Strategy First Recommendation 28/01/2007 Share Price $0.33 12 mth Price Target $0.60 Suggested Stop Loss $0.20 Recommendation Spec Buy Risk Rating High Market Information Sector Gold Explorer Index Market Cap 23.5m How Many Shares do I buy? Trade = Amount ($) you're prepared to risk Size Market Price - $0.195
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Recommendation Summary
Company Background Gryphon Minerals Limited (GRY) is a Western Australian mineral exploration company that explores and develops gold and base metals. Their main tenements are in Western Australia and in the West African region of Burkina Faso. Besides its gold and nickel projects, GRY is also looking to diversify through several uranium prospects in Queensland.
Investment Summary It has been an exciting time for GRY recently with a number of projects recording promising results along with increased activities into other areas. GRY is ramping up its operations which should see a re-rating of the company going into 2007 especially with their highly prospective Banfora Gold Project in West Africa.
So far, good grades have been seen with the Nogbele Prospect providing results of [email protected]/t, [email protected]/t and [email protected]/t of gold in some areas. A soil geochemical sampling program is now being undertaken to cover areas previously unexplored. At the Fourkoura Prospect, good results were also obtained with findings of [email protected]/t, [email protected]/t and [email protected]/t of gold. These are exciting times in Africa and aggressive exploration programs will be looked at to start drilling as soon as possible.
In Australia, GRY has a number of projects that are sure to keep the explorer busy well into 2007. A survey is being conducted at the Collurabbie Project involving Nickel that is within the same area as the highly prospective joint venture nickel discovery involving BHP, Nickel West and Falcon Minerals Ltd. At the Radio Gold project, a drill program was performed providing results of [email protected]/t of gold, an encouraging sign.
In Queensland, GRY has successfully completed applications for the Hamilton River and Cat Creek Uranium projects to further diversify its exploration portfolio. These projects are in the well known prospective Mount Isa area and studies are now being undertaken to determine the optimal infrastructure required.
In the midst of all of this, GRY has completed a share placement to Newmont Mining Corporation, Macquarie Bank, Dundee Precious Metals Inc and Rand Merchant Bank. This has given GRY greater financial strength and backing with an injection of $5m into the company.
Due to the nature of the industry along with the exploration stage GRY is currently in, we have a 'spec buy' on the stock at current levels.
wise-owl Checklist Strong management team with a good track record. Solid financial base includes cash in hand of approximately $7m after the recent share placement. Promising results expected from the Banfora Gold Project along with their tenements in Australia could trigger a market re-rating of the stock. Institutional Shareholders include Dundee Precious Metals Inc (9.85%), Newmont Mining Corporation (10.69%) and Macquarie Bank Limited (5.13%). Stock is trading in a bullish channel.
Fundamental & Quantitative Analysis Management Stephen Parsons - Managing Director
Stephen is the Managing Director of the Perth based mineral exploration company, Gryphon Minerals. He graduated from the University of Canterbury in New Zealand with an Honours degree in Geology. He has held technical positions for a number of junior resource companies and major mining houses including CRA Exploration and Placer Dome, exploring for a wide variety of commodities throughout Australia before listing Gryphon in April 2004.
Shane Hibbird
Shane has over 17 years of exploration experience working in gold, PGE’s, base metals, coal, oil and gas, mineral sands and other industrial minerals throughout Australia, Laos and parts of China. He has worked for both junior explorers and multinational mining companies. He has experience in grass roots and conceptual exploration through to advanced resource appraisal, more recently involving the Kanmantoo Copper-Gold deposit near Adelaide, South Australia, and the Panton Sill PGE deposit in the Kimberley region of Western Australia.
Financial Performance As expected, GRY has yet to make any earnings due to the exploration stage it is in. For the September quarter, exploration expenses totaled $855,000. Members should not be put off by this statistic as most junior explorers will not see earnings unless they reach producer status.
Rather, we need to focus on assets in the form of the reserves their projects consists of. GRY had cash on hand of $2.26m at the end of September but with the recent injection of funds estimated at $5m, this will give GRY greater impetus going forward with their projects.
Growth Story The stage is now set for GRY to 'shine' in 2007. The hard work has been done and if the management team and board keep up this performance, GRY could be placed on the map. The project in West Africa is progressing smoothly and it is widely anticipated that this will prove fruitful for the company with its highly prospective deposits.
We need to remember that GRY is still in its early stages of exploration. Drilling is still being performed and results being studied. Towards the end of 2007, we could possibly see feasibility studies coming into play but what draws us to GRY are the grades obtained. With such high grades, this has not only caught our eye but also big institutions such as Macquarie Bank who have recently become a significant shareholder.
In 2007, we anticipate further positive news flow from this company. Possible prices rises in Gold and Nickel over 2007 could be an added bonus for GRY investors.
Revenue & Profitability GRY vs. Sector Average FY2006 FY2005 FY2004 GRY Sector Average PE Ratio (x) NA NA NA PE Ratio (x) NA 22.74 Revenue per Share ($) NA NA NA Revenue per Share ($) NA 5.31 Earnings per Share ($) -0.02 -0.02 -0.00 Earnings per Share ($) -0.02 0.71 Dividend Yield (%) 0.00 0.00 NA Dividend Yield (%) 0.00 2.78 Profit Margin (%) NA NA NA Profit Margin (%) NA 19.42 Return on Assets (%) -19.63 NA NA Return on Assets (%) -19.63 13.86 Return on Equity -21.30 NA NA Return on Equity -21.30 26.47
Technical Analysis
Trend Horizon Trend Daily Weekly Monthly
Technical Overview
Stock has been trading within a bullish channel since 2004, excluding a false break on the downside in October 2005. GRY has experienced some strong continuation patterns within this channel along the way with a break from a flag pattern in November 2005 setting off a rally from a low of 20c to the all time high of 37c, just 6 months down the track. More recently the stock appears have broken out of a triangle formation, on the upside, with momentum to break the all time high, which is now the resistance level at 37c. Short term support lies at 24c, with a break below this likely to send the stock towards critical support at the 21c level.
GRY Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
