Stocks’ Details

Renergen Limited

Development of New Device: Renergen Limited (ASX: RLT) is an emerging producer of helium & liquefied natural gas. The market capitalisation of the company stood at ~$152.65 million as on 16^th December 2020. Recently, the company announced that it has developed a device, named Renergen Cryo-Vacc, which can be used to move vaccines at temperatures of between -70 and -150 Celsius for periods of up to 30 days without any requirement of power supply. RLT has filed a patent application for the same and is in discussion for collaborations to use the design in the large-scale manufacture of these devices.

A Look at Half-Year Results: For the half-year ended 31^st August 2020 (1H FY21), the company reported a fall of 36% in revenue to R0.9 million from R1.4 million in 1H FY20. This was mainly because of countrywide COVID-19 lockdown restrictions. Loss for the half-year amounted to R26.89 million as compared to R39.98 million in 1H FY20.

Key Financials (Source: Company Reports)

Outlook: The company expects its Virginia Gas Project to come onstream in FY22. In addition, the company is optimistic about its outlook for FY21.

Stock Recommendation: During the half-year ended 31^st August 2020, the company’s intangible assets increased by 13% because of Tetra4’s gas exploration activities. Debt to equity of the company stood at 2.60x in 1H FY21 as compared to the industry median of 0.36x. In addition, asset to equity ratio of the company stood at 3.75x in 1H FY21 against the industry median of 2.21x. Hence, it seems that the company is more leveraged. In the past one month, the stock of RLT has moved up by 21.78%. The 52-week low-high range for the stock stands at $0.840 - $1.720, respectively. On a technical analysis front, the stock has a support level of ~$1.11 and a resistance level of ~$1.433. Therefore, considering the high debt to equity, loss-making business, and current trading level, we advise investors to avoid the stock at the current market price of $1.240 per share, down by 4.616% on 16^th December 2020.

Tesoro Resources Limited

Drilling Results from Ternera Prospect: Tesoro Resources Limited (ASX: TSO) is engaged in the acquisition, exploration and development of commercially significant resource projects in Chile. The market capitalisation of the company stood at ~$135.91 Mn as on 16^th December 2020. Recently, the company announced assay results received from the seven diamond drill holes completed at Ternera prospect. The company added that the holes ZDDH00059, ZDDH00063 and ZDDH00066 has intersected broad mineralised gold zones, which are further expanding the Ternera mineralised zone to the north-east and south.

Financial Highlights: During the September 2020 quarter, the company reported net cash used in operating activities of $213k and 87% of this was invested into El Zorro project. During the three months period, the company made payments of around $130,000 to related parties and/or their associates as remuneration for the Managing Director, Non-Executive Director fees, consulting fees and superannuation. For the year ended 30^th June 2020, the company recorded a loss amounting to $4,707,766 as compared to a loss of $510,402 in FY19.

Key Financials (Source: Company Reports)

Capital Raising to Support Exploration Program:  On 11^th December 2020, the company opened its share purchase plan, wherein, it is aiming to raise around $3 million via offering an opportunity to shareholder to apply for up to A$30,000 of new fully paid ordinary shares in the Company without incurring brokerage or other transaction costs. Previously, on 9^th December 2020, the company received firm commitments for a placement to raise $18 million. The company would use these funds to ramp up 50,000m drilling program at the El Zorro Gold Project, a detailed metallurgical testwork program and the commencement of a Scoping Study at its El Zorro Gold Project in early CY2021

Outlook: Looking forward, the company has planned a further 30,000m resource definition and extensional drill program at Ternera in Q1 2021, with an objective of delineating a maiden resource estimate by June 2021. The company is expecting to commence scoping study activities in January 2021.

Stock Recommendation: As on 30^th September 2020, cash and cash equivalents of the company stood at around ~$5.51 million. In the past six and nine months, the stock of TSO has surged 304.41% and 720.72%, respectively. As a result, the stock is trading at the mid-level of its 52-weeks’ low and high average range. On a technical analysis front, the stock has a support level of ~$0.155 and a resistance level of ~$0.356. Hence, considering the steep price movement in the past months and current trading levels, we are of the view that most of the positive factors have been discounted at the current trading level and give an “Expensive” recommendation on the stock at the current market price of $0.270 per share, up by 1.886% on 16^th December 2020. We further suggest investors to wait for better entry levels.

Lachlan Star Limited

Completion of Survey: Lachlan Star Limited (ASX: LSA) is involved in the exploration of mineral resources. The market capitalisation of the company stood at ~$15.02 million as on 16^th December 2020. Recently, the company has received final data from Heli-ElectroMagnetic survey finished at the Koojan Copper-Nickel-PGE (Cu-Ni-PGE) Project in September 2020. The survey has recognised several conductive anomalies within the targeted area, hosted within the mapped mafic-ultramafic intrusive rock. During the quarter ended 30^th September 2020, the company wrapped up the issue of 100,000,000 ordinary shares at $0.005 per share with respect to the placement to raise $500,000, which was announced on 26 June 2020. For the year ended 30^th June 2020, the company recorded a loss amounting to $447,102 against $419,700 in FY19.

Key Financials (Source: Company Reports)

Outlook: Looking forward, the company plans to commence exploration activities at the wholly-owned Princhester Magnesite project. In addition, the company would also carry out the acquisition and development of any other investments within the mining industry and in-market segments unrelated to the mining industry.

Stock Recommendation: At the end of September 2020 quarter, the company was well-financed with a cash balance of ~$1.6 million. The stock of LSA has moved up by 142.85% and 325% in the last six and nine months, respectively. As a result, the stock is inclined towards its 52-week high level of $0.022. On a technical analysis front, the stock has a support level of ~$0.015 and a resistance level of ~$0.019. Thus, considering the low market capitalisation, absence of revenue, rising losses, we advise investors to avoid the stock at the current market price of $0.016 per share, down by 5.883% on 16^th December 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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