Over the past couple of years, the Australian resources sector has experienced an increase in M&A activity and growth in particular. Now the significant divestment of the heavyweights to further their investment and diversify into other minerals and industries has created opportunities for smaller companies. Also, over the past 12 months, an array of policy and legislative reforms were introduced which may impact Australia’s resources sector significantly. Two stocks falling under this sector are:
MAGNETITE MINES LIMITED (ASX: MGT) – The operations in the financial year ended 30 June 2018 have resulted in a loss of $3.52 million compared to last year’s loss of $4.44 million considering which no dividends were paid or declared since the start of the financial year. The company has cash and cash equivalents at end of the financial year at $1,744,347 as of June 30, 2018, with no debt which is representing a decent balance sheet. In this tough economic climate, the Group has had to justify both project and corporate expenditure including but not limited to staff redundancies. While every effort is being made to retain staff going forward, additional redundancies may be necessary to ensure the survival of the company. The company also has negative earnings per share (EPS) of -0.006 AUD which represents the lack of profitability for them. As at November 8, 2018, the stock of MGT traded lower at a market price of $0.008 almost at its 52-week low, it has witnessed a performance change of -73.01% over the past one year with a market capitalization of A$7.39 million.
EMPIRE RESOURCES LIMITED (ASX: ERL) – The company is seeking to raise up to approximately $1,610,672 by a pro-rata non-renounceable rights offer of up to approximately 161,067,158 shares on the basis of 1 new share for every 3 shares held at an issue price of 1 cent per New Share. Company’s loss from ordinary activities after provision for income tax was $348,978 which decreased when compared to 2017 loss of $1,876,657. Revenue comprised the company’s 60% share of the sale of gold and silver of $18,360,847, cash inflow from operating activities was $7,096,843 compared to 2017 outflow of $1,451,299 due to the net proceeds from the sale of gold and silver. Current assets increased by 36% to $2,360,192 from 2017 of $1,734,309 mainly due to cash and cash equivalents increasing to $1,008,062 compared to 2017 of $385,447 following completion of open pit mining. As at November 8, 2018, the stock of ERL traded lower at a market price of $0.010 almost at its 52-week low, it has witnessed a performance change of -47.83% over the past one year with a market capitalization of A$5.8 million.
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