Stocks’ Details

Red Mountain Mining Limited

Completion of Survey: Red Mountain Mining Limited (ASX: RMX) is engaged in the exploration of gold and cobalt. The market capitalisation of the company stood at ~$12.40 Mn as on 13^th October 2020. Recently, the company notified that it has successfully finished heritage clearance survey and pre-drilling earthworks at Mt Maitland. In addition, the company has also secured an RC drill rig for its drill programme at Mt Maitland, which is planned for 18 holes for around 1,300 metres. The company has scheduled to begin drilling in the upcoming days. For the year ended 30^th June 2020, the company reported revenue amounting to $51,384 as compared to $92,026 in FY19. Net loss after tax for the period amounted to $1,960,519 against $1,164,964 in FY19.

Key Financials (Source: Company Reports)

Capital Raising for Progress in Various Projects:  On 25^th September 2020, the company announced that it has successfully raised $800,000 (before costs) through placement of 114,285,714 shares at a price of A$0.007 per share to professional and sophisticated investors The company intends to use these funds for the upcoming work programme at Mt Maitland. In addition, RMX would also use funds for the development at Koonenberry gold project in NSW, the Mukabi Kasiri project in the DRC, assessment, and due diligence in respect of new mineral assets, general working capital and costs of the offer.

Stock Recommendation: As on 30^th June 2020, the cash balance of the company stood at $1.4 Mn as compared to $2.2Mn in FY19. The 52-week low-high range for the stock stands at $0.002 - $0.015, respectively. Going forward, the company remains on track to focus on additional opportunities to enhance shareholder’s value. On the technical analysis front, the stock price of RMX has a support level of ~$0.008 and a resistance level of ~$0.015. Thus, in light of the recent completion of heritage clearance survey, capital raising for various projects, focus on additional opportunities and decent liquidity position,  we give a “Speculative Buy” recommendation on the stock at the current market price of $0.011 per share, with no change on 13^th October 2020.

Invictus Energy Ltd

Commencement of Field Operations: Invictus Energy Ltd (ASX: IVZ) is involved in the exploration of oil and gas, with a market capitalisation of $28.62 Mn as on 13^th October 2020. The company is likely to start field operations in the next fortnight at Cabora Bassa Basin. This follows the approval of the environmental management plan, easing of COVID-19 related restrictions as well as the completion of the final cultural ceremonies in the Muzarabani and Mbire Districts. In addition, the company has also wrapped up tranche 2 placement for the equivalent of A$220k with Mangwana Opportunities Fund at a share price of $0.066. For the year ended 30^th June 2020, the company reported loss amounting to $1,773,456 as compared to $1,022,049 in FY19, owing to rising expenses, like professional fees and corporate costs.

Financial Summary (Source: Company Reports)

Outlook: The strategy of the company revolves around screening the market for value accretive assets. This offers the company an opportunity to broaden its risk profile and decrease the effect to external influences by introducing cash flow from production along with near term development opportunities. In addition, the company is also aiming to become a significant energy supplier in Southern Africa.

Stock Recommendation: The company closed the year with cash and cash equivalents of $1,497,014 as compared to $2,214,264 in FY19. The stock of IVZ is inclined towards its 52-week high level of $0.085. In addition, the stock is trading at a price to book value multiple of $3.5x as compared to the industry average (Oil & Gas) of 2.2x on TTM basis. Thus, it seems that the stock is overvalued at current trading levels. On the technical analysis front, the stock price of IVZ has a support level of ~$0.059 and a resistance level of ~$0.068. Hence, considering the current trading level and higher valuation, we give an “Expensive” recommendation on the stock at the current market price of $0.061 per share, down by 1.613% on 13^th October 2020. We further suggest investors to wait for better entry levels.

Corazon Mining Limited

Update on Lynn Lake Project: Corazon Mining Limited (ASX: CZN) is in the exploration for nickel, cobalt, copper and gold and development of mining activities. The market capitalisation of the company stood at $9.76 Mn as on 13^th October 2020. Recently, the company updated on the preliminary results received from the recently finished geophysical survey at Lynn Lake Project, wherein, the company has discovered multiple new priority nickel-copper sulphide targets. However, final detailed results with prioritised drill targets are likely to come by the end of October 2020. During FY20, the company reported loss amounting to $1,778,384 as compared to $2,352,622 in FY19. During the same period, net cash used in the operating activities stood at $2,210,430 against $2,125,616 in FY19.

Key Financials (Source: Company Reports)

Outlook: Looking forward, the company would continue its mineral exploration activity at and around its exploration projects with the aim of identifying commercial resources.

Stock Recommendation: In the month of February 2020, the company raised $1,125,538 via placement of 321,582,138 fully paid ordinary shares, with an issue price of $0.0035 per share to sophisticated investors. The funds are being used for exploration programs and working capital purposes. At the end of FY20, the cash and cash equivalents of the company stood at $539,678 against $414,675 at the end of FY19. The 52-week low-high range for the stock stands at $0.000 - $0.005. On the technical analysis front, the stock price of CZN has a support level of ~$0.002 and a resistance level of ~$0.004.  Thus, in light of low market capitalisation and loss making business, we advise the investors to avoid the stock at the current market price of $0.003 per share, with no change on 13^th October 2020, owing to the release of recent drilling results.

Aldoro Resources Limited

Completion of Capital Raising: Aldoro Resources Limited (ASX: ARN) is in the exploration and development of gold and nickel in Western Australia. The market capitalisation of the company stood at $5.84 Mn as on 13^th October 2020. Recently, the company notified the market, with an update on old exploration activities at its Unaly Hill South Project, wherein, ARN has finished an aircore (AC) drilling program at the project and drilled 56 AC holes for a total of 3,422m. In the month of July 2020, the company finished a capital raising of A$1,189,000 (before costs) through the issue of 13,211,111 new fully paid ordinary shares at an issue price of $0.09 per share to professional and sophisticated investors. During FY20, the company raised $650,000 (before costs) for exploration activities and working capital via issue of 4,333,333 shares at $0.15 per share. During FY20, the company recorded revenues amounting to $96,022 and loss for the period amounted to $42,751.

Financials (Source: Company Reports)

Outlook: The strategic focus of the company revolves around the development of value from exploration in its tenement projects in Western Australia. ARN would continue to explore and evaluate its other projects.

Stock Recommendation: As on 30^th June 2020, the cash and cash equivalents of the company stood at $2,203,956 against $3,552,155 at the end of FY19. During FY20, the company experienced major deterioration in its key margins. The 52-week range for the stock stands at $0.065 - $0.305. On the technical analysis front, the stock price of ARN has a support level of ~$0.079 and a resistance level of ~$0.115. Thus, considering the decline in topline, rising business losses and low market capitalisation, we advise investors to avoid the stock at the current market price of $0.088 per share on 13^th October 2020. 

Daily Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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