Tribune Resources Limited

TBR Details

Q1FY22 Financial Performance: Tribune Resources Limited (ASX: TBR) undertakes exploration activities at the East Kundana Joint Venture (EKJV) tenements, the Diwalwal gold project in the Philippines, and the Japa gold project in Ghana.

• Production Update: Rand and Tribune toll processed ore of around 138,407 tonnes at 4.06 g/t, extracted from the EKJV operations, with TBR’s interest corresponding to 103,805 tonnes. Rand and Tribune produced gold of 167,981 ounces from the processing operations, with TBR’s stake of 75% corresponding to 12,736 ounces of gold.
• Sale and Stockpile Update: Rand and Tribune sold 31,198 low-grade parcel ore, treated via Evolution Mining’s Mungari mill during the quarter, with TBR’s stake of 23,250 tonnes. The total share of all stockpiles of TBR corresponded to 29,540 ore tonnes at a grade of 2.25 g/t, ore source being RHP High Grade and RHP Low Grade.
• Cash Position: The cash balance, as of 30 September 2021, stood at $6.961 million, up from $4.163 million (reported on 30 June 2021). Receipts from customers edged up by $270k and stood at $36.83 million. Consequently, operating cash flows stood positive at $7.51 million, considerably up from $1.03 million PcP.

Q1FY22 Financial Position, Analysis by Kalkine Group

Key Risks and Challenges

Considering the regulatory hurdles, potential exploration risk, ore depletion, and the risk of resource estimation at the early stage of the project may counteract production prospects. The current labor shortage and subsequent increase in wages may lead to production delays and high costs.

Outlook

• Underground Exploration: Diamond core drilling stands completed with 23,133 meters of drilling, confirming the continuation of high grade on the main mineralized K2 structure.
• Startrek Exploration: 14 holes returned substantial mineralization, including a laminated quartz vein. Substantially more drilling will be necessary for comprehending the mineralization continuity.

Stock Recommendation

The stock of TBR gave a negative return of ~16.730% in the past one year. The stock is currently trading lower than the 52-weeks’ average price level band of $4.600 - $6.480. On a TTM basis, the stock of TBR is trading at a price to book value multiple of 1.0x, lower than the industry (Metals & Mining) median of 2.4x. Considering the stock trading close to 51-weeks’ low, planned drilling at the Japa project, improved cash receipts & decreased production costs, undervaluation manifested by TTM valuation, and risks associated with the business, we give a ‘Speculative Buy’ recommendation on the stock at the current market price of $4.795, as of 31 December 2021, at 11:27 AM (GMT+10), Sydney, Eastern Australia.

TBR Daily Technical Chart, Data Source: REFINITIV

Note: The purple line reflects the RSI (14-day period)

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

Note 2: Investment decision 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 Valuation has been achieved and subject to the factors discussed above.

Technical Indicators Defined: - 

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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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