Stocks’ Details

AVZ Minerals Limited

Positive Feedback from Government Engagement: AVZ Minerals Limited (ASX: AVZ) is engaged in the exploration of minerals. Recently, AVZ informed regarding the appointment of mining veteran John Clarke for the post of Non-Executive Chairman.

Q1FY20 Operational highlights for the Period Ended 30 September 2019: AVZ declared its quarterly report, wherein the business reported net cash used in operating activities at $2.349 million, which included $1.797 million used for exploration and evaluation, $0.212 million used for staff cost and $0.372 million for administration and corporate costs. The business reported net cash used in investing activities at $0.766 million and a cash balance of $5.643 million as on 30 September 2019. During the quarter, the company reported positive results from Phase 1 metallurgical test work and the appointment of GR Engineering as DFS engineer. The company also increased its stake by 5% in the Manono Project with a plan for further increase in ownership. During the quarter, AVZ also awarded the geotechnical and hydrogeological studies contract that will assist in the development of final pit design based on the conversion of resources to reserves.
 

Q1FY20 Cash Flow Statement (Source: Company Reports)

Q2FY20 Cash Flow Guidance: As per the second quarter FY20 cash flow guidance, the company is expecting a total cash outflow of $2.1 million, which includes exploration and evaluation costs of $1.5 million, staff costs of $0.25 million and administration and corporate costs of $0.35 million.

Stock Recommendation: The stock is quoting at $0.045, with a market capitalisation of ~$101.38 million. The stock has generated a negative return of 12% and 18.52% in the last three months and six months, respectively. At the current market price, the stock is trading at the lower band of its 52-week trading range of $0.037 and $0.096. AVZ received excellent feedback from the government and the company is looking forward to securing a range of benefits like, tax incentives and exemptions and planned rail and port upgrades, which is likely to aid improved business growth. Considering the current trading levels and business prospects, we recommend a ‘Speculative Buy’ on the stock at the current market price of $0.045, up 2.273% as on 19 December 2019.

Azure Minerals Limited

Commencement of 7,000m RC Drilling Program: Azure Minerals Limited (ASX: AZS) is engaged in the exploration of base and precious metals. Recently, the company reported the issuance of 4,400,000 Options Exercisable at $0.205, expiring on 30 November 2022.

Major Highlights from Loma Bonita Gold-Silver Deposit: AZS provided an update on the Loma Bonita gold-silver project wherein, the company reported the commencement of the 7,000m RC drilling program. Channel sampling in a road cutting 400 metres along trend from the Loma Bonita deposit returned a continuous gold intercept of 35.5m at 3.6g/t Au, confirming upside potential.

FY19 Financial Highlights for the Period Ended 30 June 2019: AZS declared its full-year financial results, wherein the company reported revenue from continuing activities at $45,983 as compared to $85,748 in FY18. The company reported a net loss of $9,735,486 as compared to $9,220,519 in the previous financial year. Exploration expenses were reported at $4,610,484 as compared to $5,813,830 in FY18.


FY19 Income Statement Highlights (Source: Company Reports)

Guidance: The company is focusing on growing the Alacrán gold & silver resources of 32.2Moz silver & 150,000oz gold with respect to the Loma Bonita deposit. In addition, it is planning for exploration drilling on greenfield targets for March & June quarters of FY20.

Stock Recommendation: The AZS is quoting at $0.125 with a market capitalisation of ~$20.27 million. The stock has corrected 32.43% and 26.47% in the last three months and one year, respectively. The stock is quoting at the lower band of its 52-week trading range of $0.089 and $0.280. The company reported the receipt of environmental approval for the drilling program at its Alacrán Project and informed the commencement of preparation of access tracks and drill sites and drill rig mobilisation.Considering the recent drilling activities and current trading levels, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.125 as on 19 December 2019.

Galan Lithium Limited 

Reported $2 Million Capital Raising: Galan Lithium Limited (ASX: GLN) is engaged in the exploration of lithium and other metals. On 19 December 2019, the company reported extensive brine potential at Western Basin Projects, wherein the business reported completion of surveys at Pata Pila and Rana del Sal. The company also reported confirmation of the presence of highly conductive horizons consistent with extensive geological units saturated with brine.
Q1FY20 Operational Highlights for the period ended 30 September 2019: GLN reported a mineral resource of 684,850 tonnes of contained lithium carbonate equivalent (LCE) at 672mg/l Li for North Zone, Candelas project. Other highlights during the quarter are as under:

1. Resource estimate exceeds the company’s expectation and forms a solid basis to advance the Pre-Feasibility Study at Candelas.

2. The company reported additional lower grade resources at Candelas North and Candelas Central Zones.

3. Exceptional maiden drill results from the Western Tenements indicate a potential for further additional resources.

4. During the quarter, the company appointed South American based lithium industry expert Daniel Jiménez to the BOD.

5. The company reported completion of $2 million capital raising via placement and SPP.

Cash Flow Highlights for Q1FY20: The company reported net cash used in operating activities at $2.299 million, and net cash from financing activities at $1.934 million. GLN reported cash and cash equivalents at $2.473 million as on 30 September 2019.


Q1FY20 Cash Flow Activities (Source: Company Reports)

Stock Recommendation: The stock is quoting at $0.135 with a market capitalization of ~$22.9 million. The stock has corrected 21.62% and 27.5% in the last three months and six months, respectively. The stock is quoting at the lower band of its 52-week trading range of $0.135 to $0.680. During the quarter, GLN successfully and safely completed its drilling campaign at Pata Pila and Rana de Sal projects. The stock is available at a price to book value multiple of 1.4x on TTM basis as compared to the industry median of 1.5x. Looking at the current trading levels, drilling activities and business prospects, we recommend a ‘Speculative Buy’ on the stock at the current market price of $0.135, down 6.897% on 19 December 2019.

Firefly Resources Limited

Issuance of Options: Firefly Resources Limited (ASX: FFR) is engaged in the exploration of gold and lithium across Western Australia. On 17 December 2019, FFR informed the issue of 5,700,000 unlisted options including:

2,000,000 options exercisable at $0.12 on or before 31 December 2021.

2,000,000 options exercisable at $0.14 on or before 31 December 2022.

850,000 options exercisable at $0.12 on or before 31 December 2021.

850,000 options exercisable at $0.14 on or before 31 December 2022.

Q1FY20 Cash Flow Highlights for the Period Ended 30 September 2019: FFR reported its quarterly cashflow highlights, wherein the company reported net cash used in operating activities at $0.603 million, net cash used in investing activities at $0.011 million and net cash from financing activities at $2.529 million. The company reported cash and cash equivalents of $2.154 million as on 30 September 2019.


Q1FY20 Cash Flow Statement (Source: Company Reports)

Cash Flow Guidance for Q2FY20: As per the cash flow guidance for the second quarter FY20, the company expects total estimated cash flow at $0.53 million, which includes $0.25 million in exploration and evaluation, $0.18 million for staff costs and $0.1 million for administration and corporate costs.

Stock Recommendation: The stock is quoting at $0.055 with a market capitalization of ~$4 million. The stock has corrected 42.53% and 60% in the last three months and six months, respectively. At the current market price, the stock is quoting close to the lower band of its 52-week trading range of $0.049 and $0.350. The stock is available at a price to book value multiple of 0.8x on trailing twelve months (TTM) basis as compared to the industry median (metal & mining) of 1.5x. Looking at the current trading levels, price correction and valuation, we recommend a ‘Speculative Buy’ on the stock at the current market price of $0.055, up 10% as on 19 December 2019.

 
Comparative Price Chart (Source: Thomson Reuters)

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