Tempus Resources Ltd

Company Overview: Tempus Resources Ltd (ASX: TMR) is engaged in the exploration of mineral resources and is focused on scouting for exploration projects in Canada and Ecuador. The company’s flagship project - Elizabeth-Blackdome Project, is a high-grade gold past-producing project located in Southern British Columbia. The other key projects of the Group are the Rio Zarza and Valle del Tigre projects.

TMR Details

Uptick in Project Activities Bolstered by the Recent Fund Raising: The company has successfully raised capital of $6.28 million through placement, as announced on 19 August 2021. The fund raising round witnessed an issue of 24.99 million shares at an average price of $0.251 per share. The proceeds will be used to fund the ongoing 12,000 metre drilling program at Elizabeth and for exploration activities in Ecuador.

September 2021 Quarter Update:

TMR has recently updated about its operational activities in September 2021 Quarter and reported several key developments during the period.

• It completed the drilling of 17 core holes at Elizabeth for ~5,200 metres.
• Visible gold has been also identified in 3 holes (EZ21-02, EZ21-04, EZ21-12) during the quarter.
• The company also discovered a potential new gold vein, named as the ‘Blue Vein’ at 150 NW of the SW vein at Elizabeth.
• The independent review of previous metallurgical test work at Elizabeth reveals and confirms the presence of high-grade gold mineralisation. This can be processed by making use of the existing Blackdome mill circuit with high recoveries of up to 95%.

It ended the period with cash reserves of $4.34 million as of the end of September 2021 quarter period, reflecting an uplift from $1.02 million during the previous quarter-end.

Trend in Exploration & Evaluation Assets (Source: Analysis by Kalkine Group)

‘Bonanza’ Grade Gold Assay Results:

On 26 October 2021, the company has announced ‘bonanza’ grade assay results from its newly discovered Blue Vein from drill-hole EZ-21-12.

• It reported 33.7 grams per tonne gold over 1 metre from 117.8 metres and 26.4 g/t gold over 0.5m from 130.7 metres.
• The management seems to be upbeat about the recently discovered Blue Vein along strike parallel to the SW vein with 6 drill intersections to date.

Top 10 Shareholders: The top 10 shareholders together form around 19.47% of the total shareholding, while the top 4 constitute the maximum holding. AIMS Asset Management Sdn Bhd  and Izurieta (Rodrigo Arturo) are holding a maximum stake in the company at 5.72% and 3.40%, respectively, as also highlighted in the chart below:

Top 10 Shareholders (Source: Analysis by Kalkine Group)

Key Metrics:  The company reported an improvement in assets to equity ratio to 1.37x in FY21, compared to 1.52x in FY20. ROE of the firm improved to negative 38.7% in FY21, compared to negative 50.8% in the prior corresponding year.

Leverage Profile & Cash Profile (Source: Analysis by Kalkine Group)

Key Risks: The company is exposed to the following risk factors:

• Environment Risk: The company’s line of operations has the potential to deteriorate the environmental conditions and impact the balance of the project sites.
• Regulatory Risk: Its operations are also exposed to the risk of stringent regulatory measures, that can have an impact on its ease of doing business.
• Revenue Risk: The Group’s projects are capital intensive in nature and any challenge to monetize the assets, poses a threat to the sustainability of the company.

Outlook: The company completed an alteration study at the Blackdome Gold Mine and reflects decent potential for finding additional gold mineralisation below historic stopes and to the west of current identified gold veins. TMR expects to complete further drilling at Blackdome in 2022. Its 100% owned Valle del Tigre Project and the Zamora Project, in the Cordillera del Condor mineral belt of southeast Ecuador are early-stage exploration projects. Further, the Group announced the results from the initial Phase I sampling program completed at Valle del Tigre II and confirmed the presence of gold and copper mineralization in several trends. It is planning to complete a follow-up of the soil sampling program in Q4, 2021.

Stock Recommendation:  The Group will hold its AGM on 18 November 2021. As per ASX, the stock of TMR is trading below its average 52-weeks’ levels of $0.145-$0.310. The stock of TMR gave a negative return of ~14.99% in the past six months and a negative return of ~2.85% in the past one month. Considering the current trading levels, improved cash position, identification of gold holes, discovery of gold vein, and the key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.165, as on 29 October 2021.

Technical Insights:

TMR prices have dropped after hitting its initial resistance level, i.e., $0.195, which also lies over its 21-period SMA on a weekly chart. Prices are now getting the support of the downward sloping trend line that further indicates that the stock could reverse to upside from nearby supporting levels. RSI (14-period) is hovering at ~41 levels. Immediate support levels are $0.155 and $0.140, while immediate resistance levels are $0.195 and $0.220.

TMR Daily Technical Chart, Data Source: REFINITIV

Note: The purple color line in the chart shows RSI (14-period)

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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