Stocks’ Details
Element 25 Limited
Shares in a Trading Halt: Element 25 Limited (ASX: E25) is a multi-commodity exploration firm with tenements in Australia. It is running Yamarna Gold Project (~100%) and Holleton Gold Project (100%), Butcherbird Manganese Project (100%) and Green Dam Project (nickel sulphide) Australia. E25 is building a business development pipeline in France. As of 23 March 2021, the market capitalisation of the company stood at ~$355.46 million. On 22 March 2021, E25 requested ASX to place its shares in a trading halt, pending the release of an announcement related to its proposed capital raising for working on its lithium-ion battery-grade flowsheet (manganese sulphate) and expansion of production volumes from the Butcherbird Project. The shares will remain in trading halt until the news update by E25 on the above matter or the commencement of normal trading on Wednesday, 24 March 2021.
A Look at the 1HFY21 Results: During 1HFY21, E25 registered a revenue of $148k (from other income sources), and a net loss after tax of $4.83 million. During the reporting period, E25 carried out permitting and financing activities at the Butcherbird project. It is also planning to start the construction on Stage 1 of the project. E25 has completed the scheduled dry commissioning till mid-March 2021, commenced the wet commissioning and maiden ore processing after 15th March 2021 as a part of the Stage 1 process. It held cash and cash equivalents of $11.26 million as of 31 December 2020.
1HFY21 P&L Highlights (Source: Company Reports)
Key Risks: The company runs the risk of achieving the desired production volumes, seeking capital for constructing the plant and working capital needs. It also faces the risk of discovering and estimating the resources on the project.
Outlook: E25 is currently focusing on its Butcherbird project development, progressing on-track and in sync with the target date. The company is undertaking the project to feed the potential demand of high-purity manganese sulphate monohydrate (HPMSM) for EV batteries as a substitute for fossil fuels.
Stock Details: The shares of E25 are currently in a trading halt. They will remain in a trading halt until the earlier of the commencement of normal trading on Wednesday, 24 March 2021 or a news release on the proposed funds raising for the Butcherbird project. The stock of E25 gave a positive return of 81.08% in the past three months and a positive return of 262.16% in the past six months. The stock was last traded at $2.680.
St George Mining Limited
A Sneak-Peak at the Half-Yearly Financials: St George Mining Limited (ASX: SGQ) is engaged in the mining and exploration of gold, uranium, copper, and nickel in Australia. As of 22 March 2021, the market capitalisation of the company stood at ~$46.32 million. During 1HFY21, SGQ earned a revenue of $178k from other income sources and a net loss after tax of $4.75 million. The company incurred an evaluation and exploration expenditure of $3.63 million in 1HFY21. At the Mt Alexander project (MAP), SGQ announced further diamond drilling intersected mineralised rocks demonstrating the potential for discovering nickel-copper sulphides. The DHEM surveys also identified several electromagnetic (EM) anomalies and observed to have sulphide source in deeper drill holes. SGQ received positive results from the initial metallurgical test work on sample mineralisation from the MADD177 at the Investigators Prospect. At the Paterson project, SGQ identified multiple high-priority targets for the potential gold and copper mineralisation. It has received approval for the maiden drill programme by the Department of Mines, Industry Regulation and Safety (DMIRS). It held a cash and cash equivalent balance of $3.39 million as of 31 December 2020.
1HFY21 P&L Highlights (Source: Company Reports)
Key Risks: The company faces the impact of border restrictions in Western Australia and other places on its rig personnel’s movement and availability of drill rigs. It is closely coordinating with the drill contractors to continue their drilling services. It faces the risk of timely completion of metallurgical testing in Canada due to travel restrictions and shutdowns.
Outlook: At the MAP, SGQ will finalise the resource estimation, undertake a scoping study, at the Stricklands deposit to advance to a starter mine proposal post-completion of metallurgical testing results in Canada. At the Paterson project, SGQ has scheduled drilling for May 2021 subject to heritage surveys’ completion.
Stock Recommendation: The stock of SGQ gave a negative return of 4.34% in the past three months and a positive return of 39.68% in the past one year. The stock is currently trading towards its 52-weeks’ low level of $0.057. The stock of SGQ has a support level of ~$0.067 and a resistance level of ~$0.107. Considering the current trading levels, low debt levels, drill results returning nickel-sulphide intersections at the MAP, gold and copper targets at the Paterson project, high current ratio signifying decent liquidity position, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.088, down by 4.348% on 23 March 2021.
Talon Petroleum Limited
Inclusion of Addendum for Approval at the GM: Talon Petroleum Limited (ASX: TPD) is a developer and producer of petroleum resources in the United States. Its main asset is the Mosman Rockingham (MR) Olmos Project in Texas. As of 23 March 2021, the market capitalisation of the company stood at ~$32.11 million. Recently, TPD notified its shareholders of its decision to include an additional resolution in Addendum to seek approval for issuing 54 million shares at $0.005 per share to Macallum Group Limited (MGL) at the General Meeting on 26 March 2021. TPD has signed a non-binding term sheet with MGL to acquire its 100% ownership in the Muchea Area in Perth Basin, subject to certain conditions’ fulfilment.
Maiden Resource Well Estimated: On 17 March 2021, TPD announced the estimation of the primary, prospective recoverable resources with the best at 20.2 MMbbl (P50) condensate from the Condor Structure contained within SPA0081 and EP494 in the onshore Perth Basin. The estimate demonstrates significant liquids upside at the current prices. It projects a higher upside if the maiden well, Walyering-5, is drilled in FY21. This estimation is based on the formal agreement’s execution to acquire the area covering the Condor Structure (formerly Muchea) from MGL.
Tranche 1 Placement Completed: Recently, TPD raised $5 million from the issue of 1,000 million Tranche one placement shares (new) at $0.04 per share to the institutional investors. As the issuance was oversubscribed by $1 million, TPD will issue shares for Tranche two placement subject to its shareholders’ approval at the General Meeting in late March 2021.
December 2020 Quarter Results: During Q4FY20, Strike Energy Limited (STX), the operator (55%) of the JV for EP447, inked an agreement with Ensign Energy Services (EES) for the availability of its Rig 970. The rig is required for the drilling of the maiden Walyering-5 (prospect) well. During the quarter, TPD was granted three new exploration licences in the UKCS (UK Central North Sea). The company is making efforts for farm-out on its Rocket, Skymoos, and Vantage prospects. However, it has not been able to successfully farmout due to the uncertainty regarding time. TPD received $7k receipts from its customers for the quarter. TPD held a cash and cash equivalent balance of $4.64 million as of 31 December 2020.
Q4FY20 Financial Highlights (Source: Company Reports)
Key Risks: TPD faces the risk of decreasing oil and gas output from its wells, economic uncertainty due to the COVID-19 and its ongoing restrictions. TPD also meets the risk of fluctuations in the gas prices and demand from the user-end.
Outlook: In partnership with STX (the operator), TPD will undertake the drilling of the Walyering-5 well later in FY21. The well will be drilled and cased presently so that TPD can convert it into a production well.
Stock Recommendation: The stock of TPD gave a positive return of 133.33% in the past three months and a positive return of 75% in the past six months. The stock is currently trading above the 52-weeks’ average price level of $0.001-$0.0095. The stock of TPD has a support level of ~$0.0066 and a resistance level of ~$0.0075. On a TTM basis, the stock is trading at a price to book value multiple of ~17.3x higher than the industry (Energy) average of ~9.2x, thus seems overvalued. Considering the current trading levels, significant returns in the past three months and the past six months, and valuation on a TTM basis, we believe that most of the positives have been factored in at the current trading levels. Hence, we suggest investors to wait for better entry levels, and we give an ‘Expensive’ rating on the stock at the current market price of $0.007, up by 16.666% on 23 March 2021, owing to the news of the proposed issue of 54 million securities to MGL.
Comparative Price Chart (Source: Refinitiv, Thomson Reuters)
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