Stocks’ Details

Riversgold Limited

Update on Exploration Activities: Riversgold Limited (ASX: RGL) is engaged in the mineral exploration of its gold projects in Australia and Alaska. As on 30 September 2020, market capitalisation of the company stood at ~$20.62 million. The company has recently provided an update on its exploration activities, wherein it reported that the Quarterback Geological Team have finalised the interpretation of the magnetics data and has identified over 40 new targets within RGL’s tenure.

Quarterly Performance (For the Period Ended 30 June 2020): During the quarter, the company initiated the divestment of its Alaskan Gold Project to Mamba Mineral LLC and completed a capital raising of $1.53 million. During the quarter, the company used a cash of $216k from operating activities.

Cash Used in Operating Activities (Source: Company Reports)

Outlook: The company is focusing on Australian gold projects and is expecting a discovery potential, wherein ~60% of tenure was never explored. The company is planning to complete geophysical and litho-structural interpretations for Queen Lapage, Cutler and Farr Jones prospects in 2020 and will grow Cutler and Farr Jones footprint via soils sampling & auger drilling.

Stock Recommendation: The company has an increased focus on prospective gold project in Eastern Goldfields. As per ASX, the stock of RGL gave a negative return of 40.45% in the past three months and a negative return of 3.64% in the last one month. The stock is trading slightly below the average of its 52-week price band. On a technical front, the stock of RGL has a support level of ~$0.0091 and a resistance level of ~$0.073. On a TTM basis, the stock of RGL is trading at a price to book value multiple of 4x, higher than the industry median (Basic Materials) of 2.5x. Considering the current trading levels, volatility in returns in the past three months and the softer market conditions, we suggest investors to keep an eye on the business activities and hence, give an ‘Avoid’ rating on the stock at the current market price of ~$0.053 on 30 September 2020.

Meteoric Resources NL

Extension to Midrim & Laforce Acquisition Agreement: Meteoric Resources NL (ASX: MEI) is engaged in the exploration of mineral tenements in Brazil, Canada, Western Australia, and Northern Territory. As on 30 September 2020, the market capitalisation of the company stood at ~$62.01 million. The company has recently announced that the conditional agreement with Rafaella Resources Limited to acquire the Midrim and Laforce nickel-copper sulphide projects has been extended by mutual agreement from 42 to 73 days. 

FY20 Financial Highlights: During FY20, the company reported a loss of $7.14 million from continuing operations as compared to a loss of $4.45 million in FY19. On 30 June 2020, the group reported a healthy balance sheet with net assets of $6.53 million, reflecting an increase from $2.37 million and cash assets of $6.51 million, up from $2.53 million.

FY20 Financial Highlights (Source: Company Reports)

Stock Recommendation: The company has ended FY20 with a decent portfolio and seems well-positioned to acquire an Australian based project to hedge the Company’s geographical risk. As per ASX, the stock of MEI gave a return of 42.86% in the past three months and a return of 13.64% in the past one month. The stock is trading slightly above the average 52-week price band and retains limited potential for further growth. On the technical analysis front, the stock of MEI has a support level of ~$0.0081 and a resistance level of ~$0.065. On a TTM basis, the stock of MEI is trading at a price to book value multiple of 9.5x, higher than the industry median (Basic Materials) of 2.5x, and thus seems overvalued. Considering the current trading levels, returns in the past three months, softer market conditions due to the global pandemic, and higher P/BV multiple on TTM basis, we suggest investors to wait for better entry level and hence, give an ‘Expensive’ rating on the stock at the current market price of $0.050 on 30 September 2020.

Alderan Resources Limited 

Alderan prepares for October drilling at Detroit Project: Alderan Resources Limited (ASX: AL8) is engaged in the exploration of mineral in Utah, USA. The Company is exploring the prospective Frisco project located in Beaver County, Utah, for copper, gold, zinc, silver, and associated minerals. As on 30 September 2020, the market capitalization of the company stood at ~$32.73 million. The company has recently announced that it will start its drill program at the Mizpah prospect in mid-October post the review completion of data from previous exploration on the prospect.

Rio Tinto hits 41m at 1.9% Cu & 0.62 gpt Au at Cactus Canyon: The company has provided drill results from Kennecott Exploration (KEX) (a subsidiary of Rio Tinto) at its Frisco Project, wherein the first drill hole reported 41m @ 1.9% Cu, 0.62 g/t Au, 7.1 g/t Ag, from 252m; within 74m @ 1.1 % Cu, 0.35 g/t Au, 4.5 g/t Ag, from 219m. KEX has completed four holes in the program to test the possible continuity of mineralization between the Cactus and Comet Cu-Au prospects and the results for other three holes are expected over the coming weeks.

Quarterly Report: For the quarter ended 30 June 2020, the company signed option agreements with Tamra Mining Company LLC to acquire a stake of up to 70% in Valley/Crossroads copper-gold and Detroit gold/copper/molybdenum projects in Utah, USA. During the quarter, the company successfully completed capital raising activities, raising approximately $2.1 million and reported a cash balance of $2.13 million. In the same time span, the company used a cash of $319k from operating activities.

Quarterly Cash Flow Activities (Source: Company Reports)

Stock Recommendation: AL8 has started exploration activities, including geological, geochemical, and geophysical surveys, and is nearing completion of compilation and digitization of historical exploration data. As per ASX, the stock of AL8 has given a negative return of 16.67% in the past three months and a negative return of 10.71% in the last one month. The stock is inclined towards its 52-weeks’ high level of $0.210 and retains limited potential for growth. On a technical front, the stock of AL8 has a support level of ~$0.01 and a resistance level of ~$0.17. On a TTM basis, the stock of AL8 is trading at a price to book value multiple of 3.5x, higher than the industry median (Basic Materials) of 2.5x. Considering the current trading levels, volatile returns in the past three months, and softer market conditions, we suggest investors to wait for better entry levels and hence, give an ‘Expensive’ rating on the stock at the current market price of $0.130, up by 4% on 30 September 2020.

Daily Comparative Chart (Source: Refinitiv, Thomson Reuters)

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