Resolute Mining Limited

RSG Details

Strike Notice at Syama Gold Mine: Resolute Mining Limited (ASX: RSG) is involved in gold mining and exploration for minerals. The market capitalisation of the company stood at $1.17 billion as on 10^th September 2020. On 9^th September 2020, the company received a notice from a Local Union Committee of the Union Nationale des Travailleurs du Mali SOMISY-SA regarding a 10-day strike order at the Syama Gold Mine in Mali for not fulfilling certain demands. These demands include the return of Syama workers who have been stood down on full pay because of RSG’s COVID-19 protocols. 

However, the company stated that it has executed a comprehensive, company-wide response to the coronavirus pandemic. In doing so, the company took initiatives to limit the travel of non-essential employees from outside the surrounding region to the Syama Gold Mine. The company added that the strike notice is irresponsible, opportunistic and reflects a breach of the commitments made in the Syama Workforce Stability Agreement. Consequently, the company is considering how to respond to the strike notice. The company has decided to suspend production and cost guidance for FY20 as a result of the impact of the strike as well as actions that may be taken by RSG on production at Syama.

Growth in Production and EBITDA: During 1HFY20, the company reported gold production of 217,946 ounces as compared to 176,237 ounces in 1H FY19. RSG posted total gold sales of 212,668oz at an average gold price of US$1,427/oz. Underlying EBITDA for the period amounted to US$107 million, suggesting an increase of 96% over pcp. This indicates a solid operational cost performance.

Production History (Source: Company Reports)

Key Risks: The company’s financial performance could be impacted by the volatility in the prices of gold, as the company mainly derives its revenue from the sale of gold. 

Stock Details:  During the half-year, the company cemented its balance sheet through a successful equity raising of A$195 million, the sale of Ravenswood, and the acquisition of the Mako third party financing royalty. The company closed the HY20 with a cash balance of US$62 million, additional liquid assets of $35 million and a promissory note of US$35 million. On the technical analysis front, the stock of the company has a support level of ~A$0.917 and a resistance level of ~A$1.153. The stock of RSG is trading slightly below the 52-week low -high average of $0.605-$1.690, respectively. In the past six months, the stock provided a positive return of 22.54%. The stock closed at $0.995 per share, down by 6.132% on 10^th September 2020, owing to the release of strike notice.

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

NewPeak Metals Limited

NPM Details

Dark Horse Resources Limited Changed Name to NewPeak Metals Limited: Dark Horse Resources Limited (ASX: DHR) is an exploration company with a major focus on lithium and gold projects in Argentina. On 9^th September 2020, the company advised the market that it has changed its name to NewPeak Metals Limited (ASX: NPM), which has been approved by the Australian Securities and Investments Commission and became effective on 10^th September 2020. The company also sought approval for the name change from shareholders in its Extraordinary General Meeting, which was conducted on 7^th September 2020. In addition, the company is in the process of re-branding its web and social media presence, and these changes would be effective in the upcoming week. The new website of the company would be www.newpeak.com.au and the explorer can be contacted via email at [email protected].

Under its previous name i.e. Dark Horse Resources Limited, the company executed the second phase of the new Strategic Business Plan and signed binding term sheets for the acquisition of interests in mineral permits in the Gold-rich Central Otago region of New Zealand’s South Island, which is subject to regulatory approvals. On 31^st August 2020, the company wrapped up the private placement to qualified institutional and sophisticated investors and raised $343,000 before costs. The below picture gives an overview of cash flow from operating activities at the end of June 2020 quarter:

Cash Flow from Operating Activities (Source: Company Reports)

Key Risks: The company’s business activities are exposed to numerous financial risks, which include credit risk, liquidity risk and market risk. Credit risk arises from the default of counterparties on their contractual obligation, while liquidity risk is influenced by the inability of the company to pay its financial obligations. In addition, the use of interest-bearing, tradable and foreign currency financial instruments lead the business to market risk.

Stock Details: During June 2020 quarter, the company raised $675,000 cash through private placement and raised $1,532,000 through SPP, subsequent to the end of the quarter. Debt to equity of the company stood at 0.19x in 1H FY20 as compared to the industry median of 0.21x. On the technical analysis front, the stock of the company has a support level of ~A$0.002 and a resistance level of ~A$0.0061. The stock of NPM is inclined towards its $52-week high of $0.004. The stock of NPM closed at $0.003 per share, down by 25% on 10^th September 2020.

NPM (Formerly, known as DHR) Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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