Major Highlights of Metals & Mining Players – MLX, GOR and RRL

Mining & exploration segment has performed decently across Australia. Companies engaged in the exploration of gold, silver, copper, cobalt, and other metals and minerals have boosted their operational activities in the recent past. The minerals go through a long process of drilling, manufacturing and exploring before being used by the end users.

S&P/ASX 200 Energy index has generated a YTD return of 8.41% and three years return of 8.15%, as of 10 September 2019.

Metals X Limited

Metals X Limited (ASX: MLX) operates in the metals & mining sector and specialises in exploration and development of projects related to base metals across Australia. The Renison Tin operations in Tasmania and the Nifty Copper Operations in Western Australia are the two producing assets of the company. MLX is the owner of the Wingellina nickel-cobalt deposit in Central Musgrave.

Updates on Renison Tin operations:

MLX has provided highlights regarding the Renison project:

  1. The capacity of the mill has been increased by 24%, and mill feed grade has been increased by 22% with successful commissioning and construction of ore sorters.
  2. Tin production has been raised by 5.7% y-o-y with FY2019 EBITDA of $21.5 million. Metals X realised sales price margin of 37% in the quarter ended June 2019.
  3. The mineral resources were increased by 22%. Also, the overall Mineral Resource grade went up by 14.5% through demonstrated commitment to resource definition drilling.
  4. Tin metal contained in Ore Reserves has also been boosted by 20% through improved planning and enhancing mineral resources base.
  5. Area 5 phase 1 ventilation works are going as per planning.

Mineral Resources and Ore Reserves

Mineral Resources and Ore Reserves 2005 – 2019 (Source: Company’s Report)

Outlook – Renison Project:

The management is focusing on increasing mine production to 1 Mtpa in the coming years. MLX is targeting to finish its Area 5 Mining Study, in addition to revised Ore Reserve estimate, early in the quarter ending March 2020. Additionally, MLX would look for speeding up operations across surface exploration for new mining opportunities.

Recently on 6 September 2019, MLX provided an update on its drilling activities at the Bell 50 area at the Renison Tin Operations in Tasmania. The company notified that additional drilling at Bell 50 has given a drill intersection of 30.10 metres at 4.58% Sn from 233.0 metres within hole U6966. Assay results are pending for an additional 6 new drill holes at Bell 50. Drilling at Bell 50 and Area 5 is continuing with two rigs in operation.

FY19 Financial Result Highlights:

During FY19, MLX reported EBITDA at $(5.7) million versus an EBITDA of $12.7 million in FY18. Net profit after tax during the year stood at $(117) million as compared to $(26.3) million in the previous financial year.

Stock Update:

The stock of MLX closed the day’s trading at $0.205 on 10 September 2019, up 5.128 from its previous close, with a market capitalisation of $134.37 million. The 52-week trading range of the stock stood at $0.140- $0.615. The stock has delivered negative returns of 17.02% and 31.58% in last three months and six months, respectively.

Gold Road Resources Limited

Gold Road Resources Limited (ASX: GOR) is engaged in the mining and exploration of gold in the Yamarna Greenstone Belt in north?eastern Goldfields, Western Australia. GOR produced its first gold in June 2019.

Through a market update on 9 September 2019, GOR notified about its activities with respect to the Yamarna Greenstone region.

Yamarna Greenstone Updates

For Yaffler South Project:

The company informed about the best intersections for its Yaffler project.

  • 11 metres at 5.94 grams per tonne gold from 74 metres including 4 metres at 14.18 grams per tonne gold from 79 metres (19YFRC0001)
  • 12 metres at 3.40 grams per tonne gold from 116 metres including 4 metres at 7.05 grams per tonne gold from 121 metres (19YFRC0017)
  • 12 metres at 2.71 grams per tonne gold from 59 metres, including 2 metres at 11.50 grams per tonne gold from 65 metres (19YFRC0016)
  • 4 metres at 3.37 grams per tonne gold from 5 metres and 33 metres at 1.26 grams per tonne gold from 15 metres (19YFRC0018)

For Gruyere project:

At this project, better results from the assays include

  • 2 metres at 2.44 grams per tonne gold from 282.8 metres (19GY0341)
  • 9 metres at 1.80 grams per tonne gold from 270.1 metres (19GY0342)
  • 4 metres at 1.80 grams per tonne gold from 288.6 metres (19GY0344)

Company report

Source: Company’s Report

H1FY19 Financial Update:

Gold Road Resources Limited reported a net loss of $16.933 million during the first half of FY19 as compared to a loss of $7.737 million in H1FY18. The company reported total current assets of $78.043 million including cash and cash equivalents at $63.267 million, trade and other receivables at $3.057 million and inventories of $11.599 million as on 30 June 2019.

In the non-current segment, exploration and evaluation came at $15.622 million, whereas property, plant and equipment came at $461.123 million. The company reported net assets of $322.683 million as on 30 June 2019. Total cash ouflows from investing activities during the half year stood at $26.691 million. Cash and cash equivalents of Gold Road Resources at the half year stood at $63.267 million.

Stock Update:

On 10 September 2019, the stock of GOR closed the day’s trading at $1.325, down 2.214% from its previous close. The market capitalisation of the company stood at $1.19 billion, with approx. 878.54 million outstanding shares. The 52-week trading range of the company stood at $0.590 to $ 1.645. The stock has given positive returns of ~40.41% and ~51.40% in last three months and six months, respectively.

Regis Resources Limited

Regis Resources Limited (ASX: RRL) is engaged in the exploration, evaluation and development of gold projects across Australia. The company has projects like the Duketon Gold project in Eastern Goldfields of Western Australia and McPhillamys gold project located in new New South Wales.

FY19 Financial Result Update:

RRL reported revenue at $654.8 million, up 8% on a y-o-y basis, while EBITDA was slightly lower at $307 million, as compared to $313 million in FY18. The EBITDA margin stood at 46.8% during the year. The company reported a net profit after tax of $163.1 million with a net profit margin of 25% during FY19. RRL has a cash balance of $205.3 million as on 30 June 2019. Operating cash flow during the quarter stood at $329 million, as compared to $301 million in FY18.

Performance Highlights:

The company sold gold of 369,721 ozs with an average realisation price of $1,765/oz. Gold production during FY19 stood at 363,418 ozs, and the business was positively impacted from full-year production from Tooheys Well and Erlistoun. The company started development of the first underground operation at Rosement during FY19.

Dividend Distribution:

The Board recommended a fully franked dividend of 8cps per ordinary share with a payment date of 16 September 2019. Total dividend for the year stands at 16cps.

Dividend History

Dividend History (Source: Company Reports)

FY20 Outlook:

The management has provided production guidance of 340,000 to 370,000oz of gold production with an average realisation price of $1,125 to $1,195/oz. The company has forecast a growth capital of $62 million for FY20.

Stock Update:

On 10 September 2019, the stock of RRL settled at $4.570, down 2.972% from its previous close. The market capitalisation of the company stood at $2.39 billion, with approx. 508.18 million outstanding shares. The 52-week trading range of the company stood at $3.650 to $ 6.720. The stock has given mixed returns of ~7.05% and -15.74% in the last three months and six months, respectively. The stock of RRL is available at a price to earnings multiple of 14.640x with an annualised dividend yield of 3.4%.


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