Stocks’ Details

Red River Resources Limited

Progress at its Hillgrove Gold Project:  Red River Resources Limited (ASX: RVR) is engaged in mineral exploration and production of zinc, copper and lead concentrate. The market capitalisation of the company stood at $50.08 Mn as on 24^th February 2020. The company recently updated the market with the progress at its Hillgrove Gold Project and stated that it has undertaken a grab sampling program for evaluating the grades of historic fill remaining in the Sunlight workings as a part of the Hillgrove Gold Mine Restart Strategy. The company reported a weighted average grade of 5.7 g/t Au, 1.8 g/t Ag and 0.5% Sb from 20 samples which were taken from draw points on 1700 and 1650 Levels. For the Hillgrove gold project, the next step is to undertake metallurgical characterisation test work.

For the month of January 2020, the company reported record copper concentrate production of 860 tonnes and zinc concentrate production of 1,431 tonnes. The following picture provides an overlook of the ore mined at the Thalanga Operations:


Thalanga Operations Ore Mined (Source: Company Reports)

Future Strategy for Thalanga Operation:  The Company would continue to explore for metals on its properties, and maximise production from its Thalanga Operation.

Stock Recommendation: For the quarter ended 31^st December 2019, the company reported revenue amounting to $12.2 million. At the end of the quarter, cash balance of the company stood at $11.9 million, reflecting a decline of $5.4 million. Net margin of the company stood at 3.9% in FY19, reflecting YoY growth of 3.4%. This represents that the company has improved its position to convert its topline into the bottom line on a YoY basis. Hence, considering the progress at the Hillgrove Gold Project, the performance of Q2 FY20 and improved net margin, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.095 per share, down by 2.062% on 24^th February 2020.

Rox Resources Limited

Impressive Gold Grades: Rox Resources Limited (ASX: RXL) is engaged in the production of gold and nickel. The market capitalisation of the company stood at $45.2 Mn as on 24^th February 2020. Recently, the company through a release dated 18^th February 2020, stated that drilling at the Youanmi Gold Project has delivered more impressive gold grades, which include (1) RXRC158: 4m @ 69.5 g/t Au from 28m, (2) RXRC137: 4m @ 7.4 g/t Au from 60m and (3) RXRC140: 24m @ 1.5 g/t Au from 56m.

The company has wrapped up the ~16,000m RC drilling program between the months of August and December 2019. This has significantly improved RXL’s understanding of gold mineralisation at Youanmi and provided a clear demonstration of the exploration upside.


Net Cash from Operating Activities (Source: Company Reports)

Focus of RXL: The company would continue to explore its mineral tenements. The company would maintain its focus on the recently acquired Youanmi Gold and Eureka Gold/Nickel Projects.

Stock Recommendation: Current ratio of the company stood at 7.60x in FY19 as compared to the industry median of 1.83x. This reflects that the company is in a decent position to address its short-term obligations against the broader industry. As at 31^st December 2019, cash balance of the company stood at $3.65 million. As per ASX, the stock of RXL is trading towards its 52-week high level of $0.035. Thus, considering the current trading levels, we have a watch stance on the stock at the current market price of $0.029 per share, down by 6.452% on 24^th February 2020. We also suggest investors to wait for further catalysts to drive the stock.
 

Uscom Limited

Inclusion of USCOM 1A in SCCM Guidelines: Uscom Limited (ASX: UCM) is a developer and manufacturer of premium cardiovascular devices. The company possesses two practice leading technologies, i.e., USCOM 1A and USCOM BP+. The company recently announced that the USCOM 1A technology has been included in the Society of Critical Care Medicine (SCCM) guidelines for the treatment of severe sepsis in children. Sepsis is a serious and often fatal complication of all infectious diseases, which includes seasonal infections like flu and coronavirus.

In another update, the company announced the publication of new recommendations for the diagnosis and treatment of children with Coronavirus (COVID-19) infections in Hubei. UCM mentioned that the USCOM 1A haemodynamic monitor is being used in China and other parts of the world for optimising the circulation management in neonates and children.  The below picture provides an overview of income, expenses and loss for 2019


Financial Metrics 2019 (Source: Company Reports)

Strategy for 2020: With respect to rapid operational growth, the company is planning to deliver multiple products into multiple jurisdictions. For 2020, it is planning for a transition to a cost-efficient global manufacturer.

Stock Recommendation: For 2020, the company expects a risky scenario due to unpredictable global markets, operational changes, distribution, etc. During the span of one month and three months, the stock of UCM witnessed a surge of 125% and 103.77%, respectively. Therefore, in light of the above factors, we have a watch stance on the stock at the current market price of $0.285 per share, up by 5.556% on 24^th February 2020. It looks like that the upside in the stock was primarily due to the inclusion of USCOM 1A technology in SCCM. 

The Food Revolution Group Limited

First Order for Hand Sanitiser: The Food Revolution Group Limited (ASX: FOD) is engaged in the production of food and beverages. The market capitalisation of the company stood at $57.97 Mn as on 24^th February 2020. Recently, the company has received the first order of $2 million for hand sanitiser from its distribution partner Careline Australia Pty Ltd due to the higher demand on the back of Coronavirus outbreak. The company would start the production before the end of February 2020. The order would be filled by the company and contracted manufacturers, including Careline’s manufacturing plant in Sydney. 


Financial Performance 2019 (Source: Company Reports)

Accelerated Growth in FY20:The company is preparing for accelerated growth in FY20 and beyond. The company is planning to launch new products in 2020. It is also planning to build its domestic relationships for branded and private label products.

Stock Recommendation: The company is confident about the demand for its hand sanitizer and anticipates further orders in future. Over the time span of one month and six months, the stock of FOD has provided returns of 12.68% and 21.21%, respectively. Thus, taking the recent order for Hand sanitizer and a decent outlook, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.084 per share, up by 5% on 24^th February 2020.

Holista CollTech Limited

Production of World’s First Nasal Balm: Holista CollTech Limited (ASX: HCT) is involved in the development and commercialisation of food ingredients and ovine collagen for cosmetic and biomedical applications. The market capitalisation of the company stood at $50.39 Mn as on 24^th February 2020. As per a release on ASX, the securities of the company have been placed on a trading halt on request by HCT, pending the release of an announcement. The securities of HCT would be in halt until the earlier of the commencement of normal trading on 25^th February 2020 or when the announcement is released to the market. The company has recently appointed Mr Brett Fraser as the Non-Executive Chairman, and Mr Stuart Usher as the Company Secretary.

As per the release dated 20^th February 2020, Holista CollTech in collaboration with Global Infectious Control Consultants LLC (GICC, LLC), will co-develop and produce the world’s first nasal sanitising balm using Path-Away®, in Malaysia. GICC LLC, which is the U.S. developer of Path-Away®, will co-own the global patent. Filing of the global patent is expected in 1QFY20, with production of the balm to commence in 3QFY20.


Cash Flow from Operating Activities (Source: Company Reports)

Expected Sales Collections for Q1 FY20: The company is expecting total sales collection for Q1 FY20 amounting to $1,539,000. HCT is expecting to deliver an order of GI Lite™ valuing $74,500 to KawanFood by Q1FY20.

Stock Recommendation: Since the start of FY20, the company has successfully raised more than $2,600,000 by utilising the Acuity Capital Control Placement Agreement (CPA) facility. This funding would provide the capital to develop the nasal sanitising balm, enhance existing regional markets and new European markets without disrupting business operations. In the recent announcement for trading halt, the company has also notified about some pending clarifications pertaining to the announcements made on 20^th February 2020, key announcement being the agreement for co-development of nasal sanitizing balm. Therefore, we look forward to the company’s announcement or any updates with the commencement of normal trading which is expected on 25 February 2020.

 
Comparative Price Chart (Source: Thomson Reuters)

Disclaimer
 
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.