Regis Resources Limited

RRL Details

Q1FY22 Financial and Operational Summary: Regis Resources Limited (ASX: RRL) is involved in gold and mineral exploration. On 17 December 2021, one of the company’s substantial shareholders, Van Eck Associated, reduced its holding in the company from 10.82% to 9.5%. During the Q1FY22 (Quarter ended 30 September 2021), the company recorded gold production of 101,989oz at an AISC of $1,521/oz, which was comprised on Duketon production of 73,074oz at an AISC of $1,617/oz and Tropicana of 28,914oz at an AISC of $1,179/oz.

• The gold sales for the quarter stood at $179 million at an average realised price of $2,178/oz after adjusting for hedging.
• Cash and bullion for the quarter moved down to $208 million from $269 million at the end of the June 2021 quarter.

Production Trend (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to risks arising from the volatility in gold prices globally, as it generates a major portion of revenue from the sale of gold. In addition, RRL’s performance could also be impacted by the adverse change in foreign currency.

Outlook: For FY22, the company is expecting gold production in the range of 460-515koz at an AISC of between $1,290-1,365/oz. In addition, growth capital is expected of between $155 million- $165 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 of RRL is trading below its 52-week low-high average of $1.665 - $3.681, respectively. The stock has been corrected by ~13.53% and ~26.07% in the past three and six months, respectively. 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’ average P/E multiple, considering gold price volatility, and COVID-19 led uncertainties, etc. For the purpose of valuation, peers such as St Barbara Ltd (ASX: SBM), OceanaGold Corp (ASX: OGC), Resolute Mining Ltd (ASX: RSG), and others have been considered. Considering the expected upside in valuation, decent performance in Q1FY22, higher ROE, decent liquidity position, optimistic outlook, and current trading levels, we recommend a ‘Buy’ rating on the stock at the current market price of $1.860 as on 11 January 2022, 10:30 AM (GMT+10), Sydney, Eastern Australia.

RRL Daily Technical Chart, Data Source: REFINITIV 

Jupiter Mines Limited

JMS Details

Q3FY22 Financial and Operational Highlights: Jupiter Mines Limited (ASX: JMS) is engaged in the operation of the Tshipi Manganese Mine in South Africa and the sale of manganese ore. For the quarter ended 30 November 2021 (Q3FY22), the company recorded production and sale of 909,510 and 845,421 tonnes, respectively.

• The company achieved graded ore mining of 255,036 bcm, and overall total in-situ movement for the quarter was 2.9 million bcm.
• JMS closed the quarter with cash at bank of $119.1 million as compared to $122.6 million as on 30 November 2020.

Production & Sales (Source: Analysis by Kalkine Group)

Key Risks:  The company’s operational and financial could be impacted by an adverse change in climate, which may result in a temporary suspension of its operations. In addition, JMS 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 an increase in Chinese steel production in the upcoming year, which may leave a positive impact on manganese ore pricing and along with reducing freight costs.
• Looking forward, JMS would continue to prioritise maximising value and cash returns from its participation in the world class Tshipi operation.

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 JMS is trading below its 52-week low-high average of $0.180 - $0.375, respectively. The stock has been corrected by ~8.33% and ~29.03% in the past three and six months, respectively. 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’ average P/E multiple, considering COVID-19 led uncertainties and low current ratio, etc. For the purpose of valuation, peers such as Jervois Global Ltd (ASX: JRV), Champion Iron Ltd (ASX: CIA), Iluka Resources Ltd (ASX: ILU), and others have been considered. Considering the expected upside in valuation, decent performance in Q3FY22, higher business margins, decent outlook, current trading levels, and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the closing price of $0.220, up by~2.325% as on 11 January 2022.

JMS 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 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 analysis has been achieved and subject to the factors discussed above alongside support levels provided.

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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