Cann Group Limited

CAN Details

Aurora Sold Its Ownership Position in CAN: Cann Group Limited (ASX: CAN) is primarily involved in the breeding, cultivating, manufacturing, and supplying of medicinal cannabis for sale and use within Australia and overseas markets. On 12 October 2020, the company announced that Aurora Cannabis Inc has sold its 11.84% shareholding in Cann Group Limited via off-market trades to a small number of undisclosed buyers. Cann Group Limited has assured that Aurora’s decision to exit a strategic holding in the company has no impacts on its business plans.

FY20 Results Highlights: For the year ended 30 June 2020 or FY20, the company reported total revenue of $647,222 and a total net loss of ~$16.94 million. During the year, due to COVID-19 related impacts on the financing environment, the company was not able to finalise external funding options for proceeding the development of new cultivation facility in Mildura, in north-west Victoria. In response to COVID-19 uncertainties, CAN has implemented cost reduction initiatives to preserve cash. Further, it has redirected its near-term investment priorities into the development and pursuit of further supply agreements which will support the company’s future revenue growth and priority.

FY20 Results (Source: Company Reports)

Outlook: Looking ahead the company is focused on developing a growing and diversified supply base with B2B customers in Australia and overseas. Further, the company intends to expand its manufacturing capacity. It is worth noting that the recent sale of Aurora’s shareholding in CAN has no impacts on the company’s business plan. In FY21, the company expects its revenue to be around $15 million, reinforced by existing supply contracts. The company is also taking necessary measures to continue operating within the COVID-19 restrictions, ensuring the health and safety of its employees.

Stock Details: Over the last three months, the stock of CAN has corrected by 56.8%, and in the last month it has corrected by 10.58%. As a result of this, the stock is currently trading near to its 52 weeks low price of $0.375. On the technical analysis front, the stock has an immediate support level of ~$0.375 and a resistance of ~$0.97. At the market close on 12 October 2020, the stock was trading at $0.38, representing an intraday decline of 9.524%, mainly due to the sale of Aurora’s shareholding in Cann Group Limited.

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

Duketon Mining Limited

DKM Details

Increase in Rosie Nickel Resource: Duketon Mining Limited (ASX: DKM) is an Australian mineral exploration company focused on discovering nickel deposits within the Duketon greenstone belt in Western Australia. The company recently completed an Updated Rosie Nickel Mineral Resource Estimate, which indicated a 50% growth in contained nickel metal, as compared to the previous mineral resource estimate. The Updated Mineral Resource reported 49,100 tonnes contained nickel, 10,600 tonnes contained copper and 205,000 ounces of contained PGEs, as depicted in below table.

Rosie Mineral Resource Contained Metal (Source: Company Reports)

FY20 Results Highlights: During the year ended 30 June 2020, the company continued its regional exploration activities and generated multiple new targets in both nickel and gold, creating a significant and robust pipeline of organic opportunities. Over the year, the company received an income of $20 million from the sale of its gold assets to Regis Resourced Limited. As a result of this, the company reported an increased net profit of $19.13 million in FY20, compared to a loss of $2.89 million in FY19. As at 30 June 2020, the company had cash and cash equivalent of $20.32 million, compared to $2.08 million in FY19.

FY20 Results (Source: Company Reports)

Current Focus Areas: Currently, the company is focused on expanding its known nickel deposits through targeted extensions to Rosie, C2 and Nariz. Further, the company intends to develop strategic partnerships specific to gold, nickel, and copper.

Stock Recommendation: The stock of DKM has provided a return of ~140.9% in the past six months, and in the last three months, it has provided a return of ~32.50%. As a result of this, the stock is currently trading close to its 52-weeks high price of $0.285. On the technical analysis front, the stock has a support level of ~$0.224 and a resistance of ~$0.275. On the face of the decent financials, the stock seems to have a potential for limited upside. Considering the company’s stock price movement in the past six and three months period and current trading level, we suggest investors to wait to better entry levels and give an “Expensive” rating on the stock at the current market price of $0.265, up by 3.921% on 12 October 2020.

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

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