Panoramic Resources Limited

PAN Details

PAN to Sell 100% of the Panton PGM Project: Panoramic Resources Limited (ASX: PAN) is a Western Australian mining company whose main purpose is developing the Savannah Nickel Project in the East Kimberley. On 12 October 2020, the company informed the market that it has inked a deal with Dubai 2020 Limited, a private family office investor, to sell its 100% of the Panton PGM Project to the latter. The deal is expected to be completed by early December 2020. Dubai 2020 has paid non-refundable deposit of A$200,000 to gain exclusive due diligence until 5 December 2020. As per the sale agreement, Dubai 2020 Limited will acquire 80% interest in Panton for a consideration of A$12 million cash. Further, Dubai 2020 has a right to buy the outstanding 20% of PAN’s interest for A$3 million cash within a certain time frame.

Savannah Key Development Update: On 1 October 2020, PAN updated the market on its underground development activities at its Savannah Nickel Operation in Western Australia. The company stated that the mining contractor, Barminco has carefully completed the development drive, thereby connecting the vertical ventilation shaft to Fresh Air Raise. The company expects back-reaming of the ventilation raise to begin mid-October and expects the same to be completed late in the March 2021 quarter. 

FY20 Key Financial Highlights: In FY20, total ore milled processed stood at 388,759t at 1.05% nickel, 0.61% copper, and 0.05% cobalt. The company saw good overall recoveries of 83.7% nickel, 93.7% copper and 88.3% cobalt in FY20. Prior to suspension, Savannah had produced 3,417t nickel, 2,215t copper and 176t cobalt in concentrate since recommissioning. Sales revenue for the period stood at $69.1 million. Loss for the year stood at $87.9 million, as compared to a profit of $9.2 million reported in the year-ago period. Cash on hand as at 30 June 2020 stood at $31.2 million, with nil debt. As per the presentation of Paydirt Nickel Conference, the following chart provides an overview of shareholder composition of Panoramic Resources Limited.

Shareholder Composition (Source: Company Reports) 

Stock Recommendation: For FY21, the company plans to undertake activities that are anticipated to drive future operational performance, reduce risk, and leave the mine capable of being restarted at FY21 end. In the past one and three months, the stock has moved up by 27.9% and 54.9%, respectively. As a result, the stock is trading below the average of its 52-week high and low levels of $0.064 and $0.348, respectively. In addition, the stock is trading at a price to book value multiple of 1.4x against the industry median (Basic Materials) of 2.6x on TTM basis. On the technical analysis front, the stock price of PAN has a support level of ~$0.067 and a resistance level of ~$0.122. Hence, considering the decent outlook for FY21,  Savannah Key Development Update, its plan to sell Panton PGM project, current trading levels, and key risks, we give a “Speculative Buy” recommendation on the stock at the current market price of A$0.110 per share, down by ~4.348% on 12 October 2020. 

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

Norwest Minerals Limited

NWM Details

NWM Rides on Bulgera Gold project: Norwest Minerals Limited (ASX: NWM) is an Australia-based company, which is engaged in the exploration of gold and base-metal projects, which are all located in Western Australia. Recently, the company announced that Australian Mines Limited, a substantial holder of the company, has reduced its voting power from 25.05% to 20.04%. During the 1HFY20, the company’s exploration events contained reverse circulation drilling at the Bulgera Gold project. The company has planned a series of RC holes to test for this deeper high-grade gold mineralisation and expects the same to begin in October 2020. The company has also raised $2.5 million through a capital raising program, which will provide the funds to let Norwest drill the series of reverse circulation holes deeper into the Bulgera mine sequence. The company also completed the 4,520-metres of aircore (AC) drilling to test gold objectives along the 5 Kms strike of the Bulgera Mine sequence. The company has also announced to divest its non-core Warriedar project to Warriedar Mining Pty Ltd. As at September 2020, the company had cash at bank of $3.5 Mn. 

FY20 Key Highlights: For the year ended 30th June 2020, the company reported revenue amounting to $53,180 as compared to $54,219 in FY19. Net Loss for the period amounted to $1,247,912 against $2,143,238 in FY19. During FY20, NWM recognised an impairment of $507,613 from the sales of Warriedar tenements. Earnings per share in FY20 came in at 1.59 cents per share, down from 4.61 cents per share in FY19. No dividends were paid during the year ended 30 June 2020. The company exited the period with cash balance of $1.5 million.

FY20 Key Highlights (Source: Company Reports)

Stock Recommendation: The stock of NWM has given negative returns of 32.2% and 38.2% in the past three and six months, respectively. The stock is trading below the average of its 52-week high and low levels of $0.098 and $0.22, respectively.  The company remains on track to ensure that it is fully funded via the capital raising program to accelerate and expand multiple upcoming drilling programs, which focuses its Marymia East Gold Project. The company also has a decent potential for new gold discoveries from the upcoming drilling programs. On the technical analysis front, the stock price of NWM has a support level of ~$0.1 and a resistance level of ~$0.135. In addition, the stock is trading at a price to book value multiple of 0.7x against the industry median (Basic Materials) of 2.6x on TTM basis.  Therefore, considering the drilling activities at the Bulgera Gold project and Marymia East Gold Project, capital raising program, current trading levels, and key risks, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.105 per share, up by ~4.9% on 12 October 2020. 

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

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