West African Resources Limited

WAF Details

AGM Results Announced: West African Resources Limited (ASX: WAF) is a gold mining firm with projects in West Africa. As of 20 May 2021, the market capitalisation of WAF stood at ~$913.95 million. On 14 May 2021, WAF released the resolutions voted at its Annual General Meeting (AGM) held on the same date. 

Results of Q1FY21 Released: For Q1FY21 (March Quarter), WAF reported an increase in the gold production to 55,823 oz, up by 11% QoQ at an average sales price of US$1,800/oz. This production was reported from its Sanbrado mine in Burkina Faso. It realised lower revenue of $132,317 in Q1FY21 vs $135,873 in Q4FY20. However, it sold 56,780oz of gold in Q1FY21 vs 51,688 oz in Q4FY20. The company reduced its AISC (All-In Sustaining Costs) per ounce to US$957 in Q1FY21. WAF has updated on its estimate of mineral resources, ore reserves and 10-year mine plan from its Sanbrado operations. During Q1FY21, WAF paid US$13 million and a further US$25 million payment after the quarter-end to Taurus. The company earned $39 million of operating cash flow during the quarter. It held $94 million cash on hand and $31.4 million in unsold bullion as of 31 March 2021.

Quarterly Production, Q2FY20-Q1FY21 (Source: Company Reports)

Key Risks: The company faces the risk of changes in gold production, prices, unit costs. It also faces the risk of COVID-19 restrictions and changes in safety protocols regarding isolation of staff, contractors, etc.  

Outlook: WAF estimates a gold production of 250,000-280,000oz at an AISC of US$720 - US$800/oz for FY21. The updated 10-year production outlook estimates 216,000oz of gold average per year from 2021-2030. It has estimated an exploration budget of US$12.5 million in 2021. WAF aims to complete the ongoing diamond and RC infill drilling campaign for the Toega project to estimate the Indicated Mineral Resources (IME) in Q2FY21.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Data Source: Refinitiv, Thomson Reuters, 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 WAF gave a positive return of 32.92% in the past three months and a positive return of 16.57% in the past six months. The stock is currently trading higher than the 52-weeks’ average price level of $0.720-$1.230. The stock of WAF has a support level of ~$1.035 and a resistance level of ~$1.138. We have valued the stock using the Enterprise Value to Sales based illustrative relative valuation method and have arrived at a target price with a correction of mid-single-digit (in % terms). We believe that the company can trade at a slight discount than its peer median, considering its lower revenue generated and average sales price realised for Q1FY21 vs Q4FY20, and the risks associated with the pandemic restrictions and changes in the production level. For this purpose, we have taken peers like Alkane Resources Limited (ASX: ALK), Pantoro Limited (ASX: PNR), and others. Considering the current trading levels, decent returns in the past three and six months, and valuation, we suggest investors to book profit and give a 'Sell' rating on the stock at the current market price of $1.090, up by ~5.314% on 20 May 2021.

WAF Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Immutep Limited

IMM Details

Business Update: Immutep Limited (ASX: IMM) is a biotechnology developer of new immunotherapy treatments for cancer and contagious and autoimmune diseases. As of 20 May 2021, the market capitalisation of IMM stood at ~$351.52 million. On 20 May 2021, IMM announced that the Bank of New York Mellon Corporation (BNYMC) Group held 267.72 million shares representing 38.46% voting shares in IMM.  The company has reported that its AIPAC-Phase IIb clinical trial has covered 72% of patients with late-stage cancer compared to ~60% previously. It progresses well on the final overall survival (OS) numbers from its metastatic breast cancer trial to report in 2HCY21. IMM also updated that its patient recruitment for the TACTI-002 Phase-II trial in partnership with Merck & Co. Inc (“MSD”) is also on track. 

It also announced the selection of a high-producing CHO cell line for its preclinical candidate IMP761. As per the recent operational update, IMM reported a robust financial position with adequate cash till CY2023 due to the unexpected timing of many significant data read-outs from its trials.

Q3FY21 Results: During the March quarter, IMM reported the grant of a Patent entitled “Combined Preparations for the Treatment of Cancer or Infection” from the US Patent & Trademark Office. IMM initiated the recruitment of the first line of non-small cell lung cancer (NSCLC) patients for the TACTI-002 trial and expanded Part A of the study in partnership with “MSD”. For its EAT COVID-Phase II trial, IMM’s patient data for safety has been reviewed and recommended to advance into the randomised portion of the study. It received $59,000 of cash receipts in Q3FY21 versus $336,000 in Q2FY21. IMM holds $51.7 million of cash as of 31 March 2021.

Q3FY21 Cash Flow from Operating Activities (Source: Company Reports)

Key Risks: The company faces the risk of developing lead candidates for conducting successful clinical trials and achieve desired trial outcome. It also bears the risk of developing and protecting its IP portfolio.

Outlook: IMM is in the process of finalising a CMO (contract manufacturing organisation) for GMP manufacturing of IMP761. The company expects to receive final data from AIPAC-Phase IIb. For the TACTI-002-Phase II trial, the company monitors the patient recruitment. It intends to present the new clinical data from this trial and INSIGHT-004 study at the American Society of Clinical Oncology Annual Meeting (ASCO) 2021 (4-8 June). It expects updates from the programs run in partnership with or out licensed to Novartis, GSK, EAT COVID, etc. It also intends to build new partnerships and expand existing programs.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation (Illustrative)

Data Source: Refinitiv, Thomson Reuters, 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 IMM gave a positive return of 31.39% in the past month and a positive return of 41.25% in the past three months. The stock is currently trading above its 52-weeks’ average price level of $0.140-$0.630. The stock of IMM has a support level of ~$0.54 and a resistance level of ~$0.598. We have valued the stock using the Enterprise Value to Sales based illustrative relative valuation method and have arrived at a target price of low double-digit downside (in % terms). We believe that the company can trade at a slight premium than its peer median, considering the grant of a European patent in April 2021, grant of expedited review and development with the USFDA for efti (“IMP321”), and strong financial position with cash available till 2023. For this purpose, we have taken peers like Telix Pharmaceuticals Limited (ASX: TLX), Medlab Clinical Limited (ASX: MDC), Paradigm Biopharmaceuticals Limited (ASX: PAR) and others. Considering the current trading levels, decent returns in the past month and the past three months, operational business update in May 2021, and valuation, we suggest investors to book profit and give a ‘Sell’ rating’ on the stock at the current market price of $0.565 up by ~11.881% on 20 May 2021.

IMM Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Note: 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.

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