Stocks’ Details

Havilah Resources Limited

Long Kalkaroo Copper-Gold Intersections: Havilah Resources Limited (ASX: HAV) is engaged in the exploration for minerals, predominantly copper, gold, cobalt, and iron ore on its extensive mineral tenement holdings in the Curnamona Craton region of northeastern South Australia. As on 1 October 2020, the market capitalization of the company stood at ~$52.83 million. The company has recently released results from its reverse circulation drilling from West Kalkaroo, wherein the RC drillholes were able to penetrate deeper than the previous aircore drillholes and intersected gold near the Tertiary-bedrock unconformity. As per the technical director, the RC drilling results coupled with the previous drilling results, reflects a wide zone of gold-copper mineralization in the fault intersection area.

Quarterly Activities: During the quarter ended 31 July 2020, the total cash outflow for exploration & evaluation activities stood at $459,328. This was primarily related to the Kalkaroo project. The company is prudently reducing its corporate overheads and is saving over $30k per month. During the quarter, the company used a cash of $776k from operating activities.

Quarterly Activities (Source: Company Reports)

Stock Recommendation: There is substantial scope to increase resource tonnages in Kalkaroo deposit if future drilling shows this mineralization extends eastwards and to depth. As per ASX, the stock of HAV gave a return of 50% in the past three months and a return of 14.71% in the last one month. The stock is trading close to its 52-weeks’ high level of $0.215, and thus retains limited potential for further growth. On a technical front, the stock of HAV has a support level of ~$0.065 and a resistance level of ~$0.21. Considering the current trading levels, decent returns in the past one month, softer market conditions due to the global pandemic, we suggest investors to wait for better entry levels and hence, give an ‘Expensive’ rating on the stock at the current market price of ~$0.190, down by 2.564% on 1 October 2020.

Kingwest Resources Limited

Completion of Entitlement Issue and Placement: Kingwest Resources Limited (ASX: KWR) is engaged in the acquisition and exploration of resource projects. As on 1 October 2020, the market capitalization of the company stood at ~$20.75 million. The company announced the completion of its fully underwritten non-renounceable 1-for-5 entitlement, wherein it raised $3.3 million at an issue price of $0.135 per share. The company has also received commitments from investors to place a further 7,407,407 shares pursuant to the placement capacity.

Financial Highlights: During FY20, the company reported a decline in revenue from $42,632 in FY19 to $11,930 in FY20. In the same time span, loss of the company went up to $5.2 million from $966k in FY19. As at 30 June 2020, the group had a cash balance of $2.78 million, reflecting an increase from $1.85 million in FY19 and a net asset position of $13.09 million as compared to $6.67 million in FY19.

FY20 Financial Highlights (Source: Company Reports)

Stock Recommendation: The company has started drilling at its Menzies Gold Project to test high grade brownfields targets. As per ASX, the stock of KWR gave a return of 26% in the past six months but a negative return of 10% in the last one month. The stock is inclined towards its 52-weeks’ low level of $0.071, proffering a decent opportunity for the investors to enter the market. On a technical front, the stock of KWR has a support level of ~$0.080 and a resistance level of ~$0.269. On a TTM basis, the stock of KWR is trading at a price to book value multiple of 1.6x, lower than the industry median (Basic Materials) of 2.4x, and thus seems undervalued. Considering the current trading levels, decent returns in the past six months and sufficient liquidity position, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of ~$0.140, up by 3.704% on 1 October 2020.

Volt Resources Limited

Termination of Zambian Project Acquisition: Volt Resources Limited (ASX: VRC) is engaged in the exploration and evaluation of graphite activities in Tanzania. As on 1 October 2020, the market capitalization of the company stood at ~$26.27 million. The company has recently announced that it will not proceed with the acquisition of 85% stake in the Luiri Hill Gold Project because of unsatisfactory results of its due diligence enquiries.

Update on Guinea Gold Projects: The company converted Kouroussa and Nzima, its reconnaissance permits to exploration permits, which increased the number of granted exploration permits to three. This will allow the company to undertake programs after the completion of its drill targeting activities, including desktop geological and data reviews, soil sampling and analysis.

Financial Highlights: During FY20, the company reported an increase in total revenue to $42,265, up from $4,071 in FY19. In the same time span, loss after income tax went down to $3.13 million from $3.48 million in the previous year. However, the cash balance of the company witnessed a decline and stood at $264k, down from $1.17 million in FY19 and net assets were $22.2 million, representing deferred exploration expenditure on its Graphite prospecting tenements in Tanzania. During the year, net cash outflows from operating activities stood at $2.33 million, mainly because of the corporate compliance, management, marketing, and investor relations costs.

FY20 Financial Highlights (Source: Company Reports)

Stock Recommendation: The company has established a new gold business and continued with the development of its Bunyu Graphite Project in Tanzania. As per ASX, the stock of VRC gave a return of 160% in the past six months but a negative return of 18.75% in the last one month. The stock of VRC is trading at attractive levels, close to its 52-weeks’ low of $0.004. On a technical front, the stock of VRC has a support level of ~$0.05 and a resistance level of ~$0.016. Considering the current trading levels, volatile returns in the past six months, softer market conditions and increased borrowings, we suggest investors to keep an eye on the business activities and the stock will remain under our watchlist at the current market price of $0.010, down by 23.077% on 1 October 2020, owing to its recent release regarding termination of Zambian Project Acquisition.

Daily Comparative Chart (Source: Refinitiv, Thomson Reuters)

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