IronRidge Resources Ltd (LON: IRR)

Alternative Investment Market-traded IronRidge Resources Ltd is an Australia-headquartered minerals exploration company. Operational interests - gold, lithium, bauxite, titanium and iron ore in frontier regions of Africa and Australia. As on February 12, 2015, shares of the IRR got admitted to the AIM-segment of the London Stock Exchange.

Recent Development
In the exchange filing made by the company as on November 07, 2019, it reported that it had raised approximately £2m before expenses through the subscription of 20,000,000 new ordinary shares of the company at the price of 10p per share. Proceeds of this transaction would be utilised towards the development of gold and lithium projects in Côte d'Ivoire, Ghana and Chad in Africa.

Financial & Operational Highlights: FY19
During the year under consideration, Exploration and evaluation expenditure for FY19 was A$24.7 million, representing an increase of A$8.3 million over the last year with continued exploration programs conducted across the Company's projects in Ghana, Ivory Coast, Chad and Australia. Cash position at the end of the FY19 was at A$6.7 million.

Operational Highlights

Lithium
During the period, the Company completed its first phase 8,210m, second phase 4,684m reverse circulation drilling and 1,000m diamond core drilling programme at the Ewoyaa and Abonko projects, part of its Cape Coast Lithium portfolio.

Gold
In the FY19 period, the Company reported trenching results at 200m spacing for the second phase 9,360m infill programme at Dorothe.  Multiple broad, high-grade trenching intersections were returned at a 0.4g/t gold cut-off and maximum 4m dilution including highlights 84m @ 1.66g/t, 4m @ 18.77g/t, 32m @ 2.02g/t, 24m @ 2.53g/t, 12m @ 2.32g/t and 4m @ 5.27g/t gold.

Cote D'Ivoire - Gold and Lithium
At the Kineta Gold Project, a total of 3,392 soil samples were collected on a 400m x 50m and infill 200m x 50m grid over an 11 x 4.5km area as part of the first phase soil programme over the Kineta license in the north-east of the Country and at the Bianouan Gold Project broad trenching intervals of 47m @ 0.16g/t (including 14m @ 0.23g/t Au), 7m @ 0.18g/t and 4m @ 0.21g/t at the Ketesso target and 11m @ 0.7g/t, 9m @ 0.16g/t, 1m @ 1.1g/t, 3m @ 0.14g/t and 1m @ 0.42g/t at a 0.15g/t Au cut-off with maximum 2m of internal dilution were returned at the Yaw target. Acquisition of 100% of the share capital of each of Marlin Minerals SARL, Booster Minerals SARL and CAPRI Metals SARL were finished.

Post-Period-End Highlights:
In August 2019, the Company entered into a Memorandum of Understanding for drilling for equity with drilling contractor GeoDrill Limited.  The agreement was based on a competitive quotation process and provides for the issue of ordinary shares in IronRidge for 50% of the drilling cost up to a value of US$4 million two US$2 million stages.

Stock Performance
 
Daily Price Chart (as on November 11, 2019), before the market close. (Source: Thomson Reuters).

At the time of writing (before the market close at 11:47 AM GMT), shares of the IRR traded 3.5% lower at GBX 10.28, and in the year-over period, shares of the IRR have registered a 52w high of GBX 24.25 and a low of GBX 10.0 respectively. In the year-over period, shares of the IRR tumbled approximately 54%, on a YTD basis shares have declined by approximately 33%, down 17% in the past three months and tumbled around 26% in a month.

Conclusion
The stock of IRR is undergoing through a downtrend, as it plummeted substantially over the past couple of months. At the current trading level, the stock has breached its short-term as well as long-term support levels, as it was quoting well below its 50-day and 200-day moving averages, which reflects a long-term downtrend in the stock.  Also, the stock has registered 52w lows many times in the past couple of months.

However, the group has entered into a Memorandum of Understanding for drilling for equity with drilling contractor GeoDrill Limited.  The agreement is based on a competitive quotation process and provides for the issue of ordinary shares in IronRidge for 50% of the drilling cost up to a value of US$4 million two US$2 million stages.

Therefore, based on the above-discussed trend and MOUs signed by the group in the past couple of months, we have given a "Watch" recommendation at the closing price of GBX 10.63, (as on November 08, 2019), while we look for any upcoming catalysts in the near term.
 

Sirius Minerals Plc (LON: SXX)

Sirius Minerals Plc (SXX) is a Scarborough, North Yorkshire-based fertiliser development company. The company is focused on the development and operation of its polyhalite project in North Yorkshire, which contains the largest, highest grade resource of polyhalite, a unique multi-nutrient fertiliser. The company’s POLY4 fertiliser product can help in the production and quality of a large variety of crops to overcome challenges such as food security and increased populations.

Recent Developments
As on November 11, 2019, the group has reported its strategic review progress report. Project development work moving at a slower pace to allow for a six-month strategic review period (dully funded by cash resources).
Net Present Value (NPV) for the 13Mtpa business case for the current period ranging from US$11bn to US$13 bn. Internal Rate of Return (IRR) ranging from 29% to 35% for a range of development scenarios subject to successful financing.
Two-stage development plan (2-Stage planning phase) in the strategic report would assist to attain the key de-risking milestone of first polyhalite, when the service shaft reaches the polyhalite ore body, with an upfront capital requirement of US $600 million.

Financial Highlights: H1FY19

Source: Company filings

During the first half under consideration, the company remained on the development phase and hence does not generated any revenues. The company's operating loss stood at £14.3 million in H1 FY2019 as against a loss of £10.8 million in H1 FY2018. The LBT (loss before tax) stood at £3.1 million in H1 FY2019 versus an LBT (loss before tax) of £96.3 million in H1 FY2018. The LAT (loss after tax) stood at £3.1 million in H1 FY2019 versus a LAT (loss after-tax) of £95.3 million in H1 FY2018. The basic loss per share for H1 FY2019 was 0.06 pence versus a loss per share of 2.10 pence in H1 FY2018. The diluted loss per share for H1 FY2019 was 0.47 pence versus a loss per share of 2.10 pence in H1 FY2018.

Stock Performance
 
Daily Price Chart (as on November 11, 2019), before the market close. (Source: Thomson Reuters)

At the time of writing (before the market close at 12:52 PM GMT), shares of SXX have traded 7.6% higher at GBX 3.467 and registered a 52w high of GBX 26.84 and a 52w low of GBX 2.10.

In the year-over period, shares of SXX delivered a negative price return of 86%, and on a YTD basis, its shares have tumbled approximately 84% and declined approximately 15% in the past one month.

Conclusion
The company (Sirius Minerals Plc) has prepared a two-stage development plan (2-Stage planning phase) that would help to attain the key de-risking milestone of first polyhalite, when the service shaft reaches the polyhalite ore body, with an upfront capital requirement of $600 million.

However, the prevailing trend in its stock is negative, as its shares have plummeted more than 85% in the past one year and approximately 15% in the past month.

Also, at the current trading level, shares of SXX were trading at a lower valuation in terms of Price-to-Book Value, as SXX’s P/BV stood at 0.25x, whereas the industry average stood at 3.34x. It reflects the company is trading at a steep discount against the industry average.

Therefore, based on the positive strategic report and prevailing trend in the shares, we have given a “Watch” recommendation at the current price of GBX 3.467 (as on November 11, 2019, before the market closed), while we look for any upcoming catalysts in the near term.

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