Would Baggy Green JORC drilling results announced by Cobra Resources meet expectations?

Summary

• Cobra Resources Plc had not reported any revenue during H1 FY20.
• The Baggy Green JORC is currently estimated at 94,000 oz and occurred in the form of two deposits.
• The Company’s operating loss was slightly improved to negative £0.296 million during H1 FY20 ended on 30 June 2020.
• The Barns and White Tanks assay results are going to be announced in January 2021.

Cobra Resources Plc is the metals and mining company, which is focused on making critical acquisitions of projects in the natural resources sector. The Company has its primary focus on the Wudinna Gold Project in South Australia. The Company is keen on exploration of precious metals like copper, gold and cobalt.

Recent Developments

Wudinna Project Update – Baggy Green Gold Deposit Assay Results

(Source: Company website)

On 24 December 2020, the Company had updated a substantial amount of gold intercepts present at the Baggy Green deposit. The Baggy Green JORC is currently estimated at 94,000 oz and occurred in the form of two deposits. The Company had drilled 13 holes from north to south, with further six exploration holes giving rise to new mineralisation.

However, the total of Baggy Green assay results and Clarke assay results updated as of 03 December 2020 represented only 50% of total assay results anticipated from the program. The Barns and White Tanks assay results are yet pending, and it is expected to be announced in January 2021.

Wudinna Project Update – Clarke Gold Deposit Assay Results

On 03 December 2020, the Company had highlighted that it had found a substantial high-grade gold intercepts at the Clarke deposit. The result encapsulates the details of three reverse circulations (RC) holes (totalling 409m) which were drilled at the Clarke deposit. It would be included in the initial assay results to be returned from the Company's current drilling activity.

However, the Clarke assay results represented just 20% of total assay results anticipated from the drilling programme. The Baggy, Baggy Green, Barns and White Tanks assay results are yet pending, and it is expected to announce between late December 2020 and early January 2021.

Wudinna Project Update – Stage 1 Completion

On 30 November 2020, the Company updated that it had completed its stage 1 obligations entitled with 50% ownership. The Company had also sent the notice through its subsidiary, Lady Alice Mines, to Andromeda Metals Limited and Peninsula Resources mentioning the details of completion. However, the Company is planning to increase its stake up to 75% as it would spend around A$2.9 million over a 3-year period. The Wudinna Mineral Resource estimate for the Barns, White Tank and Baggy Green deposits stood at 211,000 ounces above a 0.5 g/t gold cut-off grade as of March 2019.

Exploration Update

On 30 October 2020, the Company updated regarding the completion of its drilling activities at Baggy Green, Baggy Green North and Clarke. The Proposed Stage 3 drilling at Barns had commenced. The Company had finished its drilling activity of 23 Reverse Circulation (RC) holes. It consist 21 RC holes present at Baggy Green, Baggy Green North and Clarke as of 29 October 2020.

Financial Update (for H1 FY20 ended on 30 June 2020 as on 30 September 2020)

(Source: Company result)

• The Company had not declared any revenue during H1 FY20.
• The Company’s operating loss was slightly improved to negative £0.296 million during H1 FY20 from negative £0.361 million during H1 FY19 due to IPO expenses incurred during H1 FY19.
• Similarly, the Company’s earning per share had also marginally improved to negative 0.19 pence during H1 FY20 from negative 0.54 pence during H1 FY19.
• The Company did raise gross proceeds of approximately £677,145 for 2.25 pence per share in May 2020, which would enable the Company to plan for its upcoming drilling programme.
• The Company had also raised £1.5 million in placing zero-coupon convertible loan notes convertible at 2.3 pence per share to develop its targeted exploration campaigns in the next 12-18 months.

Share Price Performance Analysis of Cobra Resources Plc

(Source: EODHD/Others, chart created by Kalkine group)

Shares of Cobra Resources Plc were trading at GBX 1.98 and were down by close to 1.25% against the previous closing price as on 07 January 2021, (before the market close at 08:45 AM GMT). COBR’s 52-week High and Low were GBX 3.85 and GBX 0.65, respectively. Cobra Resources Plc had a market capitalization of around £5.78 million.

Business Outlook

The Company had completed various fundraising activities to develop and plan its drilling programme occurred during the second half of the year. Cobra Resources had reinforced its 2021 activity, and set an objective to carry the positive momentum towards the growth of the existing resource base. The growth can be achieved through exploring fresh mineralisation by its drilling activities, and also find the potential IOCG targets. The Company had highlighted that the current phase is the bright time for gold exploration.

The short-term plans consist of two Reverse Circulation (RC) drilling programmes and a further Auger soil sampling programme. The soil sampling activity encapsulates 150 soil sample holes at Larwood, and a total of 6750m RC drilling at the Greater Baggy Green area, Laker, Larwood, and Barns. The Exploration activity at Barns and Larwood would be on farmland, and hence its timelines totally depend upon the harvesting activities. The Company had not experienced any delays due to the current COVID-19 travel restrictions.