Tribune Resources Limited

Quarterly Update on EKJV Exploration Report: Tribune Resources Limited (ASX: TBR) is primarily in the business of exploration, development and production activities at the group’s East Kundana Joint Venture tenements. The company provided a quarterly EKJV Exploration Report wherein all the exploration activity for the quarter was associated to in-mine drilling from Rubicon and Pegasus targeting southern extensions to the Falcon lode. A total of eight diamond holes for 3,420 metres were completed in Rubicon-Hornet-Pegasus and ten diamond holes targeting Falcon, returned significant intersection results during the quarter.

Dividend/Distribution – TBR and Final share buyback: Tribune Resources Limited declared a fully franked dividend of 20 cents per share on ordinary fully paid shares at the company tax rate of 30%, which was paid on October 25, 2019.

Significant Rise in Revenue: During the year ended 30 June 2019, the company reported a significant rise in revenue from $179,928,524 to $364,677,724, which was mainly driven by a rise in sales of gold. This growth in revenue led to an increase in profit before taxes from $79,603,044 in FY18 to $134,898,417 in FY19. The company also witnessed a rise in operating cash flow from during the year, which was led by a rise in receipts from customers, interest received and fall in the payment of income taxes. The company’s net cash from operating activities stood at $227,642,299 in FY 2019 from FY 2018 figure of $53,262,021.


Financial Performance (Source: Company Reports)

Outlook: The group plans to continue its exploration, development and production activities on the existing projects as well as to acquire further suitable projects for exploration as and when opportunities arise.

Key Metrics: During the time span of 2015 to 2019, the company witnessed a CAGR growth of 42.78% in the revenue implying that the company is possessing decent capabilities to garner revenues. During the same time span, the gross profit witnessed a CAGR growth of 36.09% in the gross profit. The gross margin of the company stands at 54.9% as compared to the industry median of 42%. The company’s EBITDA and net margin stood at 43.4% and 19.8%, which are higher than the industry median of 29.1% and 11%, respectively. An increased net margin reflects that the company has better capabilities to convert its top-line into the bottom-line.

Stock Recommendation: The stock performance witnessed a rise of 106.80% in the past 6 months and a compound annual growth rate (CAGR) of 49.21% in the net income during the time span of FY 2015 to FY 2019. 2019 annual general meeting of the company is to be held on November 14, 2019 and it is expected that the company might disclose the future growth prospects. Therefore, we advise the investors to closely track the annual general meeting of the company. The companyhas ~55.5 million shares outstanding, with the market capitalisation of ~$481.77 million. 52-week trading range of the stock stood at $3.661 to $8.800 and currently, the stock is trading at the upper band of its 52-week trading range. Hence, considering the above-mentioned facts and current trading levels, we recommend a “Hold” rating on the stock, which is currently trading at A$8.650 per share, down 0.346% on October 28, 2019.

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