in the stock at the current market price of $1.145, while gold prices have otherwise impacted the stock lately; but we believe that the long-term opportunities still prevail given the fundamentals.
 

Gold Road Resources Limited

Change in Leadership: Gold Road Resources Limited (ASX: GOR) has witnessed a slew of major developments recently from CEO transitions to high priority targets identification at Lake Grace JV. As per the release, Ian Murray, current Managing Director and Chief Executive Officer of Gold Road Resources would retire on 17 September 2018 and Duncan Gibbs would assume the role. Gibbs has been a significant part of the turnaround program at Sunrise Dam and his inclusion in Gold Road Resources would be beneficial for the company. On the financial front, the current ratio substantially increased from 5.25x to 13.97x in 1HFY18 from the previous six months. Meanwhile, GOR has generated negative Year to date return of 10.71% but the stock has held on to its support level of $0.606. The ‘Hammer candlestick’ made in last trading session with relative strength indicator turning positive indicates that the stock might move up from the current levels. The company is expected to grow on the back of the number of factors such as leadership transition and new discoveries. We recommend “Buy” in the stock at the current market price of $0.620.
 

Evolution Mining Ltd

Stellar Performance in FY18:Evolution Mining Ltd (ASX: EVN) posted strong numbers for FY18 with underlying net profit after tax at A$250.8 Mn, up 21% from A$206.6 Mn. Group cash flow was reported at A$395.6 Mn in FY18, an increase of 4% from A$382.0 Mn reported in FY17. EBITDA margin was up 8% in FY18 at 53% compared to 49% in FY17. As a result, the Board of Director declared fully franked final dividend of 4 cents per share for its shareholders and it will be payable on September 28, 2018 with the record date of August 29, 2018. This summarized a total dividend payment of 7.50 cents per share for the full year. On the other hand, EVN is primarily focused towards improving margins over production growth. For the next three years, the company is looking forward to producing 700,000 ounces of gold. The group estimates that all-in sustaining cost would remain comparatively flat in three-year period. The company has also identified a new high-grade lode during the recent drilling at GRE46.

 

FY18 Financial Highlights (Source: Company Reports)

The stock has generated positive year to date return of 2.26% and is looking positive on the chart. The short-term consolidation phase of the stock seems to be over with relative strength indicator moving higher and the stock rebounding from the support level of $2.70. We recommend “Buy” in the stock at the current market price of $2.770 (up by 2.214% on September 07, 2018), expecting that the company would continue to post good numbers and is on the right track to achieve its three years production target.

 
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