Tribune Resources Limited 

TBR Details

An Update on Reserves: Tribune Resources Limited (ASX: TBR) is engaged in exploration, development, and production activities at its East Kundana Joint Venture (EKJV) tenements. TBR has updated Mineral Resources and Ore Reserves for the EKJV as of 31 March 2021. The total mineral resources available with EKJV tenements has been declined by 69koz to 12.03mn tonnes at 5.1 grams per tonne (gpt) gold for 1.99mn ounces of gold. The EKJV has seen a depletion in mineral resources mainly due to mining depletion at Rubicon, Hornet, Pegasus, Pode and Hera. Similarly, EKJV has witnessed a decline in its ore reserves by 189koz to a total of 3.53mn tonnes at 5.1gpt gold for 0.57mnoz of gold. EKJV has seen a mining depletion at Rubicon, Hornet, Pegasus and Pode, resulting in depletion of ore reserves. 

3QFY21 Business Highlights: TBR has reported 131,406 tonnes of ore processed at Rand and Tribune Toll at 4.13 gpt. TBR’s share stood at 98,554 tonnes from the EKJV operations. A total of 16,474 oz of gold was extracted and credited to Rand and Tribune Bullion accounts, with TBR’s share of 12,355 oz of gold. In addition, exploration drilling continues with 22,967 metres completed in 144 holes at the Japa project in Ghana and 2,654 metres completed in 9 holes at Diwalwal Gold Project in the Philippines.  

Change in Substantial Holder’s Interest:  TBR has announced a change in its interest in Rand Mining Limited on 29 April 2021. As a result, TBR has increased its holding to 46.73% in Rand Mining Limited from 43.68% holding earlier.    

1HFY21 Key Highlights:

• Increase in Revenue – TBR has registered an increase in revenue in 1HFY21 due to increased contracts with customers.
• Increase in Net Profit – TBR has reported increased profits due to a decline in mining expenses and lower finance costs in 1HFY21.
• Decline in Cash Balance – The cash balance declined to $6.59mn as of 31 December 2020 against $14.02mn as of 30 June 2020.

Revenue Trend (Source: Analysis by Kalkine Group)

Key Risks: 

• Estimation Risks: The company estimates the mineral and ore resources available before mining. Hence, the imprecise estimates impact the business and the financials of the company.
• Foreign Exchange Risks: The company is exposed to foreign exchange risks. Any adverse change in foreign exchange prices may impact the business severely.
  

Outlook: TBR expects mineral production for 4QFY21 to be at similar lines with 3QFY21 due to aftereffects of seismicity and damage to Pegasus in 2QFY21. The company has initiated a share buyback program, expiring on 21 February 2022 unless decided otherwise.

Stock Recommendation: The stock of TBR gave a return of ~-33.14% in the last nine months and a return of ~-30.68% in the last twelve months. The current market capitalisation of TBR stands at ~$264.96mn as of 14 July 2021. The stock is currently trading below the average 52-weeks’ price level range of ~$4.60-~$8.87. On a TTM basis, the stock of TBR is trading at a P/BV multiple of 1.2x, lower than the industry (Metals & Mining) median of 2.8x, thus seems undervalued. Considering an increase in top-line in 1HFY21, an increase in bottom-line in 1HFY21, completion of drilling for ongoing projects in 3QFY21, current trading levels, key risks associated with the business, and valuations on TTM basis, we recommend a “Speculative Buy” rating on the stock at the current market price of $4.75, down by ~5.941%, as on 14 July 2021.

TBR Daily Technical Chart, Data Source: REFINITIV 

Alexium International Group Limited  

AJX Details

Commercial Launch and Initial Sales of Alexicool Products: Alexium International Group Limited (ASX: AJX) is engaged in researching and developing technology, licensing its intellectual properties, and selling its specialised chemistry to customers. AJX has reported the commercial launch with an initial sale of a suite of Alexicool products for a total mattress cooling system (TMCS). AJX has initiated strategic activities to achieve growth in the US bedding market with the launch of its product. The near-term target market is valued at US$2mn per annum for products in a similar segment. 

Change in Director’s Interest: On 17 May 2021, AJX has announced, the director, Simon Colinton Moore, has acquired an additional 5mn shares on 13 and 14 May 2021, under the capital raising program. 

3QFY21 Business Highlights: AJX has received a USDA certification for its PCM brand of BioCool products. The company has witnessed its first sales of new biobased products in 3QFY21. The company has reported production with FR socks manufacturer operating effectively. The cash receipts stood at US$1.5mn as at 31 March 2021

1HFY21 Highlights:

• Increase in Revenue – AJX has reported an increase in revenue in 1HFY21 against 1HFY20 mainly due to an increase in sales of the Alexicool® product line.
• Decline in Losses – The company has witnessed a decline in net losses mainly due to extinguishing the debt facility and a significant decline in interest expenses in 1HFY21.
• Decline in Interest Expenses – The company has reported a significant decline in its interest expenses to US$0.31mn in 1HFY21 against US$1.59mn in 1HFY20.

Revenue Trend (Source: Analysis by Kalkine Group)

Key Risks: 

• Covid-19 Related Risks: The company is exposed to Covid-19 impacts. Hence, the business may get impacted if such situation arises.
• Interest Rate Risks: The company holds interest-bearing liabilities. Therefore, a severe change in interest rates may impact the financials of the company.
  

Outlook:  AJX is progressing with two-prong commercialisation approach for NyCo. The company is focused on cooling technologies for bedding applications to increase market penetration. Moreover, the company is ready for scale up process and expects Alexicool product line to reach full scale production during 1HFY22.

Stock Recommendation: The stock of AJX gave a return of ~-12.06% in the last six months and a return of ~-14.99% in the last nine months. The current market capitalisation of AJX stands at ~$32.65mn as of 14 July 2021. The stock is currently trading below the average 52-weeks’ price level range of ~$0.044-~$0.100. Considering an increase in revenue in 1HFY21, significant decline in losses in 1HFY21, registering initial sales from Alexicool product line, receiving USDA certification for its BioCool products, current trading levels and associated business risks, we recommend a “Speculative Buy” rating on the stock at the market price of $0.051 as on July 14, 2021, 11:16 AM (GMT+10), Sydney, Eastern Australia.

AJX Daily Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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