W Resources Plc - Delivering long term Tungsten Production, with Strong Market Fundamentals

W Resources Plc (LON: WRES) is an AIM-listed mining company and is involved in the exploration, production and development of Tungsten metal, through its subsidiaries.

Financial Highlights – Increased Revenue in the financial year 2019 (31^st December 2019)

(Source: Annual Report, Company Website)
 
For the financial year ending 31^st December 2019, driven by an increase in the mineral exploration revenue for the period, the revenue increased to EUR 365 thousand as against EUR 219 thousand in the financial year 2018. The gross profit for the period stood at EUR 22 thousand. Due to an increase in operating expenses, the operating loss (before exceptional item) stood at EUR 1,244 thousand in FY2019 versus operating loss (before exceptional item) of EUR 899 thousand in FY2018. The operating loss stood at EUR 1,244 thousand in FY2019 versus an operating loss of EUR 734 thousand in FY2018. The LBT (loss before tax) stood at EUR 2,942 thousand in FY2019 versus an LBT (loss before tax) of EUR 4,592 thousand in FY2018. The loss for the year stood at EUR 2,942 thousand in FY2019 versus loss for the year of EUR 4,516 thousand in FY2018. The basic and diluted loss per share stood at 0.05 cents in FY2019 versus a basic and diluted loss per share of 0.08 cents in FY2018.

Share Price Performance

Daily Chart as of June 5^th, 2020, after the market close (Source: Refinitiv,Thomson Reuters)

W Resources Plc shares closed at GBX 0.15 at the time of writing after the market close on 5^th June 2020. Stock's 52 weeks High is GBX 0.49 and Low is GBX 0.091.

From the technical standpoint, 14-day RSI is currently hovering in an oversold zone and carry the potential to trigger an upside bump in the stock price.

Growth Catalysts
The market conditions in which the company operates is strong, which will increase the financial performance and bring operational balance. The group’sLa Parrilla project in Spain is amongst the largest and low-cost tungsten mine globally, which will help in delivering earnings growth in coming years.

Conclusion
In the financial year 2019, the company’s profitability remained in the negative zone, but the top-line and the bottom-line performance have improved for the period. The combined production of Tungsten and Tin increased by 232 per cent to 45.2t, and strip ratio and mining costs remained below and lower than budgeted mine plan in the first quarter of the financial year 2020. In the Q1 FY2020, thecompanyshipped 48.8t and 20.2t of Tungsten Concentrate and Tin Concentrate, respectively, to offtake partners. In Spain, covid-19 shutdown for mining operations has been lifted, but full-scale operations are still on hold. The company had completed its T2 expansion, a world-class tungsten project at La Parrilla. W Resource Plc’s La Parrilla project is now fully funded and under full project development.

Therefore, based on the above rationale, we have given a "Speculative Buy" recommendation on the stock, at the closing price of GBX 0.15 (as on 5^th June 2020).

Victoria Oil & Gas Plc – Domestic Energy Supplier in African Region

Victoria Oil & Gas Plc (LON: VOG) is a domestic energy supplier. The group is engaged in the gas distribution, exploration, and production business in Cameroon.

Operational Update for Q1 FY2020
On 17^th April 2020, Victoria Oil & Gas released an update on the operational performance for Q1 of the financial year 2020. The group announced the selection of a new CEO (Chief Executive Officer) and Non-Executive Director and have joined the board. In the Q1 FY2020, the group produced a daily average of 1,343 bbls of condensate and 5.1 mmscf/d of gas and sold to customers from the industrial sector and generated net revenue of USD 5.3 million from GDC (Gaz du Cameroun) operations. The GDC operations received payment of four invoices from ENEO, Grid power customer, in the form of promissory notes with a value of USD 2.9 million for the period. Due to coronavirus lockdown, VOG evacuated expatriate crew from Cameroon and is now waiting to resume work at La-108. The group is focused on implementing enhanced projects at its facilities to reduce surface pressure and reservoir backpressure by adding reserves and deliverability.

Share Price Performance

Daily Chart as of June 5^th, 2020, after the market close (Source: Refinitiv,Thomson Reuters)

Victoria Oil & Gas Plc shares closed at GBX 3.80 at the time of writing after the market close on 5^th June 2020. Stock's 52 weeks High is GBX 16.50 and Low is GBX 2.48.

From the technical standpoint, its shares were trading well above its short-term support level of 20-day simple moving average prices, which reflects an uptrend in the stock and carrying the potential to move up further.

Growth Catalysts
The Group would benefit from securing the long-term supply of gas. The company is focusing on its strategies which could help the company to grow and create value for its shareholders. 

Conclusion
Some of the risks which can impact business operations are capital constraints, global economic volatility, commodity price risk, legal compliance regulatory or litigation risk, adverse market sentiment, political and country risk. The company finalised a new agreement with ENEO related to payment guarantee security in the Q1 FY2020. The focus is now back on growing sales and signing new grid power contracts. In the current period, the company also increased industrial customer gas consumption for thermal use and industrial customer gas for power usage. International Organization for Standardization compliance ("ISO") 9001, 14001 & 45001 audits successfully completed, emphasising the group's commitment to global standards in its management systems.

Based on the above rationale, we have given a “SPECULATIVE BUY” recommendation at the closing price of GBX 3.80 (as on 5^th June 2020).
 
*The “Speculative Buy” recommendation is valid for the current price as covered in the report as on 8th June 2020.

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