Stocks’ Details

Silver Mines Limited

Bowdens Silver to Continue till the End of 2020: Silver Mines Limited (ASX: SVL) is primarily engaged in the acquisition, exploration, and development of quality silver projects. The company has 100% interest in the Bowdens Silver Project, the largest undeveloped silver deposit in Australia.

Quarterly Highlights: During the quarter ended 30^th June 2020, the company lodged the Development Application (DA) and Environmental Impact Statement (EIS) for the proposed development of the Bowdens Silver Project. During the quarter, the company also commenced exploration activities at the project and announced that drilling activities will be expanded up to 10,000 metres of drilling, targeting high-grade infill and extension silver mineralisation. The company will receive up to $200,000 as reimbursement for direct drilling costs incurred during the Bowdens drill program. The reimbursement forms part of the NSW government’s funding budget of $2.2 million announced in 2019.

Update on Other Projects: In addition, desktop activities continued at the Barabolar Project; however, planned drilling on the project has been put on hold. The company has also been granted 569 square kilometres of new exploration licences adjoining the Tuena Gold Project.

Capital Raising: The company raised a total of $12 million through a placement of shares to institutional, professional, and sophisticated investors. Funds received from the placement will be used in activities related to the Bowdens Silver Mine, land acquisitions, and for corporate and general working capital purposes. Cash used in operating activities during the June quarter stood at $573k, with cash and cash equivalents amounting to $12.123 million.

Operating Cash Flow (Source: Company Reports)

What to Expect: The company expects drilling activities at the Bowdens Silver Project to continue at least till the end of CY2020.

Key Risks: The company’s operations may get impacted by price fluctuations, changes in commodity demand, currency fluctuations, unfavourable drilling and production results, deviation from mineral resource and ore reserve estimations, loss of market, competition, environmental risks, etc.

Stock Recommendation: The stock of the company gave positive returns of 112.5% in the last three months and is currently trading close to its 52-week high of $0.295. On a trailing twelve months (TTM) basis, the stock is trading at a price to book value multiple of 3.5x, against the industry median (metal and mining) of 2.3x. On the technical analysis front, the stock of the company has a support level of ~$0.16 and a resistance level at ~$0.29. Considering the ongoing business developments, price movements, and current trading levels, we have a wait and watch stance on the stock at the current market price of $0.265, up 3.922% on 18^th August 2020.

E2 Metals Limited

New Gold and Silver Targets: E2 Metals Limited (ASX: E2M) is engaged in the exploration and evaluation of mineral deposits in Australia, New Zealand, and Argentina. The company recently announced that Mr Martin James Donohue became a substantial shareholder with 5.42% of the voting power. In another recent update, the company notified that it has received the multi-element gold and silver results for the Conserrat project. Rock chip sampling at the project has identified a new high-grade vein target at the Emilia prospect. Further sampling at the target is expected during August and September. Samples collected from the Ro prospect also identified a second vein trend. During July 2020, the company also received multi-element assay results for the Corona project and Corona Norte soil survey, depicting a coherent silver and arsenic (with lesser gold plus antimony) anomaly defined over a 1.5km strike.

Quarterly Highlights: During the quarter ended 30^th June 2020, the company reported a new high-grade gold and silver discovery at the Mia prospect, Conserrat. Assay results included hole CORC-36 returning the highest-grade drill intercept of 16m at 3.91gpt Au, 123gpt Ag from 68m. Similar high-grade surface veins up to 40.4gpt Au, 262gpt Ag in surface float samples, were discovered at the Patricia prospect. During the quarter, the company completed the Placement of $2.75 million and a Share Purchase Plan of $2.17 million subsequent to the quarter. As of 30^th June 2020, the company had cash reserves of $3.56 million. Exploration and evaluation expenditure for the period totalled $380k.

Operating Cash Flow (Source: Company Reports)

Key Risks: The company’s operations are exposed to foreign exchange risk, mainly in relation to certain transactions denominated in USD, arising from activities in Argentina. In addition, business operations are also exposed to credit risk and liquidity risk.

Stock Recommendation: The stock of the company gave positive returns of 13.33% in the last three months and is currently trading below the average of its 52-week trading range of $0.060 - $0.355. During 1HFY20, the company had a current ratio of 7.12x, as compared to the industry median of 1.85x. On the technical analysis front, the stock of the company has a support level of ~$0.16 and a resistance level at ~$0.29. Considering the discovery of new gold and silver targets, decent price movements, and current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.175, up 2.941% on 18^th August 2020.

Cohiba Minerals Limited

Approval to Commence Mobilisation and Drilling: Cohiba Minerals Limited (ASX: CHK) is primarily engaged in the exploration of natural resources, including metals, precious metals, lithium, cobalt, and minerals. The company recently got approval to commence mobilisation and drilling at Horse Well and Pernatty C. The drilling program will commence at Horse Well with HWDD_02.

June Quarter Highlights: During the quarter, the company won 51% of Olympic Domain tenements under Farm-In Agreement. This represents a milestone in the company’s operations. Drilling programs at the tenements are expected to achieve the 80% ownership target. Assay results from soil sampling at the southern part of Pernatty “C” indicated anomalous values for copper, zinc, lead and other path-finder elements including iron, manganese, calcium, nickel and cobalt.

Cash Flow Highlights: During the quarter, the company spent $248k on operating activities and $160k on investing activities. Cash and cash equivalents at the end of the quarter amounted to $904k.

Operating Cash Flow (Source: Company Reports)

Key Risks: The company’s ownership of financial instruments expose it to liquidity risk, equity securities price risk, foreign currency risk, and credit risk. Moreover, the company is at a crucial stage of business wherein it is required to ensure continuity of drilling activities to achieve the desired results on time. Therefore, any disruptions to operations due to COVID-19 can adversely impact performance.

Stock Recommendation: The stock of the company gave positive returns of 100% in the last three months and is inclined towards its 52-week high of $0.017. On a trailing twelve months (TTM) basis, the stock is trading at a Price to Book Value multiple of 3.4x, against the industry median of 2.3x. On the technical analysis front, the stock of the company has a support level of ~$0.009 and a resistance level at ~$0.016. Considering the ongoing drilling programs, price movements, key risks, current trading levels, and valuation on TTM basis, we have a wait and watch stance on the stock at the current market price of $0.014 as on 18^th August 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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