Cygnus Gold Limited

CY5 Details

Cygnus Gold Limited (ASX: CY5) is engaged in the exploration of gold and base metals. Its exploration work focuses on the Southwest Terrane (SWT), a region within the prolific Yilgarn Craton, Western Australia.

Results Performance for First Half-Year Ended 30 June 2021 (H1FY21)

• The company has recorded a loss after tax of $669.94k in H1FY21 versus a loss after tax of $107.94k in H1FY20.
• The company's net assets were reduced to $2.71 million as of 30 June 2021 from $3.38 million as of 31 December 2020.
• The cash and cash equivalents at the end of 30 June 2021 stood at $2.81 million versus $3.39 million at the end of 31 December 2020.

Income Statement (Source: Company Reports)

Quarterly Activities Update for the Period Ended 30 September 2021

The company has maintained a substantial (~2,100km) landholding within the Yilgarn Craton, Western Australia. The exploration work on the 100% owned Panhandle and Julimar East projects has started during the quarter. At the same time, the exploration activities for the Bencubbin Project are slated to begin in December/January. The work at the company’s gold projects has not started during the quarter, and an assessment of the following steps is underway.

Outlook

The company’s cash and cash equivalents at the end of 30 September 2021 stood at A$2.32 million. During the September 2021 quarter, the new Cygnus geological team has started exploring priority tenure, pending the outcome. Further, additional exploration is planned for December/January field season. In the Julimar East Project, reconnaissance exploration and field visits were finished, and the early-stage exploration programmes to start soon. At the same time, the Geophysics work is planned for the summer exploration season at the Bencubbin Project that will comprise ground electromagnetic (EM) surveys and airborne magnetics.

Key Risks

It is exposed to market risk like changes in interest rates relates mainly to the Group’s cash. The group is also prone to environmental obligations for its exploration activities while it fulfils all regulations when doing any exploration work.

Stock Recommendation

The company has delivered a 9-month and 1-year return of ~-8.33% and ~-2.94%, respectively. The stock is trading higher than the average of the 52-week high price of $0.210 and the 52-week low price of $0.094.

Considering the factors above, the current trading levels, and the associated business risks, we advise the investors to book profits. Accordingly, we give a “Sell” rating on the stock at the current market price of $0.165 per share, up 22.222% as of 29^th October 2021.

Technical Overview:

Daily Price Chart

Source: REFINITIV, Note: Purple color line reflects Relative Strength Index (14-Period)

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

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