Predictive Discovery Limited

PDI Details

This report is the full version of the report published on 12 May 2022 at 3:50 PM GMT.

Latest Update: Predictive Discovery Limited (ASX: PDI) is primarily engaged in the exploration and production of gold with a portfolio of Kankan, Nonta, Kaninko, and Boroto projects in Guinea, West Africa. On 6 May 2022, Director Simon Jackson acquired ~260,000 shares at ~$21.44 cents per share in an on-market trade in PDI.   

Operational Update of Q3FY22 (ended 31 March 2022):

• PDI continued with the diamond drilling at the NE Bankan resource in Q3FY22. The results have defined a high-grade gold mineralised zone plunging further south.
• The regional aircore (AC) drilling exhibited significant gold intercepts at the Bankan Creek North, 800W, SW Bankan, and AG2 prospects, three are proximate to NE Bankan.
• PDI incurred ~$3.5 million in exploration and evaluation expenditure in the March 2022 quarter.
• PDI held ~$12.9 million in available cash and reported no debt on 31 March 2022.

Comparative Net Operating Cash Outflows; (Analysis by Kalkine Group)

Key Risks: The company faces the risk of resource estimation and expansion, seamless funding for exploration activities, regulatory barriers, and uncertainty of commercialisation of production. 

Outlook:

• PDI aims to undertake further extensional drilling at the NE Bankan prospect. It is ramping up on-site drilling capability with at least four new diamond drill rigs to expedite the new drilling program. The exploration programs are targeted to produce an updated MRE (Mineral Resource Estimate), expected to be finalised in the September 2022 quarter.
• PDI will continue with the internal technical and baseline environmental studies needed to progress the Bankan project.

Stock Recommendation: The stock of PDI gave a negative return of ~16.33% in the past month and a negative return of ~2.38% in the past three months. The stock has a 52-weeks low level of $0.074 and high level of $0.295. Considering the current trading levels, no debt on its balance sheet, expected upside exploration potential at the Bankan project, new intercepts identified at NE Bankan, and intercepts identified on the prospects near NE Bankan, technical levels mentioned below, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.200, as of 12 May 2022, 10:30 AM (GMT+10), Sydney, Eastern Australia. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Technical Commentary: PDI price broke the symmetrical triangle pattern by upside and the prices are sustaining above the breakout level from past three weeks. Prices are sustaining above its 21-period and 50-period SMA on a monthly chart that supports our bullish stance. RSI (14-period) is hovering at ~60 on a monthly chart that indicates the stock is trading in a bullish momentum. Immediate support levels are 0.179 AUD and 0.160 AUD while immediate resistance levels are 0.235 AUD and 0.250 AUD.

PDI Daily Technical Chart, Data Source: REFINITIV  

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: -

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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