Corazon Mining Limited (ASX: CZN)

Potential for commercialisation: Corazon Mining Limited charged higher with the update on completing highly successful Phase 3 metallurgical test work at the Mount Gilmore Cobalt-Copper-Gold Project (“Project”) in New South Wales, which has delivered a high-grade cobalt concentrate with the potential to supply the emerging global battery technology sector. The Phase 3 metallurgical test work focused on defining down-stream concentrate processing options. The results entailed exceptional recovery rates of cobalt at 7.38%, with 9.28% copper and 4.10g/t gold from drill samples, using conventional processing routes. The combination of high grade concentrates and very high recoveries delivered in the test work provides Corazon with the opportunity to potentially either produce a high-value bulk concentrate for direct sale, or to develop an in-house down-stream processing plant.


Cobalt Ridge Drilling (Source: Company Reports)

Corazon announced the outcomes of successful flotation programs that saw high-grade and background-grade composite drill samples beneficiate all target metals into a small portion of the initial mass. The copper and cobalt stripped solutions were further concentrated to levels that allowed for product generation. The concentrated copper solution produced a light blue powder, suggesting a hydrated copper sulphate. The test work was managed by internationally recognised metallurgical consultants, METS Engineering and independently carried out at ALS Metallurgy in Balcatta, Western Australia. Current activities at Mt Gilmore are focused on defining drill targets and it is expected that drilling will target mineralisation contiguous with Cobalt Ridge for resource definition purposes, as well as new areas prospective for cobalt mineralisation that were being identified by the current phase of regional exploration. The share price has been falling since the start of the year and was down by 44.4 per cent in the last three months. The stock however rose by 20% on 17 May 2018 with the above updates. We like this speculative play but believe in looking for sustainable performance, and thus keep a watch on the stock.
 

RXP Services Limited (ASX: RXP)

Lowering of full year guidance: RXP Services recently released a trading update for FY2018 and expects that revenue for FY18 will be in the range of $145 million to $146 million and underlying Earnings Before Interest Tax and Depreciation and Amortisation (EBITDA) will in the range of $15.8 million to $16.1 million. This is below the previously stated guidance of circa $150 million of revenue with underlying EBITDA margin of 13.3%. Delayed start and ramp-up of a number of important client projects in H2, along with the deferral of associated digital product sales into FY19, impacted H2 FY18 performance. The uptake of RXP’s digital services continues to grow and is expected to strengthen over the coming 12 months.


Revenue Outlook for H2 (Source: Company Reports)

Despite the delayed client projects underway, and margin pressure, RXP’s operational results of the past 6 weeks were encouraging and with a high number of billable staff along with high utilisation, a strong Q4 is expected. RXP’s Q4 FY18 is on track to deliver revenue of circa $40 million with an EBITDA margin circa 14% which is considered a more representative quarter for the business moving forward. The Company remains committed to a transition in work mix that ensures one can take advantage of the digital evolution occurring across all of its businesses. In line with its integrated business model, the Group maintains its focus on positioning itself so that it can best serve its clients and continue to take advantage of the move to digital occurring across all businesses. The stock was down by 22.97 per cent in last six months, followed by a rise of 8.57 per cent in last one month. Just after the release of the trading update, the stock fell by 13.15 per cent as on 17 May 2018. We give a “Hold” recommendation at the current market price of $0.495, in view of the mixed update while the stock trades at low multiples.

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