4 Small-cap Gold Stocks – AMI, AWV, AUL and HEG

Stocks’ Details

Aurelia Metals Limited (ASX: AMI)

Decent Interim Result: AMI released its financial results for the six months ending on 31 December 2017 wherein the sales revenue and EBITDA increased by 34% and 52%, respectively, and amounted to $68.963 million and $31.320 million, respectively, as compared to the same corresponding period in the prior year. Reported profit was up 321% and net debt reduced by 66% and amounted to $32.190 million. The reduction in net debt included $20.7 million which was raised in Tranche 1 but does not include $64.7 million which was raised in Tranche 2 and in SPP. Performance improved as the processing facility at Hera got increased by 8% and gold recovery also increased by 4%. Recently, the Company acquired Peak Mines for US$58 million and funding was done by equity and debt. ROIC for 2016 was 13.1% while it was 18.0% in 2017. The share prices were up by 46% in the past six months and the stock seems to have more potential for growth at the back of mine improvement and support from base metal prices. We give a “Speculative Buy” recommendation at the current market price of $0.37


Half year Performance (Source: Company Reports)
 

Anova Metals Limited (ASX: AWV)

Executing Financing Facility for Second Fortune Gold Project: AWV recently provided an update on mine activities at the Second Fortune Gold Project in Western Australia. The decline development is progressing as it was planned, and the level 1 historic workings have been intersected.  Parallel development of the decline to level 2 and stripping/production from level 1 were planned through February and March. First ore from the underground development has been successfully processed through the ore sorting plant. Anova’s ore will be treated on a campaign basis and the fees will be payable to Maximus for the processing and this comprised of a Fixed Cost for tonnage and also a variable cost that is based on performance of the ore in the mill. Anova agreed to pay a partial pre-payment of processing costs to secure priority for the milling of 40,000 tonnes of ore. The pre-payment is secured and will be deducted from the costs of the ore which is processed. Anova Metal’s wholly owned subsidiary Anova Metals Australia Pty Ltd entered into a Facility Agreement for a loan syndicate that is co-ordinated by agent and security trustees, MSQ Holdings Pty Ltd and the facility allows to drawdown of $3m to meet its expenditure requirements at the Second Fortune Gold Project and for working capital. The group’s ROE in 2016 was (17.9%) and was (22.1%) in 2017. The share prices were also down by 27.91% in the past six months. Considering that the group is yet to unveil its potential, we give an “Expensive” recommendation at the current market price of $0.062
 

AuStar Gold Limited (ASX: AUL)

Significant Results from Drilling at Rose of Denmark: AUL came up with an update on the progress of trial mining at the Stacpoole Zone. Development continues and is on schedule. In addition, the access rise was ready and was available for development and will shortly enter the ore zone. Due to imminent exposure of the Stacpoole zone, the onsite gold processing plant was now inspected, tested and recommissioned and was ready to receive the ore for processing from the trial mining. The Group sold 100% of the Granite castle and Charters Towers, and due to which the Company has now banked $400,000 in cash from these sales. Drilling in the Northern end of the Rose of Denmark continued and generated significant results which were in line with the mineralization style that was consistently identified to date. The continued success of the drilling program further supports the strategy that the Company’s next step could include a bulk sample program which will help in ascertaining the strike length of these ore zones. ROE in 2016 was (42.6%) and deteriorated to (118.0%) in 2017. The stock prices were down by 41.67% in the past six months and by 12.50% in the last week. While the group is targeting a near term trial mining, there is a lot of risk associated. Thus, the stock looks “Expensive” at the current market price of $0.007, and we would review it at a later date.
 
A section of the drilling at Rose of Denmark (Source: Company Reports)
 

Hill End Gold Limited (ASX: HEG)

Exceptionally high-grade of resources: HEG announced an outstanding maiden kaolin resource estimate for its Yendon high-purity alumina project in Victoria, which was marked by an extensive inventory exceptionally high on grades and low on impurities. Hill End aims to produce high purity alumina via a well-established process in which it will upgrade the kaolinized host rock at Yendon to a kaolin concentrate that contains the world leading levels of alumina. Yendon has the potential to be a world class high purity alumina project. There is also an immense scope to grow the resource further. Since the drilling program finished, a new exploration license was granted that added potential for expansion of the resources and secured the area immediately to the south of the existing Yendon deposit. In addition, historic exploration work identified other kaolin deposits on Hill End’s tenements near Yendon as well as near Pittong to the west of Yendon. This work together with other studies will be used to form the Pre-feasibility Study for the Yendon Project which is expected to be completed in the second quarter of 2018. HEG is aiming to target lithium battery and LED lighting industries as a high purity alumina supplier. The stock prices were up by 110.9% in the past six months but the last five days’ gain of 3.85% was annulled by the drop of 3.7% on March 08, 2018. While there is some potential, the stock might be a good watch. At the moment, it looks “Expensive” at the market price of $0.13

Gold Projects’ Location (Source: Company Reports)

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