Medusa Mining Limited

MML Details

Dividend Update: Medusa Mining Limited (ASX: MML) is a gold production company focused on growth in the Philippines and the Asia Pacific Region. For H2FY21, the company has paid an unfranked dividend of A$0.02 per ordinary share on 19 November 2021.

Key Highlights of 2021 AGM: On 28 October 2021, the company held its 2021 Annual General Meeting (AGM), wherein the management highlighted that despite operating under COVID-19 restrictions at a site level during most of FY21, MML was able to keep its costs under control, with All-In Sustaining Costs (AISC) for the year being in line with guidance at US$1,231 per ounce.

• Production Update: During FY21, the company’s Co-O Gold Mine delivered 95,193 ounces which was above the guidance of between 90,000 to 95,000.
• Improved Profitability in FY21: Underpinned by decent operating performance, the company’s net profit after tax (NPAT) grew by 59% YoY to US$47.3 million in FY21.
• Rising Cash Balance: Over the year, the company increased its cash and cash equivalent balance by 53% to US$72.2 million.

Revenue Trend (Source: Analysis by Kalkine Group)

Key Risks:

• COVID-19 Uncertainties: MML is exposed to the uncertainties surrounding the COVID-19 pandemic, as it could impact its operations.
• Gold Price Fluctuations: MML is exposed to the risks related to the fluctuations in the prices of gold, as it could impact its financials.

Outlook: In FY22, MML expects its production to be in the range of 90,000 to 95,000 ounces with an AISC of between US$1,250 to US$1,300 per ounce. During FY22, MML expects to incur an expenditure of approximately US$15 million on the construction of the Tigerway Decline Project.

Stock Recommendation: Over the last six months, the stock has corrected by 20.78% and is trading lower than the average 52-week price level band of $0.655 - $0.990. On a TTM basis, the stock is trading at a price to book multiple of 0.6x, lower than the industry (basic materials) median of 2.5x, thus seems undervalued.  Considering the improved financial results in FY21, rising cash balance, modest production outlook, current trading level, valuation on TTM basis, and key risks associated with the business, we give a “Speculative Buy” rating on the stock at the closing price of $0.695, down by ~2.113% as on 10 January 2022.

MML Daily Technical Chart, Data Source: REFINITIV

Kingfisher Mining Limited

KFM Details

Significant Rare Earths Discovery: Kingfisher Mining Limited (ASX: KFM) is a mineral exploration company focused on acquisition, exploration and development of mineral resource projects throughout Western Australia.  In an exploration update provided on 10 January 2022, the company announced drill results from the on-going exploration at its 100% owned projects in the Gascoyne Mineral Field. As per the update, the Mick Well Prospect drill program has delivered an impressive 12m at 1.12% total rare earth oxides (TREO), including 4m at 1.73% TREO. Notably, the follow-up mapping indicates significant rare earths exploration potential for the company’s expansive Gascoyne tenure.

September 2021 Quarter Highlights: During the quarter ending 30 September 2021, the company commenced a comprehensive and focused drill program across its projects and identified numerous new targets.

• During the quarter, the company an RC drilling program at Boolaloo, which has been designed to test three separate targets, Erny Bore, Green Hills and EM1.
• Cash outflow from operating activities stood at $140k. At the end of the quarter, the company had cash of $4,004k, compared to $4,325k as at 30 June 2020.

Cash and Cash Equivalent Trend (Source: Analysis by Kalkine Group)

Key Risks:

• Commodity Price Risk: The company is exposed to the risks related to the fluctuations in the price of copper and gold as it could impact its financials.
• COVID-19 Uncertainties: The company is exposed to the risks and uncertainties caused by the COVID-19 pandemic, as it could impact its exploration programs.

Outlook: The company is looking forward to receiving the results from the three copper-gold targets at Boolaloo which are expected in January 2022. The company is continuing its exploration work at projects at a fast pace with surface mapping and sampling planned for newly identified and high-priority areas at Boolaloo. Notably, the company’s planned activities until FY22 end are fully funded.

Stock Recommendation: Over the last one month, the stock has provided a return of 28.57% and in the last six months it has provided a return of 18.42%. The stock is currently trading higher than the average 52-week price level band of $0.165 - $0.295. Considering the company’s decent return in the last one-month, current trading level, technical levels mentioned below, and uncertainties surrounding the COVID-19 pandemic, we suggest investors to book profit and give a “Sell” rating on the stock at the closing price of $0.24, up by ~33.33% as on 10 January 2022.

Technical Commentary: KFM's prices witnessed a decent gain of ~42.86% in the past couple of sessions and made a high of AUD 0.250 after breaking the crucial resistance level of AUD 0.245. However, prices have been unable to sustain above the breakout level, indicating the possibility of a downside correction hereon. On the daily chart, the leading indicator RSI (14-period) is trading around the overbought zone at ~66.88 levels. The trend-following indicators 21-period SMA and 50-period SMA are placed below the CMP and may act as the support levels for the stock. Now an immediate resistance level for the stock is at AUD 0.265 while support is at AUD 0.210 level.

KFM Daily Technical Chart, Data Source: REFINITIV

Note:  The purple color line in the chart depicts RSI (14-period), while the yellow color line represents the trend line. The sky-blue and red-color lines show 21-Period SMA and 50-Period SMA, respectively. The green-color histogram at the bottom of the charts represents volumes.

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.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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