Latin Resources Limited 

LRS Details

Update on “Less than Marketable Parcel Facility”: Latin Resources Limited (ASX: LRS) is a mineral exploration company mainly involved in the identification and definition of mineral resources in Latin America and Australia. In an update provided on Less than Marketable Parcel Sale Facility, a share sale facility for shareholders who own less than $500 value worth of LRS shares, the company confirmed that only 5,133,274 ordinary shares from the facility are left for sale. The proceeds from the sale process will be distributed among participating shareholders on pro-rata basis.

Favourable Results from Peep O’Day Prospect: On 24 June 2021, the company confirmed that the assay results received from rock chip sampling from the Peep O’Day Prospect within the NSW Yarara JV Project, have shown distinct clusters of gold mineralisation with several samples returning grades greater than 1.0 g/t Au, with a peak of 9.79 g/t Au.

Q1FY21 Operational Highlights:

• Multiple drilling Campaigns Completed: During Q1FY21, LRS completed the first pass 400m x 400m Phase I, and 200m x 200m infill drilling campaigns at its Noombenberry Halloysite Project.
• Continuing Exploration Work at Yarara: At its Yarara Gold Project, the company has started on-ground mapping and reconnaissance prospecting work on the Priority 1 target areas.
• Completed Due Diligence for Argentinian Lithium Projects: The company’s Joint Venture Partner, Integra Capital, has completed due diligence to spend up to US$1 million on exploration and development of the Catamarca lithium projects.

Bottom Line Trend (Source: Analysis by Kalkine Group)

Key Risks:

• Regulatory Risks: The company requires statutory approvals to conduct drilling and various other exploration programmes. Any delay in the receival of these approvals could hinder the company’s operations.
• Foreign Currency Risks: The company has operations in several countries like Peru, Argentina, Brazil, and Australia, exposing it to foreign currency risk.
• COVID-19 Uncertainties: The potential impact of the COVID-19 pandemic and associated restrictions could impact the company’s operations and delay its programmes.

Outlook: After obtaining positive rock chip sampling results from the Peep O’Day prospect, the company is now undertaking close-spaced surface soil sampling to better define the mineralised system and assist in the planning of additional on-ground exploration. The company has also commenced aircore drilling at Noombenberry Kaolin-Halloysite Project to cover an area that is equivalent in size to the globally significant 207Mt Cloud Nine Kaolin-Halloysite Inferred Resource.

Stock Recommendation: As at 31 March 2021, the company was in a positive financial position with a cash balance of $4 million and zero debt. Over the last six months, the stock has provided a return of 4.34% and is currently trading lower than the average 52-week price level band of $0.008 and $0.100. Considering the company’s improving bottom line, robust balance sheet, ongoing exploration programs, favourable results received from Peep O’Day Prospect, current trading level, and associated key risks, we give a “Speculative Buy” rating on the stock at the current market price of $0.047, down by 6.001% as on 26 July 2021.

LRS Daily Technical Chart, Data Source: REFINITIV 

Norwest Minerals Limited

NWH Details

Key Takeaways from Investor Presentation: Norwest Minerals Limited (ASX: NWM) is mainly involved in the exploration of gold and copper. In an investor presentation released on 21 July 2021, the company notified that it is advancing its 100% owned Bulgera Gold Project, 100% owned Bali Copper Project and Arunta West project, all located in Western Australia.

• Diamond Drilling at Bulgera Gold Project: The company is conducting a diamond drilling at Bulgera Gold project to test new gold lode down-dip of shallow Bulgera pit.
• Exploration Drilling at Bali Copper Project: Exploration drilling of key copper targets is scheduled for Q3 CY 2021.
• Entitlement Offer: On 14 July 2021, the company announced a partially underwritten non-renounceable entitlement offer to raise $5.0 million to advance the exploration activities across its highly prospective gold, copper, and base metal project portfolio.

High-grade Gold Intersected Below the Bulgera Open Cut: On 19 July 2021, the company announced that its RC drilling at Bulgera is continuing to intersect high-grade gold below the Bulgera open cut and the recently drilled RC hole BRC21017 returned 3m grading 10g/t gold including 1m @ 27.8g/t gold from 67m downhole. 

H1FY21 Result Highlights:

• Incurred Net Loss: For H1FY21, the company incurred a net loss of $1.3 million, up from the loss of $508k in H1FY19, mainly due to the rise in exploration cost written off.
• Rise in Cash Balance: As at 31 December 2020, the company had cash balance of $2.59 million, up from $1.51 million as at 30 June 2020.

Revenue Trend (Source: Analysis by Kalkine Group)

Key Risks:

• Fluctuations in Commodity Prices: The company is exposed to the risks associated with the fluctuations in the prices of gold and copper.
• COVID-19 Uncertainties: The COVID-19 pandemic has the potential to disrupt the company’s operations as it could cause temporary suspension of operations.

Outlook: The company has scheduled an aggressive 12-month exploration drilling for Bulgera gold and Bali copper projects. It plans to undertake a diamond drilling program at the high-grade gold zone below the existing Bulgera open pit. The company is also focused on identifying ‘drill ready’ targets at the Arunta West gold and base metal project.

Stock Recommendation: As at 31 March 2021, the company had cash reserve of $2 million and nil debt in its balance sheet.  The stock of NWM has provided a return of 17.51% in the last three months. The stock is currently trading lower than the average 52-week price level band of $0.065 - $0.145. On a TTM basis, the stock is trading at a price to book multiple of 1.2x, lower than the industry median of 2.7x (Metals and Mining). Considering the company’s ongoing exploration programs, debt-free balance sheet, current trading levels, valuation on TTM basis, current trading level, and associated key risks, we give a “Speculative Buy” rating on the stock at the current market price of $0.080, down by ~2.44% as on 26 July 2021.

NWM 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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