Gold Road Resources Limited

GOR Details

Business Updates Gold Road Resources Limited (ASX: GOR) is involved in mining operations through a joint venture, sale of gold and mineral exploration. The below picture provides an overview of the key business updates:

Business Updates (Source: Analysis by Kalkine Group)

Insights of Q1FY22: The following picture gives an overview of the company’s performance in Q1FY22:

Quarterly Summary (Source: Analysis by Kalkine Group)

Key Risks: The company’s performance could be affected by any adverse movement in the spot prices of gold. GOR is exposed to a more complex regulatory environment; any failure in compliance could lead the business to fines, penalties, etc.

Outlook:  GOR is expecting annual production from Gruyere in the ambit of 300,000 – 340,000 ounces at an AISC of between A$1,270 – A$1,470 per ounce for FY22.

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 GOR is trading below its 52-week low-high average of $1.135 - $1.830, respectively. The stock has corrected ~11.07% 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 (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 Northern Star Resources Ltd (ASX: NST), Dacian Gold Ltd (ASX: DCN), and SSR Mining Inc (ASX: SSR) have been considered. Considering the expected upside in valuation, growing sales and production, 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 $1.270, down by ~1.930% as on 02 June 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.

GOR Daily Technical Chart, Data Source: REFINITIV 

Resolute Mining Limited

RSG Details

Appointment of CEO & MD: Resolute Mining Limited (ASX: RSG) is engaged in gold mining, development of resource projects, and prospecting and exploration for minerals. As announced on 23 May 2022, the company has appointed Mr Terry Holohan as Chief Executive Officer (CEO) and Managing Director.

Q1FY22 Summary: The below picture provides highlights of production and sales during the quarter:

Quarter Summary (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to risks arising from the adverse movement in the prices of gold. RSG’s performance could be affected by an extreme change in the climate, which may pause operations temporarily.

Outlook: For FY22, the company anticipates 345,000oz of gold poured at an AISC of $1,425/oz.  RSG expects an exploration expenditure of $15 million for 2022.

Valuation Methodology: EV/Sales 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 RSG is trading near its 52-week low level of $0.240, offering a decent opportunity for accumulation. The stock has corrected ~19.11% in the past month. The stock has been valued using an EV/Sales 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 negative margins, etc. For valuation, a few peers like Westgold Resources Ltd (ASX: WGX), Dacian Gold Ltd (ASX: DCN), Wiluna Mining Corporation Ltd (ASX: WMC), and others have been considered. Considering the expected upside in valuation, decent performance in Q1FY22, reduction in net debt position, optimistic 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 $0.275 as on 02 June 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.

RSG 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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