Sundance Energy Australia Limited (ASX: SEA)

SEA Details

Growth in Production:SEA released its third quarter results for 2017 late last year. Third quarter net production increased by 51% which totalled to 854,887 boe as compared to the same period in the prior year and increased by 35% as compared to second quarter of 2017 despite of the hurricane-related shut-ins which were experienced at most of the midstream and downstream facilities serving company’s production. Its total revenue increased by 81% and totalled to $31.6 million as compared to the same period in the prior year which was primarily driven by higher sales volume as it rose by 46% on the same period in prior year. The company has 4 gross (3.8net) additional drilled but uncompleted wells which were scheduled for completion in the fourth quarter. The company also finalised a $30 million of revenue advance agreement with Vitol Inc. which provided it with liquidity to complete its 2017 development program.
 

Wells Exploration Trend (Source: Company Reports)
 
Its Research and Development costs were up due to higher costs of new frac design model which was made against recoveries from the old designs. The group had downgraded 2017 exit rate to 8.5-9.5kboe/d from 9.0-10.0kboe/d, which raised few concerns. SEA stock rose up by 75% in the past six months with better oil price scenario and quarterly results but fell by 7.6% on January 25, 2018 at the back of volatility. Given the trading performance, we put a “Hold” at the current price of $0.097


SEA Daily Chart (Source: Thomson Reuters)
 

Ramelius Resources Limited (ASX: RMS)

RMS Details

Attained the Targeted Production: Ramelius had commissioned a Mineral Resource estimate for its Western Queen Gold Project and the work was completed by Payne Geological Services Pty Ltd, an external and independent mining consultancy. The Project includes the two previously mined deposits, one is Western Queen South and the other one is Western Queen Central which had combined previous production of 881,000t at 7.6g/t for 214,000 ounces of gold. Monax is planning to complete a further drilling at Western Queen Central over the next six months which will test the depth extension of the high-grade Resource of 130,000t @ 9g/t Au. The group is also planning to complete a full review on the project to determine that whether it has potential to host lithium occurrences. Its ROE has been positive over the last two years (2016 figure of 24.5% and 11.9% for 2017). Its exploration projects include Milkyway, Boorgardie Basin and Tanami Joint Venture Gold Project.
 

Western Queen Project Section (Source: Company Reports)
 
RMS has exceeded the guidance range and produced gold production of 58,012 ounces in December 2017 Quarter from the Company’s operations in Western Australia. Cash and gold at hand was A$61.8M at the end of the quarter. On 31 December 2017, forward gold sales consisted of 142,500 ounces of gold at an average price of A$1,713/oz till October 2019. Group’s Mt Magnet returned to form in the December 2017 half, and gold production from Mt Magnet and Vivien was 36.5kozs in the December 2017 quarter, well above the September quarter of 2016 returns. Overall, Vivien, Water Tank Hill and the Mt Magnet are expected to be on good momentum over the next 12 months. The share prices have risen by 11.8% in the past three months with a rise of 10.6% seen on January 25, 2018 at the back of gold price movement owing to fall in greenback. Given the potential and the favourable prices expected over 2018, we give a “Speculative Buy” recommendation on the stock at the current price of $0.47


RMS Daily Chart (Source: Thomson Reuters)
 

Grange Resources Limited (ASX: GRR)

GRR Details

Benefitted from strong iron prices: It recently released its fourth quarter report ending 31 December 2017 and owing to the iron prices, in particular the pellet price, which remained strong over the past quarter due to sustained environmental guidelines in China, re-enforced the quality and a strong demand for group’s products. The average price received during the quarter was US$105.51/t which slightly decreased by 0.25% from US$105.77/t in the September 2017 quarter.  There was a significant increase in sales that is of 653kt pellet and this exceeded the previous quarter sales of 359kt as at September 2017. It also improved its cash position as on 31 December 2017 that amounted to A$167.99 million with trade receivables of A$25.17 million as compared to September 2017 Quarter figure of A$120.34 million of cash with A$34.51 million of trade receivables. The group expects to obtain an approval to operate the South Deposit Tails Storage Facility which is still being assessed.It is also confident that the market will continue to recognise a premium for higher quality pellets in comparison to benchmark that is of 62% Fe iron ore products.
 

Savage River Operations Summary (Source: Company Reports)
 
The stock price has increased by 57.7% in the past six months but dropped by about 9% in the past one month. While the iron ore market is witnessing some volatility and the commodity forecast does not look very appealing, we put an “Expensive” recommendation on the stock at the current price of $0.205, and will review the stock at a later date.


GRR Daily Chart (Source: Thomson Reuters)
 

Elementos Limited (ASX: ELT)

ELT Details

Efforts to increase mineral resources: Elementos is a tin focused exploration and development micro-cap company. Tin prices are expected to rise significantly (over 15%) by 2019 and new projects might be needed to meet the forecasted production shortfall. In this scenario, ELT might be able to leverage the opportunity. Particularly, ELT owns 100% of the Cleveland Tin Project in Tasmania and Cleveland contains 54,840t of tin in defined resources. ELT recently announced the results of the first five holes which were drilled at the Cleveland Project in the northwest Tasmania. The objective of the diamond drilling programme which commenced in August was to assess the potential for infill and also to strike mineralisation to increase the existing open cut mineral resources at Cleveland. Its recent exploration activities which were undertaken at the Cleveland were mapping, sampling, geophysics and drilling. Additional 12 drill holes have been planned to test the magnetic anomalies which were detected earlier this year with drill site access and pad preparations are underway.
 

Tin Stock Trend (Source: Company Reports)
 
The group’s ROE for 2017 was -16.4% whereas for 2016 ROE was -34.9%, and operating loss for the financial year 2017, after applicable income taxes was $769,493 whereas for 2016 it was $1,757,780. As far as stock prices are concerned, ELT increased by 25% in last one month but there was a decline of 9% in past five days and a further 10% drop on January 25, 2018. The group is yet to unveil great potential in terms of financial performance and asset development. At the moment, the stock looks “Expensive” at the current market price of $0.009


ELT Daily Chart (Source: Thomson Reuters)

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