Bellevue Gold Limited

BGL Details

Growing Indicated Resources: Bellevue Gold Limited (ASX: BGL) is a gold exploration company which is focused on the exploration and development of its Bellevue Gold Project. As announced on 4 May 2022, the indicated resources increased to 4.6Mt @ 11.2 g/t gold for 1.7Moz. In addition, global resources stood at 9.8Mt @ 9.9 g/t for 3.1Moz. The indicated resources have been increasing at a growth rate of 43% since the maiden indicated resource in July 2020.

Insights of Q3FY22: During the quarter ended March 2022, the highly successful inferred resource conversion drilling program returned more strong results, which are likely to support an updated Resource/Reserve estimate scheduled for the June 2022 quarter.  

• In addition, the drilling continued to demonstrate excellent continuity and grade.
• BGL seems to be fully financed for production with $150.9 million in cash as of 31 March 2022 and a $200 million undrawn debt facility with Macquarie Bank.

Cash Balance (Source: Analysis by Kalkine Group)

Key Risks:  Any adverse movement in the prices of gold could impact the business growth. In addition, extreme change in the climate could affect business materially.

Outlook: The company expects the optimisation study to provide favourable results. In addition, this work is focussed on productivity and cost benefits from changes to the mine plan, including mining sequence, level spacing and de-risking opportunities.

Valuation Methodology: P/BV Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of BGL is trading below its 52-week low-high range of $0.710 - $1.130, respectively. The stock has been corrected by ~18.31% in the past month. The stock has been valued using a P/BV multiple-based illustrative relative valuation method and arrived at a target price of low double-digit (in percentage terms). The company might trade at a slight discount to its peers, considering the COVID-19 Uncertainties and rising cost pressure, etc. For valuation, a few peers like Gold Road Resources Ltd (ASX: GOR), Red 5 Ltd (ASX: RED), and Evolution Mining Ltd (ASX: EVN) have been considered. Considering the expected upside in valuation, growing indicated resources, decent funding levels, nil debt to equity ratio in 1HFY22, decent outlook, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $0.820, down by ~1.796% as on 19 May 2022.

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

BGL Daily Technical Chart, Data Source: REFINITIV 

Macmahon Holdings Limited

MAH Details

Commissioning of Project: Macmahon Holdings Limited (MAH) provides mining services to miners across Australia and Southeast Asia. Recently, the company noted the successful completion of commissioning of the full processing circuit at the Warrawoona Gold Project in WA by Calidus Resources. For which, the company provides contractor services.

1HFY22 Highlights: The following picture provides an overview of the company’s financial performance in 1HFY22:

Key Risks: The company’s performance could be affected by the rising market share of peers. In addition, the business is exposed to a more complex regulatory environment; any failure in the compliances could lead the business to fines, penalties etc.

Outlook: The company expects 2H performance to be stronger than 1H and anticipates underlying EBIT(A) in the range of $95 million – $105 million.

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative) 

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks. 

Stock Recommendation: The stock is trading near its 52-week low level of $0.152, offering a decent opportunity for accumulation. The stock of MAH has been corrected by ~19.23% in the past month. The stock has been valued using a P/E multiple-based illustrative relative valuation and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight discount to its peers, considering the COVID-19 disruptions, and lower net margins. For valuation, peers such as MACA Ltd (ASX: MLD), Perenti Global Ltd (ASX: PRN), and NRW Holdings Ltd (ASX: NWH) have been considered. Considering the expected upside in valuation, rising topline and bottom line, decent outlook, current trading levels and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $0.155, down by ~3.125% as on 19 May 2022.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

MAH Daily Technical Chart, Data Source: REFINITIV 

Poseidon Nickel Limited

POS Details

March 2022 Quarterly Summary: Poseidon Nickel Limited (ASX: POS) is engaged in the exploration and development of nickel sulphide. During the quarter ended March 2022, the company finished Black Swan Disseminated resource drilling program. In addition, metallurgical test work on various ore sources, nickel recoveries and potential concentrate specifications are in decent progress.

• With respect to Pure Battery Technologies, the company has received a Modern Manufacturing Initiatives Grant of $119.6 million from the Federal Government.
• POS closed the quarter with a cash balance of - $16.8 million against ~$21.94 million as on 31 December 2021.

Cash Balance (Source: Analysis by Kalkine Group)

Key Risks: The company’s business could be affected by adverse movements in the spot prices of nickel. In addition, POS’s performance could be affected by global supply chain issues, change in the climate, and regulatory risk, etc.

Outlook:  With respect to Black Swan, POS intends to carry out FID by September 2022 and first production in 2023. In addition, the commissioning of the mill has been scheduled for Q1 2023.

Valuation Methodology: P/E Multiple Based Relative Valuation (Illustrative)

Source: Analysis by Kalkine Group

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: The stock of POS is currently trading near its 52-week low level of $0.056, offering a decent opportunity for accumulation. The stock has been corrected by ~24.17% in the past month. The stock has been valued using a P/E Multiple based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company can trade at a slight discount to its peers, considering the COVID-19 uncertainties and falling cash, etc.  For the purpose of valuation, peers such as Nickel Mines Ltd (ASX: NIC), IGO Ltd (ASX: IGO), BHP Group Ltd (ASX: BHP), and others have been considered. Considering the expected upside in valuation, decent performance in Q3FY22, low debt to equity ratio, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $0.068, down by ~4.225% as on 19 May 2022.

Markets are currently trading in a highly volatile zone due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

POS Daily Technical Chart, Data Source: REFINITIV 

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

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

Technical Indicators Defined: -

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

Resistance: A level where-in stock prices tend to find resistance when they are rising, and a 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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