Kairos Minerals Limited

KAI Details

A Look at Pilbara Gold Project: Kairos Minerals Limited (ASX: KAI) is engaged in resource exploration. The market capitalisation of the company stood at ~$52.57 Mn as on 26^th August 2020. Recently, the company has provided an update on Pilbara Gold Project, wherein it stated that the exploration program for 2020 is progressing quickly. The program, which consists of 5,000m of reverse circulation (RC) drilling in total, has now begun at the large Fuego gold target. The company added that RC rig is targeting to finish around 12 holes to depths of up to 270 metre in order to provide an initial test of this extensive gold anomaly.

Capital Raising to Expand Exploration in Pilbara: During the quarter ended 30^th June 2020, the company stated that it is re-evaluating numerous intrusion-hosted gold exploration targets on its extensive portfolio of regional gold projects. During the same period, the company secured EIS funding for drilling at the Fuego Prospect. The company has also raised $4.2 million through a Placement ($2.5 Million) and Rights Offer ($1.7 Million). The proceeds of $2.5 million raised from the placement are likely to support exploration and drilling programs in the Pilbara Gold Project. The company will also use funds for working capital purpose. The following picture provides an overview of cash flow from operating activities:

Cash Flow from Operating Activities (Source: Company Reports)

A Look at 1H FY19 Results: For the half-year ended 31^st December 2019, the company reported revenue amounting to $5,235 as compared to $12,951 reported in 1H FY19. During the said period, the company reported a loss after income tax of $822,562.

Future Focus: The strategic focus of the company revolves around the development of the Pilbara Project. In addition, the company is also focused on regional soil sampling and mapping project at the Croydon Project. 

Key Risks: The company’s business is exposed to a variety of financial risks, such as interest rate risk, credit risk and liquidity risk. Interest rate risk arises from the fluctuation in the value of financial instruments due to changes in market interest rates. Credit risk arises from the default of counterparty on their contractual obligations, while liquidity risk is influenced by the failure of the company to address its financial obligations. 

Stock Recommendation: The company ended the June 2020 quarter with cash and investments of $3.5 million. Current ratio of the company stood at 3.42x in 1HFY20 as compared to the industry median of 1.78x. This indicates that KAI is in a decent position to address its short-term obligations against the broader industry. On the technical analysis front, the stock of the company has an immediate support level of ~A$0.0306 and a resistance level at ~A$0.072. The stock of KAI has moved up by 114.20% and 328.40% in the past three and six months, respectively. The stock is trading at a price to book value multiple of 4.5x as compared to the industry median (Metals & Mining) of 2.3x on TTM basis. Hence, considering the upside movement in the stock during the past three months, we have a wait and watch stance on the stock at the current market price of $0.038 per share, up by 5.556% on 26^th August 2020.

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

Disclaimer  

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.