De Grey Mining Limited

DEG Details

AC Drilling Results from Hemi Gold Discovery: De Grey Mining Limited (ASX: DEG) is engaged in the exploration of precious and base metals. The market capitalisation of the company stood at ~$1.72 Bn as on 11^th September 2020. In a recent presentation, the company stated that Hemi Discovery has been recognized as a potential intrusion target in June 2019. As of now, Hemi system is +2,500m N-S, +2,000m E-W, +400m deep and include four main deposit areas such as Aquila, Brolga, Crow and Falcon. On 2^nd September 2020, the company notified the market with a drilling update at Hemi Gold Discovery, wherein the company received significant new results in aircore (AC) drilling, which include:

AC Drilling Results (Source: Company Reports)

Completion of Placement to Sophisticated and Professional Investors: As per the quarterly rebalance of S&P/ASX Indices, the company will be added to S&P/ASX 300 Index, effective from 21^st September 2020. During June 2020 quarter, the company experienced a ramp-up in exploration activity with 6 drill rigs now operating. The company wrapped up two tranche placements of $31.2 million via issuing around 111.4 million shares at a price of A$0.28 per share to sophisticated, professional and other exempt investor clients of Bell Potter Securities Limited and Argonaut Securities Pty Ltd. The company closed the June 2020 quarter with a cash balance of ~$28.2 million. The company has paid $292,000 to Directors and their associates for salaries, Director’s fees and superannuation. The below picture gives an idea of cash flow from operating activities in June 2020 quarter:

Cash Flow from Operating Activities (Source: Company Reports)

Growth Strategy: The growth strategy of the company revolves around delivering a Tier 1 scale mineralised system at Hemi, growing resources at a discovery cost below the industry average of A$20/oz, and building organisational capability and progress development studies. In the near-term, the company is planning to identify new intrusive targets tenement-wide from recent aeromagnetics.

Key Risks: The business activities of the company are exposed to numerous financial risks, such as market risk (including currency risk and interest rate risk), credit risk and liquidity risk.

Stock Details: On 9^th September 2020, the company requested ASX to grant two consecutive trading halts on its securities of up to four trading days for the purpose of considering, planning and executing a capital raising. The trading halt is likely to be in place until the earlier of commencement of normal trading on 15^th September 2020, or when the announcement is released to the market. However, the company is expecting to release capital raising announcement before 15^th September 2020. The stock last traded at $1.435.

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

Jaxsta Ltd

JXT Details

Strategic Partnership with Songtradr:  Jaxsta Ltd (ASX: JXT) is the world’s largest public-facing and most connected music credits database and technology company. The market capitalisation of the company stood at ~$23.73 Mn as on 11^th September 2020. Recently, the company inked a strategic five-year commercial agreement with Songtradr, wherein JXT would provide a bespoke tech-enabled revenue identification and collection service for Jaxsta Pro users identifying missing performer income from sound recordings. The partnership will provide Jaxsta with 20% of net neighbouring rights revenues received by Songtradr from Jaxsta users accepting the service after recoupment of the License Fee. In addition, Songtradr has made an investment of A$1.42 million through a convertible note, which would provide additional working capital to support the commercialisation of the Jaxsta platform and product.

Growth in Pro Members: During June 2020 quarter, the company increased its membership numbers to over 42,000 Jaxsta Pro members against 21,000 in the 15^th June business update. The company upgraded its Jaxsta website to improve messaging and ease of use and rolled out new news feature to increase content for users. In addition, the company is in discussions with potential clients for Jaxsta’s commercial API and other bespoke data solutions. For the year ended 30^th June 2020, the company recorded revenue of $9,520, reflecting a rise of 100% year over year. JXT witnessed a fall of 27% in net loss to $10.51 million.

Key Financials (Source: Company Reports)

Freemium Strategy: The company’s freemium strategy primarily revolves around increasing logged-in users, which creates a customer database for ongoing messaging & easier future conversion. It also creates a large, accurate dataset of feature usage to help determine what can be monetised. The company has scheduled to conduct its Annual Shareholders Meeting on 24^th November 2020.

Key Risks: The company’s financial performance could be impacted by the disruption in members’ growth. In addition, JXT’s business is also sensitive to default by counterparties on their contractual obligations.

Stock Recommendation: As on 30^th June 2020, the cash and cash equivalents of the company stood at ~$2.41 million. On TTM basis, the company has an EV/Sales multiple of 10.9x, which is higher than the industry median (Technology) of 6.0x. The stock of JXT has moved up by 220% and 269.23% in the past one month and three months, respectively. The 52-week low-high range for the stock stands at $0.013-$0.375, respectively. On the technical analysis front, the stock of the company has a support level of ~A$0.021 and a resistance level of ~A$0.106. Hence, considering the price movement in the recent past and valuation on TTM basis, we give an “Expensive” rating on the stock at the current market price of $0.083 per share, down by 13.542% on 11^th September 2020.

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

Fin Resources Limited

FIN Details

Contractor Appointed for Diamond Drilling: Fin Resources Limited (ASX: FIN) is in the mineral exploration and evaluation with a market capitalisation of $5.83 Mn as on 11^th September 2020. Recently, the company notified the market that it has awarded a contract to Western Australian operator DDH1 Drilling to finish the diamond drilling program at the McKenzie Springs Project, which is prospective for Nickel, Copper and Platinum Group Elements. The diamond drilling has been scheduled to commence in the month of October 2020. During June 2020 quarter, the company appointed Mr Simon Mottram on the role of Non-Executive Director. The net cash used in the operating activities stood at 62k, and the company has paid 80k for administration and corporate costs.

Cash Flows (Source: Company Reports)

Key Risks: The company mainly deals with liquidity and interest rate risk, where liquidity risk arises from the inability of the company in maintaining sufficient liquidity. The interest rate risk is influenced by movement in interest rate, which may impact the future cash flows or the fair value of financial instruments.

Stock Recommendation: The company is likely to conduct its Annual Shareholders Meeting on 6^th November 2020. In the past three and six months, the stock has moved up by 66.67% and 100% and is trading slightly higher than the 52-week low-high average of $0.007-$0.026, respectively. On the technical analysis front, the stock of the company has a support level of ~A$0.018 and a resistance level of ~A$0.024. Therefore, in light of the lower market capitalisation and upside movement in the stock within past months, we advise the investors to avoid the stock at the current market price of $0.021 per share, up by 5% on 11^th September 2020.

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

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