Pursuit Minerals Limited

PUR Details

Identified New Anomaly at Calingiri East: Pursuit Minerals Limited (ASX: PUR) undertakes an exploration of minerals on its tenements in Sweden, Finland, Norway, Queensland, and the US. As of 2^nd March 2021, the market capitalisation of the company stood at ~$50.73 million. On 19 February 2021, PUR announced the identification of 5 strong EM conductors/ targets with the potential to have PGE-Ni-Cu sulphide mineralisation. This discovery is from the initial AEM data received on the Warrior project. Considering this discovery, PUR has decided to extend the Calingiri East survey block and collect AEM data from 207 line/km. The overall Warrior AEM survey will now consist of 1,922 line/km of data collection. On 25 February 2021, the company updated on the identifying of a new anomaly at Calingiri East in Western Australia.

December 2020 Quarter Results: During Q2FY21, PUR signed a binding acquisition agreement for the purchase of tenement package (Calingiri East, Calingiri West, Wubin and Bindi Bindi) on the Warrior project and started an AEM over Calingiri East in early February. PUR has made a $300k cash payment and issued 40 million fully paid ordinary shares to the project’s vendor. It will issue another 10 million shares and pay a 1% net smelter royalty (NSR) on minerals produced to the vendor. A $200k cash payment is to be made subject to a drill intersection milestone achieved.

On 100% owned Gladiator Project, PUR finished a small soil sampling program during Q2FY21 and received one significant result. It observed significant historical drill intersections within the project area in drill hole - WGC89, BCP318, BCP362, NGV58 and LJC0075.

In January 2021, PUR declared a sale agreement of its vanadium and nickel projects in Sweden, Norway, and Finland to BMR Group PLC (BMR) for ~$3 million. The consideration and agreement are subject to BMR’s relisting on the AIM market in the UK, achieving certain other funding conditions and approval of PUR shareholders. The deal, once executed, will allow PUR to focus on its high priority projects - Warrior and Gladiator in Western Australia. During Q2FY21, the company issued 22.22 million shares at $0.009 each to raise $200k and another $1.41 million capital raise via a rights issue. PUR held cash reserves of $2.40 million as of 31 December 2020.

Cash Flows from Operating Activities, Q2FY21 (Source: Company Reports)

Key Risks: PUR is exposed to the risk of exploration and mining, uncertainty due to discovery of resource estimates and interpretation of drilling results on the ongoing projects. The firm is exposed to uncertain economic conditions to meet its capital requirements for exploration expenditure. Engaging in joint ventures/ acquisitions causes the risk of synergy, timely regulatory approvals and may lead to a fall in shareholder value.

Outlook: PUR expects to finish the overall AEM survey prior to March-end and receive final data in mid-April 2021 on the Warrior project. Post the receipt of final AEM data, PUR plans to initiate ground follow-up programs to commence drill testing of high priority targets during the Q2/Q3FY21.

 Stock Recommendation: The stock of PUR gave a positive return of 313.33% in the past three months and a positive return of 315.95% in the past six months. The stock is currently trading above 52-weeks’ average price level band of $0.001-$0.081. The stock of PUR has a support level of ~$0.039 and a resistance level of ~$0.075. On a TTM basis, the stock is trading at a price to book value multiple of ~12.4x, higher than the industry (Metals & Mining) median of ~5.4x, thus seems overvalued. Considering the current trading levels, significant returns in the past 3 months and 6 months, and valuation on TTM basis, we believe that most of the company’s positives have been factored at the current trading level. Hence, we suggest investors to wait for better entry levels and give an ‘Expensive’ rating on the stock at the current market price of $0.062, down by 6.061% on 2^nd March 2021.

PUR Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

King River Resources Limited

KRR Details

High-Grade Gold Results from A New Vein: King River Resources Limited (ASX: KRR) operates a portfolio of wholly owned tenements covering ~3,289 square kilometres in the East Kimberley (EK) region in Western Australia (WA). The entities within the Group undertake the development and exploration of the tenements in the EK region of WA. Treasure Creek Pty Limited, a subsidiary of KRR holds 16 tenements in the Tennant Creek Region and comprises Tennant Creek East, Tennant East/Barkley, Rover East and Kurundi. As of 2^nd March 2021, the market capitalisation of the company stood at ~$40.39 million. On 23 February 2021, KRR announced new high-grade mineralisation of gold on another vein prospect at its Mount Remarkable project in WA. The company received the best result of 2m @ 8.44g/t Au at the Jeniffer vein from its latest results of reverse circulation (“RC”) drilling of FY20. It has received significant assay results from the drilling at Trudi East, Trude Offset, and other exploration targets were undertaken last year.

December 2020 Quarter (Q2FY21) Result Highlights: The company had undertaken a Pre-Feasibility study (PFS) at the Speewah project. During Q2FY21, KRR has discovered a way to finish a process design outlining the lower risk and speedy route towards HPA (High Purity Alumina) production. KRR drill tested 4 targets on the main Trudi vein and received multiple high-grade gold results at KMRC78, KMDD01 and other holes. On Tennant Creek, the company finished drilling 11 RC holes at Lone Star Trend and Commitment prospect. At Commitment, ironstones’ assay results suggest chance of hosting iron oxide copper-gold (IOCG) mineralisation.

KRR had planned to undertake surveys in November 2020 on Tennant East/Barkley and conducted a geophysical review on identified targets on the Rover East with no key results. On Kurundi, it has multiple prospects – the Whistle Duck prospect and the Kurundi historic gold mine. KRR undertook initial reconnaissance exploration and awaits assay results from these prospects. KRR held a cash balance of $7.34 million as of 31 December 2020.

Cash Flows from Operating Activities, Q2FY21 (Source: Company Reports)

Key Risks: The company faces the risk of mineral exploration, volatility in the prices and demand for iron oxide, copper, and gold on projects. Currently, it is conducting drilling explorations and faces the risk of discovery of prospects for high-grade mineralisation and delay in results. Till the time, the project is commercialised or significant discovery is made, it continuously is exposed to the risk of raising sufficient funds for exploration and working capital needs.

Outlook: KRR has planned reconnaissance (visual observation) exploration for the early next dry season across its tenement holdings in the region. The assets are expected to host high-grade gold mineralisation at the Mt Remarkable Project.

Stock Recommendation: The stock of KRR gave a positive return of 8% in the past three months. The stock is currently trading towards its 52-weeks’ low level of $0.018. The stock of KRR has a support level of ~$0.02 and a resistance level of ~$0.037. On a TTM basis, the stock of KRR is trading at a price to book value multiple of ~2.4x, lower than the industry (Metals & Mining) median od ~3.1x, thus seems undervalued. Considering the current trading levels, high-grade gold results from the exploration, and valuation on TTM basis, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.027 on 2^nd March 2021.

KRR Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Disclosure: King River Resources Limited (Company) is a client of Kalkine Media Pty Ltd (Kalkine Media), an affiliate of Kalkine. However, under no circumstances have Kalkine or its related entities been, directly or indirectly influenced in making any related insights concerning Company as contained in this report, and no form of compensation is or will be received by Kalkine, Kalkine Media or Kalkine’s other related entities for the publication of this report.

Disclaimer  

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.