St Barbara Limited

SBM Details

Modern Slavery Statement Released: St Barbara Limited (ASX: SBM) is a gold mining and exploration firm with projects such as Leonora operations, Atlantic operations, and the Simberi operations. In FY21, SBM undertook measures to identify, evaluate, and address modern slavery risk in its global operations. It has developed a modern slavery procedure as part of the governance framework.  SBM released a Modern Slavery Statement on 13 December 2021 in compliance with the Modern Slavery Act 2018. 

Change in Shareholding: On 2 December 2021, L1 Capital Pty Limited has increased its voting power from ~7.58% to ~8.96%.

AGM 2021 Presentation Highlights:

• SBM prioritises advancement on its Leonora Province plan. It is undertaking studies to develop new exploration areas, expand its Leonora processing facility, and deepen community presence in the Leonora region.
• The Board has sanctioned ~US$13 million of pre-investment work for the Simberi sulphide project. It has scheduled an FID (final investment decision) on the project in March 2022, post-seeking required approvals.

Q1FY22 (30 September 2021) Results:

• Overachieved Target: The company delivered a cash benefit of ~$23 million compared to the ~$15 million targeted for September 2021 quarter under the Building Brilliance transformation program.
• Cash & Debt: SBM held ~$42 million cash at the bank as of 30 September 2021 compared to $133 million as of 30 June 2021. The total debt owed under the syndicated facility stands at ~C$80 million as of 30 September 2021.

Project Update:

• The drilling exploration at the Trotsky prospect at the Simberi operations in Q1FY22 has discovered further oxide mineralisation.
• SBM discovered high-grade intercepts at the Trevor Bore target in the Leonora province and plans to start on a potential new open pit at ~25 km distance from its Gwalia processing plant.

Dividends Per Ounce Produced Highlights; (Analysis by Kalkine Group)

Key Risks:  The company faces the risk of exploration and mining, changes in the gold price, and regulations. It faces the COVID-19 impact of mining protocols and skilled labour shortage on its business.

Outlook:

• SBM is on track to restart the processing plant at Simberi during Q2FY22. The operations were halted in 2HFY21 at Simberi due to damage to the DSTP (deep-sea tailings placement) pipe.
• The company provides gold production guidance of ~60,000 - ~70,000 ounces at an AISC of ~$2,465 - ~$2,650 per ounce for FY22.
• It expects to incur a sustaining capex of ~$15 - $20 million and growth capex between ~$25 - ~$35 million for FY22.

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 SBM gave a negative return of ~4.65% in the past month and a negative return of ~17.02% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $1.255 - $2.560. The stock has been valued using the Enterprise Value to Sales based illustrative relative valuation method and arrived at a target price of low double-digit upside (in % terms). The company might trade at a slight discount than its peers, considering its statutory net loss after tax, lower production in Q1FY22, and cessation of DSTP pipeline at Simberi. For this purpose of valuation, few peers like Regis Resources Limited (ASX: RRL), Silver Lake Resources Limited (ASX: SLR), Northern Star Resources Limited (ASX: NST), and others have been considered. Considering the current trading levels, a decline in quarterly AISC, overachieved cash benefit of $23 million in Q1FY22, valuation, the restart of Simberi Operations in Q2FY22, finalised offtake gold concentrate agreements with multiple trading firms for the Simberi project, we give a ‘Buy’ rating on the stock at the current market price of $1.490, as of 14 December 2021, 10:45 AM (GMT+10), Sydney, Eastern Australia.

SBM Daily Technical Chart, Data Source: REFINITIV  

Tietto Minerals Limited

TIE Details

Update on Abujar Gold Project: Limited (ASX: TIE) is a gold explorer and developer in West Africa, particularly in Liberia and Ivory Coast. It operates the Abujar gold project in the Ivory Coast. On 10 December 2021, TIE updated that it is well on track to produce gold in Q4CY22 post obtaining financing on the project. It has started the construction of the process plant, related infrastructure, and activities to expedite the production of the Abujar gold project.

TIE has obtained mining and environmental approvals and seeking regulatory sanction from the Abujar Mining Convention, the Ivorian Government.

Issue of Shares: On 29 November and 1 December 2021, TIE issued and allotted ~119.06 million shares without disclosure as per the Corporations Act.

RIU Resurgence Conference Presentation:

• TIE estimates ~35 Moz of gold mineral resources as of July 2021 at the Abujar project.
• TIE updated open pit probable estimate of ore reserves increased to ~34.4Mt at 1.3 g/t Au for 1.45Moz.
• The firm hired Matt Wilcox as the COO to head an experienced team of mine-builders.

Q1FY22 Results & Activities:

• The company estimates higher gold production based on the open pit DFS (Definitive Feasibility Study) conducted versus the estimates provided under the PFS at the Abujar project.
• TIE expects robust financial results from the life of mine (LOM) plan and a range of gold prices. It estimates an IRR of ~95% post-tax and eleven-year project life. The payback period is less than one (1) year from the first year of production.
• TIE incurred ~$5.2 million in exploration andevaluation expenditure incurred in Q1FY22.
• TIE held ~$32.8 million cash balance as of 30 September 2021.

Net Loss After Tax Trend from FY17-FY21; (Analysis by Kalkine Group)

Key Risks: The company faces gold price fluctuations, climate risk, and regulatory delays on the projects.

Outlook:

• The company will hold an ordinary shareholder meeting on 7 January 2022.
• The company plans to provide a monthly update on the construction of the process plant and its activities at the Abujar gold project. 
• TIE targets to complete ~5,000 metres of deep drilling below the ore reserve at AG core by Q4FY21. It is rapidly growing gold resources at the project and includes the drilling data in its next mineral resource update.

Technical Commentary: TIE stock prices are trading above the horizontal trend line support zone at AUD 0.398 on the daily chart and taking the support of the same. The momentum oscillator RSI (14-period) at ~50.36 level, indicating positive momentum in the stock. The crucial support level for the stock is placed at AUD 0.390, while the key resistance is at AUD 0.492.

Stock Recommendation: The stock of TIE gave a positive return of ~28.35% in the past three months and a positive return of ~32.30% in the past six months. The stock is currently trading above the 52-weeks’ average price level band of $0.285 - $0.485. Considering the current trading levels, nil debt levels, well capitalisation, advancement on the project construction activities, technical levels mentioned above, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.425, as of 14 December 2021, 10:45 AM (GMT+10), Sydney, Eastern Australia.

TIE Daily Technical Chart, Data Source: REFINITIV 

Cyprium Metals Limited

CYM Details

 Update on the Maroochydore Project: Cyprium Metals Limited (ASX: CYM) manages a portfolio of copper projects in Australia. It operates projects in the Paterson and Murchison regions of Western Australia. On 13 December 2021, CYM declared the physical presence of a shallow copper-cobalt deposit upon the completion of the first season of drilling at the Maroochydore copper-cobalt project. The company is waiting for the assay results from the exploration programmes.

• CYM drilled six (6) diamond holes for 1,226 metres and received core samples of oxide, supergene, and sulphide for metallurgical and waste characterisation testing. CYM will continue drilling at the open pit and use results in a scoping study for the project’s development.

Nifty Copper Project Update:

• CYM is undertaking a drilling programme for mineral resource upgrade, appointing key personnel, and obtaining Government approvals for advancing on the Nifty project. John Banning was appointed as the company’s COO and Gavin Hammer was hired as the– Project development.
• Extended Timelines: CYM is experiencing changes in the industry and environment due to the impact of COVID-19 on labour, regulatory delays, etc. CYM now anticipates that the key elements of the project will restart in September 2022 and copper production will occur in 2HFY23. It aims to prioritize the completion of the project restart study and begin the finance process on the project.

Q1FY22 Results:

• CYM conducted an in-depth mineral resource review of the Nifty deposit and started the open pit optimisation work for restarting the Heap Leach study.
• The company started the infill and extensional exploration drilling to expand the resource mineralisation at the Maroochydore project.
• CYM undertook diamond hole drilling at the Nanadie well deposit at its Murchison copper-gold project and continued to discover efxtensive sulphide copper-gold deposits.
• The company held $40.04 million of cash as of 30 September 2021.
• CYM reported $6.69 million negative cash flows from operating activities in Q1FY22.

Cash & Cash Equivalents Highlights; (Analysis by Kalkine Group)

Key Risks: The project is progressing well, however, currently anticipates considerable delays due to the COVID-19 impact on labour, lockdowns, delays in approvals, etc.

Outlook:

• The company is progressing with further exploration work on the Nifty project for the mineral resource definition. It awaits assay results from the metallurgical column testing of samples. It continues to undertake the optimisation of the leaching process at the Nifty project.
• CYM has deployed a second reverse circulation (RC) drill rig at the Maroochydore copper project and plans to finish the drilling of the remaining holes before the start of the wet season.
• At the Nanadie Well deposit, CYM plans to review the assay results from diamond drilling, conduct geological analysis, and metallurgical testing for the core samples.

Stock Recommendation: The stock of CYM gave a negative return of ~40.42% in the past three months and a negative return of ~50.87% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $0.135 - $0.370. On a TTM basis, the stock of CYM is trading at a price to book value multiple of 0.8x lower than the industry (Metals & Mining) median of 2.4x, thus seems undervalued. Considering the current trading levels, progressing exploration work on the Nifty project and valuation on a TTM basis, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.140, down by ~6.667%, as of 14 December 2021.

CYM Daily Technical Chart, Data Source: REFINITIV  

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

Note 2: Investment decision 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 Valuation has been achieved and subject to the factors discussed above.

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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