Stocks’ Details

West Wits Mining Limited

Q1FY21 Highlights and Share Placement in August to Fund Activities: West Wits Mining Limited (ASX: WWI) is engaged in the exploration of gold at the mining sites located in Western Australia and South Africa. The Group is no longer continuing operations in Indonesia from FY20. Witwatersrand Basin Project (WBP) is the flagship program of the company. During the quarter, the company reported completing geological modelling of K9 reef package and provided an update on mineral resource estimate (MRE) in Oct’20, which will significantly grow its resource base, grade of gold and economic potential of the project. WWI undertook a scoping study that reaffirmed company’s development strategy to produce 50k-60koz per annum at steady-state production. To meet the working capital needs, fund the drilling program at WBP and other business activities, the company placed an issue of 161.94 million fully paid ordinary shares at $0.021 per share to raise $3.4 million to the existing and new pool of investors. Net cash used in operating activities for September 2020 quarter came in at $434k. 

Cash Flow Details (Source: Company Reports)

Vesting of Performance Rights: The company’s shareholders approved the conversion of an aggregate of 1,750,000 performance rights vested to ordinary shares in the AGM on 29 Nov’19. These will be converted to fully paid ordinary shares of the company, subject to the expansion of the JORC Resource by 600,000oz at a grade of at least 3g/t by 30 June 2021.  

Stock Recommendation: The company had a cash position of $3.323 million as on 30 September 2020. The stock gave a positive return of 180% in the last one month and 276.92% in the last six months. The stock is trading close to its 52-week high level of $0.105. On the technical analysis front, WWI has an immediate support level of ~$0.09 and a resistance level at ~$0.105. Therefore, considering the current trading level, and steep price movement, we are of the view that most of the positive factors have been discounted. Hence, we give an “Expensive” rating on the stock at the current market price of $0.098, up by 7.692% on 9 November 2020. We suggest investors to wait for better entry levels.

Gibb River Diamonds Limited

Commencement of Phase 2 Drill Program & FY20 Key Highlights: Gibb River Diamonds Limited (ASX: GIB) is engaged in the exploration of minerals with Edjudina Gold Project – EGP (with option to buy 100%), and Ellendale Diamond Project (EDP) as core projects under its belt.  The loss from ordinary activities after income tax was $521,620 in FY20 as compared to a loss of $880,961 in FY19. As on 9^th November 2020, the market capitalization of the company stood at ~$26.78 million. For Edjudina Gold Project, the maiden drill of the program confirmed a high grade, new, and near to surface deposit of gold. The company has announced the start of phase 2 of drilling program of Neta Lodes Gold Prospect in the second week of November. For EDP, the company has received exploration and prospecting licenses over the diamond mining lease area which will now pave way for permit for on-ground activity. The mined diamond deposits will be examined and assist in making allocations of capital at the EDP. Through a share purchase plan, the energy player raised $1.1 million at an issue price of 5 cents per share to fund the drilling program at Edjudina and for working capital needs.

Cash Flow Details (Source: Company Reports)

Outlook: The company looks forward to the assessment of results of the Phase 2 drilling program at Edjudina as it completes the same. It anticipates some good prospective targets to facilitate deeper exploration of Neta Lodes discovery. For EDP, it will continue to explore ways to advance and is positive about the potential in the project to yield commercial returns from the diamond mining operation.

Stock Recommendation: The stock gave a positive return of 3.33% in the last one month and 297.43% in the last six months. The stock is inclined to its 52-week high level of $0.235, thus depicting a limited potential to grow. On the technical analysis front, GIB has an immediate support level of ~$0.14 and a resistance level at ~$0.175. Considering, low market capitalization, steep price movement in the last six months, current trading level, we give an ‘Avoid’ rating on the stock at the current market price of $0.155, up by 19.230% on 9 November 2020.

Renascor Resources Limited

Explorations Results and Q1FY21 Performance: Renascor Resources (ASX: RNU) is engaged in the mining and exploration business with the extraction and development of deposits of graphite, gold, copper, and other minerals. As on 9^th November 2020, the market capitalization of the company stood at ~$18.12 million. For Q1FY21, the company has mainly developed 2 core projects - Siviour Graphite and the Carnding Gold Project. Recently, for Siviour Graphite, RNU has signed a non-binding MOU with Shanxi Minguang New Material Technology Co. Ltd. for supplying 10k tonnes of graphite from its Siviour Project in South Australia. During Q1FY21, RNU has updated the estimates for mineral ore reserve for Siviour and reported it as the largest total ore reserve of graphite outside of Africa.

Recommencement of Gold Exploration at Carnding Gold Project: The company has recommenced the exploration of gold through geophysical surveys, soil sampling and drilling. It has identified multiple gold targets in South Australia’s Gawler Craton with a high concentration of gold deposits. These new prospects offer drill ready targets for close to the surface, high-grade quality gold deposits. For the next quarter, the company is planning for the drill-testing of another shallow, high grade the Soyuz gold prospect subject to the approvals.

Cash Flow Highlights (Source: Company Reports)

Agreement with Rio Tinto for Exploration: In October, Renascor entered into a binding agreement with Rio Tinto for the exploration of EL 5586 in Adelaide Fold Belt. With this deal, Renascor stands to benefit from Rio Tinto’s present resources and exploration skill, while focusing on the near-term outcome of its core projects.

Outlook: Both the key projects of the company are advancing well. With the new reserves found at Galwer Craton for Carnding Project, revised ore estimates for Siviour and business negotiations with lithium and anode battery firms for Siviour and new agreements for exploration, the company seems to be braced well for the upcoming quarters.

Stock Recommendation: The company exited September quarter 2020 with cash and cash equivalents of $5.156 million. The stock gave a negative return of 4.54% in the last one month but went up 31.25% in the last six months. The stock is trading close to its 52-week high level of $0.017. On the technical analysis front, RNU has a support level of ~$0.0081 and an immediate resistance level at ~$0.0137. Considering the incurred losses, low market capitalisation, current trading levels, and risk related to exploration of projects, we give an ‘Avoid’ rating on the stock at the current market price of $0.010, down by 4.546% on 9 November 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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