Pure Gold Mining Inc (LON: PUR)

Business Overview
Pure Gold Mining Inc is an exploration and development company which is based in Canada. The company is engaged in the acquisition, exploration and development of mineral properties, especially gold. The Company focuses on discovering mineralization on its property.

Recent News
On 15^th November 2019, the company announced its third quarter of the financial year 2019 results ended on 30^th September 2019.

Financial Highlights – Q3 Financial year 2019 (30^th September 2019, Canadian dollars)

(Source: Interim Report, Company Website)

In the third quarter of the financial year 2019, the company’s net loss was $8.83 million as compared to $8.1 million in the third quarter of the fiscal year 2018 due to an exploration and evaluation expenditures, professional fees, wages, consulting and directors’ fees. Exploration and evaluation expenditures of the company fell to $3.6 million for the three months ended September 30, 2019, compared to $7.2 million for the same period in the prior year. The company’s basic and diluted loss per share was $0.03, with no change compared to the same period in the last year.

Share Price Performance  

Daily Chart as on 17^thDecember 2019, before the market closed (Source: Thomson Reuters)

On December 17^th, 2019, Pure Gold Mining Inc shares were trading at GBX 42.88 at the time of writing before the market close (at 8:10 AM GMT), up by 2.1 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 47.40/GBX 30. The stock has delivered 20.78 per cent return in the last one month, and now some correction in the stock price is expected.

Conclusion
The company has secured sufficient funding for its Madsen mine, which is the company’s key asset. The company is focusing on commencing underground mining, focussing on-ramp and level development which would help it in its business. The company is doing environmental studies and documentation to support the updating of existing significant permits. The company works on construction and upgrades of surface facilities, including mill upgrades, updates to the tailing’s facility and other surface works, in addition to preparing for the commencement of underground ramp and stope development which would benefit its business. However, due to the challenging market conditions and certain uncertainties, the company is facing some risks which could impact the business of the company. The company’s business operates on the credit which it takes from the third party, failure to repay credit or credit risk could hamper the operations of the company. Failure in raising funds or liquidity risk could affect the operations and business of the company. Fluctuation due to changes in market interest rates could impact the profitability of the company. Industry and economic factors such as the volatility in the gold price could affect the revenue and profitability of the company.

Based on the risks factors as highlighted above, we recommend investors to keep a “Watch” on the stock at the current price of GBX 42.88 (as on 17^th December 2019, before the market close at 8:10 AM GMT), with support from few catalysts needs to be evaluated at a later stage.

Shanta Gold Ltd (LON: SHG)

Business Overview
Shanta Gold Limited is a mining company which operates in the investment in gold exploration, development and production in East Africa mainly in Tanzania. The company engages in mining, processing, exploration and related activities.

Recent News
On 17^th October 2019, the company announced the production and operational update of the third quarter of the financial year 2019.

Production and Operations Update – Q3 FY2019
The company reported a Gold production of 22,726 oz (ounces) in Q3 FY2019 versus 19,856 oz in Q2 FY2019, while the YTD (Year-to-date) production was at 64,956 oz. In Q3 FY2019, the net debt declined by 23 per cent to US$20.7 million versus US$26.9 million in Q2 FY2019, while the gross debt declined by 15 per cent to US$25.7 million for the period. The forward sales in Q3 were down to 43,000 oz in Q3 FY2019 versus 45,000 oz in Q2 FY2019. The adjusted EBITDA was at US$16.5 million in Q3 FY2019 as against US$10.5 million in Q2 FY2019. The company’s cash balances in Q3 FY2019 was at US$11.6 million.

Financial Highlights – H1 Financial year 2019 (30^th June 2019, US$, thousand)

(Source: Interim Report, Company Website)

In the first half of the financial year 2019, the company’s revenue increased to USD 53,614 thousand as compared to USD 49,285 thousand in H1 FY2018 due to a proportional increase in the quantity sold. The company’s gross profit was USD 2,608 thousand in H1 FY2019 versus USD 16,433 thousand in H1 FY2018, due to the higher cost of sales for the period. The company reported an operating loss of USD 1,621 thousand in H1 FY2019 versus a profit from operations of USD 11,829 thousand in H1 FY2018. The company’s loss after tax was USD 5,704 thousand in H1 FY2019 versus a profit after tax of USD 7,109 thousand in H1 FY2018. The basic loss per share in H1 FY2019 stood at 0.727 cents versus profit per share of 0.918 cents in H1 FY2018.

Share Price Performance  

Daily Chart as on 17^thDecember 2019, before the market closed (Source: Thomson Reuters)

On December 17^th, 2019, Shanta Gold Ltd shares were trading at GBX 9.405 at the time of writing before the market close (at 8:10 AM GMT), up by 1.62 per cent against the last day closing price. Stock's 52 weeks High and Low are GBX 10.40/GBX 4. The stock is in up-trend and has given positive returns in short as well as long term. The stock has delivered 112.5 per cent return in the last one year, while in one-month stock has given 11.96 per cent return.

Conclusion
The company’s revenue is steadily increasing. However, due to a loss on non-hedge derivatives, the company reported net loss in the first half of the fiscal year 2019. The company is facing certain risks such as volatility in commodity price, interest rate risks, credit risks, liquidity risks and currency risks which could affect the overall business of the company. The company’s production of gold has increased in the third quarter of the fiscal year 2019. The company’s net production and costs are in line with the company’s guidance. The company is making efforts to grow and could be an opportunity for investors to invest.

Based on the rationale as highlighted above, we have given a “Hold” recommendation at the current price of GBX 9.4 (as on 17^th December 2019, before the market close at 8.10 AM GMT).

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