Stavely Minerals Limited

SVY Details

Release of Shares from Voluntary Escrow: Stavely Minerals Limited (ASX: SVY) is a mineral exploration company which has been formed to acquire early to advanced stage exploration projects with demonstrated high potential for additional discovery and it is having a market capitalisation of ~A$39.87 Mn as on 3^rd June 2019. Recently, by release dated 28^th May 2019, the company stated 972,591 ordinary shares (Escrowed Shares) will be released from voluntary escrow on 12 June 2019.The Escrowed Shares were issued on 17 April 2019, when a total of 7,692,308 shares were issued as prepayment for drilling services to be held in voluntary escrow and released progressively over the next 12 months as offsets against drilling services invoices. Post release of these 972,591 shares, 6,719,717 remain in escrow.

In the context of a share purchase plan, which was announced to the market on 16 April 2019, the company stated that it has closed oversubscribed.It made placement to sophisticated and institutional investors, as a result of which, it raised $3.2Mn along with the $2Mn placement to Titeline as advance payment of drilling services which is to be accomplished in the next twelve months.

A Quick Look at Quarterly Report March 2019:  With regards to Thursday’s Gossan Copper-Gold Prospect, the SMD044 had returned the largest and highest-grade intervals till date and multiple zones of well-developed copper-gold mineralisation had been encountered.

At the end of the quarter, the cash on hand stood at $0.76Mn. Following the quarter end, the company had announced a capital raising of $4.2Mn. The net cash used in the operating activities stood at A$1.341Mn. During the same quarter, the company had made payments of A$0.928Mn for exploration & evaluation purposes.


Operating Cash Flow Statement (Source: Company Reports)

What to Expect From SVY: As per the half yearly result report, the company stated that it is making various advances in its search for a well-mineralised copper-gold porphyry at Thursday’s Gossan and the recent drilling at Mount Stavely, the only drilling ever conducted on this target, had intercepted porphyry-related chalcopyrite and bornite mineralisation. The outlook for exploration success within Stavely Minerals’ portfolio of 100% owned and Earn-in and Joint Venture properties had never been better.

Stock Recommendation: The metals markets for Stavely Minerals’ target commodities like copper and gold are at very healthy price levels. The company expects that future expectations are very excellent for copper and gold. The return on equity stood at -71.0% in 1HFY19 in comparison to the industry median of 6.5%.

On the stock performance front, it had witnessed a decline of 13.73% and 24.14% in the time span of one-month and three months, respectively. While on the YTD basis, the stock had provided a return of 2.33%.

Given the stock price action over the period and mixed updates, we suggest investors that they should liquidate their position and book the profit at the current juncture. Thus, we give a “Sell” recommendation on the stock at the current market price of A$0.245 per share (up 11.364% on 3^rd June 2019). 
 

SVY Daily Chart (Source: Thomson Reuters)
 

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