ASX Stocks under Discussion: NCM, COE, ORI, PLS, AGS, DAV

  • May 09, 2020 AEST
  • Team Kalkine
ASX Stocks under Discussion: NCM, COE, ORI, PLS, AGS, DAV

The Australian economy possesses the largest economic demonstrated resources in the world, including mineral sands, uranium, zinc, nickel, and coal, among others. The Metals & Mining sector of Australia is a leading industry sector with more than 650 companies engaged in mineral exploration, development and production in 100 countries.

The ongoing pandemic has had a debilitating impact on the Australian economy sparing no sector. The resources sector, a significant contributor to the Australian GDP, has struggled as well. However, with the ongoing recovery in the country, the sector is likely to benefit and get back on track and resume its operations.

Let us have a look at six ASX-listed companies related to the resources sector that are under the spotlight:

Good Read: Analysis of various commodities amid COVID-19 pandemic

Newcrest Mining Limited

Newcrest Mining Limited (ASX:NCM) is involved in the exploration, development, mining and the sale of gold. Recently, the Company has priced senior unsecured notes amounting to US$1.15 billion in the US. The Company will utilise the proceeds to repurchase existing near-term corporate bond maturities.

Also Read: How these gold stocks are gaining momentum?

Equity Raising to Take Future Benefits: Newcrest Mining Limited has opened its share purchase plan (SPP) for eligible shareholders to apply for up to $30,000 of new fully paid ordinary shares without incurring brokerage, commissions or other transaction costs. The Company would raise around $100 million through SPP. This follows the successful completion of $1.0 billion placement to institutional investors.

 

 

The NCM shares closed the day’s trade at $27.600 on 8 May 2020, a decline of 0.826% compared to its previous closing price. The Company has a market cap of $22.49 billion and has ~808.26 million shares outstanding. The stock has generated returns of 7.77% and -6.82% in the last month and last three months, respectively.

Cooper Energy Limited

Cooper Energy Limited (ASX:COE) is engaged in oil & gas exploration and production. The Company mainly generates revenue through the supply of gas to South-East Australia as well as low-cost Cooper Basin oil production.

Recently, the Company provided an update on Orbost Gas Processing Plant and Sole gas field production, which is managed by APA Group:

  • Currently, the plant is in the final phase of commissioning to process gas from Sole for supply to customers in south-east Australia.
  • The Orbost Gas Processing Plant has proven its capability to produce sales specification gas from the Sole raw gas stream with a total delivery of 0.74 petajoules (PJ) from 36 days’ production.

 

The COE shares closed the day’s trade at $0.385 on 8 May 2020, an increase of 1.316% compared to its previous closing price. The Company has a market cap of $618.13 million and has ~1.63 billion shares outstanding. The stock has generated returns of -16.30% and -29.36% in the last month and last three months, respectively.

Orica Limited

Orica Limited (ASX:ORI) provides explosives and blasting system to the mining and infrastructure markets. 

Robust Underlying Results During 1H FY20

The Company recently released its operational and financial performance for the 1H FY20 and outlined the following:

  • Rise of 4% in AN volume, a strong underlying performance from all regions and further improvement from Minova has resulted in earnings growth for 1H FY20.
  • Statutory Net Profit After Tax for the period amounted to $165 million against $33 million of pcp. Earnings Before Interest and Taxes (EBIT) went up by 2%.
  • The Board of ORI has decided to pay an unfranked interim ordinary dividend of 16.5 cps on 8 July 2020, reflecting a 40% payout ratio.
  • The balance sheet position of the Company is strong. It is wisely managing capital expenditure and investing in projects which are placing the Company to hit the ground running when mining activity normalises.

 

Source: Company's report

 

The ORI shares closed the day’s trade at $16.260 on 8 May 2020, a decline of 2.983% compared to its previous closing price. The Company has a market cap of $6.8 billion and has ~405.64 million shares outstanding. The stock has generated returns of -4.35% and -26.99% in the last month and last three months, respectively.

Pilbara Minerals Limited

Pilbara Minerals Limited (ASX:PLS) in the exploration of lithium and tantalum. The Company is also involved in the development of mines.

Well-Placed for Future Supply: 100% owned Pilgangoora Lithium-Tantalum Project of the Company is well placed for the future of lithium raw material supply. During March 2020 quarter, the Company has inked a five-year 75,000tpa offtake agreement with Yibin Tianyi. PLS maintained a strong balance sheet through moderated production strategy and cost reductions to ensure PLS is well placed to capitalise on the market turnaround.

The improving situation in China along with the EV subsidy program extension in the world’s second-largest economy is expected to have a favourable impact on the PLS, which has had a strong performance in the year so far.

The PLS shares closed the day’s trade at $0.205 on 8 May 2020, an increase of 2.5% compared to its previous closing price. The Company has a market cap of $444.74 million and has ~2.22 billion shares outstanding. The stock has generated returns of -16.33% and -36.92% in the last month and last three months, respectively.

Alliance Resources Limited

Alliance Resources Limited (ASX:AGS) is involved in the exploration of gold and base metals. The Company has its projects in South Australia and Western Australia.

The Company recently completed RC drilling at the Weednanna Gold Deposit and provided assay results, which primarily include

  • 4m @6.0 g/t Au from 3m in 20WDRC001 including 1m @ 20.2 g/t Au from 5m.
  • 6m @4.8 g/t Au from 6m in 20WDRC002 including 2m @ 10.7 g/t Au from 10m.

 

The Company mentioned that the RC drilling was resumed in May 2020 to better define the distribution of gold at Shoots 2 and 10. As on 31 March 2020, the Cash reserves of the Company stood at $0.63 million.

The AGS shares closed the day’s trade at $0.145 on 8 May 2020, a sharp increase of 61.111% compared to its previous closing price. The Company has a market cap of $13.86 million and has ~154.04 million shares outstanding. The stock has generated returns of 45.00% and 38.10% in the last month and last three months, respectively.

Davenport Resources Limited

Davenport Resources Limited (ASX:DAV) is in the mining exploration. As a part of Board restructuring, DAV has appointed Dr Reinout Koopmans on the role of interim Non-Executive Chairman. The Company has also commenced a global search for a permanent Chairman.

DAV has executed numerous cost reduction strategies in response to the COVID-19 and the uncertain economic and market conditions. These measures include the following:

  • Reductions in administration costs like corporate office overheads, and salaries.
  • Incorporating a salary sacrifice arrangement where Directors, employees and contractors receive part of their fees and salaries in shares

 

The DAV shares closed the day’s trade at $0.054 on 8 May 2020, an increase of 35% compared to its previous closing price. The Company has a market cap of $6.9 million and has ~172.51 million shares outstanding. The stock has generated returns of 20.00% and 45.95% in the last month and last three months, respectively.

 


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