Resolute Mining Ltd – 30 Years of Continuous Production From 10 Mines in Africa & Australia Totalling Over 8Moz of Gold & Counting

Resolute Mining Limited (LON: RSG) is a Perth, Australia-headquartered gold producer, with operations in Africa and Australia, spanning across three gold mines. The group owns and operates the Bibiani Gold Mine in Ghana (Bibiani), the Ravenswood Gold Mine in Australia (Ravenswood) and the Syama Gold Mine in Mali (Syama).

Recent News
On 24^th April 2020, the group has issued a notice of ceasing to be a substantial holder to the ASX (Australian Securities Exchange).

Quarterly Update for the Period Ended 31^st March 2020 – Reflecting Solid Production Result
As per the production and sales, the Gold poured increased by 5% to 110,763oz at an AISC of US$1,007/oz(December 2019 Quarter: 105,293 oz at an AISC of US$ 1,419/oz). Syama and Mako deliver 99,717oz at an AISC of US$918/oz. In the March 2020 Quarter, the gold recovered increased by 15% to 119,683oz as compared with the previous quarter (December 2019: 104,433oz). Gold sales increased by 12% to 102,008oz at an average realised gold price of US$1,407/oz (December 2019 Quarter: 90,731oz at an average realised gold price of US$1,421/oz). The company had completed US$300 million senior debt refinancing and ~A$194 million equity raising, with higher cost debt repaid. On 31^st March 2020, the cash and bullion of US$96 million; total borrowings of US$308 million; and net debt of US$212 million. The repayment was funded by a successful A$194 million equity raising comprising two-tranche placement and share purchase plan launched in January 2020. The group has been strongly supported by new and existing investors. The agreement with Taurus in January 2020 to buyout existing 1.1 per cent royalty over Mako removes encumbrance and secures full benefit of Mako’s positive cashflows for Resolute.

Share Price Performance
 
Daily Chart as at April-27-20, after the market closed (Source: Thomson Reuters)

Resolute Mining Ltd’s shares closed at GBX 50.17 on 27^th April 2020 and were up by 7.73% versus the previous day closing price. Stock 52 weeks High and Low are GBX 119.50/GBX 29.50.

Growth Catalysts
In FY2020 guidance, the company has updated to 430,000oz at an AISC of US$980/oz. In Syama, the strengthening sulphide recoveries, Tabakoroni Underground PFS (Pre-Feasibility Study), and oxide resource growth. In Mako, the group has sustained high margin production. Strengthen financial position with surplus cash to be used for deleveraging.

Conclusion
In light of COVID-19, the company’s mining and processing continuing as normal and had not reported any cases of COVID-19 across sites or offices. In the fiscal year 2019, the Group’s revenue has increased by about 50 per cent as compared to the fiscal year 2018. The company, in recent time, has generated strong positive operational cash flows while investing in growth and exceeded production guidance. In line with the development expectations, the company expects to increase production at lower costs and reported that exploration programs in Mali continued to report decent results. The company is focusing on generating free cash flow from its operations and optimising its asset portfolio, which would contribute to deliver value for shareholders. The exciting exploration results are representing the potential for organic growth opportunities in the upcoming periods.

Based on the above rationale, we have given a "Hold" recommendation at the closing price of GBX 50.17 (as on 27th April 2020).

Hyve Group PLC – Delivered Double-Digit Growth in Africa Oil Week and Yugagro

Hyve Group PLC (LON: HYVE) is a London, United Kingdom-based company, which is engaged in the event business. The group hosts and designs various events across Asia, South America, Africa and Europe. It was formerly known as ITE Group PLC.

The company will release its FY 2020 Interim Results on 12th May 2020.

Recent News
On 14^th April 2020, the group’s Board notes the current media speculation. This is in respect of potential equity fundraising by the Company.

Trading Update and Coronavirus Update (as on 8th April 2020) – Reflecting Robust Performance
The group announced a trading update and the measures it has taken to protect its financial position during the COVID-19 pandemic. As earlier announced on 23rd January 2020, Hyve delivered a robust performance in the first quarter of the financial year 2020. This growth was driven by double-digit growth in Africa Oil Week and Yugagro on a like-for-like basis, and a successful Chinacoat event in Shanghai. In Q2 FY20, the company has been impacted by the spread of the coronavirus.

During the quarter, three of the Hyve's top ten events ran, including Mining Indaba and Bett, both of which stated robust year-on-year growth despite the impact from ongoing Brexit and COVID-19 travel restrictions, the spring fair rate of decrease slowed compared to the prior year. The group has cancelled and postponed various events. The management together with Hyve's global leadership team, has taken action to cut the 20 per cent of salary on a temporary basis. The Board has decided not to pay a dividend in FY20, and future dividends will be kept under review.

Share Price Performance
 
Daily Chart as at April-27-20, after the market closed (Source: Thomson Reuters)

Hyve Group PLC’s shares closed at GBX 22.80 on 27^th April 2020 and were up by 14% versus the previous day closing price. Stock 52 weeks High and Low are GBX 110.00/GBX 14.96.

Valuation Metrics

(Source: LSE)

As on 31st March 2020, the EV/EBITDA multiple of the HYVE was around 5.4x, which were lower as compared to the industry multiples. It reflects, shares are undervalued against its peers.

Conclusion
The economic conditions within the geographic areas in which the company operates influence the operating and financial performance of the company and can face uncertainty in the medium-to-long term due to the ongoing Brexit. Despite uncertainties (both geopolitically and economically) across many of the markets, the company stay confident in attaining the full-year anticipations. Hyve Group is a fundamentally decent company with a proven track record. The benefits of diversifying and strengthening the portfolio can also be noticed from the continued progress in the forward bookings. The Board is confident that the measures put in place will enable the company to safeguard against COVID-19 outbreak. In the past year, the Group has made significant strategic acquisitions, which will provide strength to the growth of the company with a considerable contribution in the top line. Despite a small-cap company, the Group has a track record of paying dividends, which is uncommon in many small-cap companies.

The revenue has grown at CAGR of 18%. The group expect margins to continue to grow and will continue to look for product-led acquisitions and further optimise the portfolio.

Based on the above rationale, we have given a "HOLD" recommendation at the closing price of GBX 22.80 (as on 27th April 2020).

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