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Stonewall Resources receives Spec Buy from Pac Partners

The broker report is looking to resource upgrades as near-term potential catalysts.

man with briefcase running up a share price arrow
A peer evaluation suggests a value for the company of $6.50 per share

Stonewall Resources Ltd (ASX:SWJ) has received a Speculative Buy rating from Pac Partners’ equity research division.

The key points in the research report titled ‘Cheap but need to hit targets to restore confidence’ are:

• The potential continues to grow for SWJ at their TGME gold Project, South Africa. With 5.15 million ounces gold (34.7 million tonnes at 4.62 g/t gold) and work continuing on adding more shallow high grade (~15 g/t) ounces. At a market cap of only $34 million SWJ is trading at a steep discount to peers. 
• The question remains when will SWJ see reward for delivering their planned exploration and development programs. It is likely to be when the pathway to production becomes simpler and clearer.
• Confidence in the ability of SWJ to restart production and source project financing needs to be shown following a pullback in the share price.

Pac Partners stated it is looking for resource upgrades and completion of the definitive feasibility study (DFS) to act as possible catalysts.

No price target, peer comparison suggests $6.50

While the Speculative Buy research report has no 12-month price target for the 1.3 cent stock, it did comprise a peer evaluation section as follows.

In determining relevant peer group to SWJ we have selected companies that have resources and are progressing towards production. 

Whilst peer comparisons can be subjective and open to debate the underlying fact remains that SWJ is trading at a significant discount to the peer average.

On the group we have selected the peer average is $58 on a EV/resource ounce basis, SWJ is currently trading at $6.50. 

READ: Stonewall Resources appoints Brett Tang to board

Earlier this month, Stonewall boosted its board with the appointment of Guyang (Brett) Tang as a director of the company.

Tang is a director at Tasman Funds Management, Stonewall’s largest shareholder, and a director and founding partner of China-based VC fund China Nanjing Venture Capital Ltd.

Quick facts: Theta Gold Mines Ltd

Price: 0.17 AUD

Market: ASX
Market Cap: $74.24 m

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