Wallbridge Mining Company Limited (TSX: WM) is an advanced exploration-development company driven by a strategic targeted approach. Company is focused on advancing development of its flagship Fenelon Gold Project in northern Québec. It owns a large portfolio of nickel-copper-PGM projects in Ontario and Quebec.

Key highlights

• On track Drilling and Exploration Operations: In early 2021, the Company ramped up its drill program in support of MRE by operating six to eight drill rigs during the nine-month period ended September 30, 2021. Further, the company has focused on Fenelon Gold Mines with 102,000 metres (approx.) of exploration drilling and a USD 69 million exploration program planned for 2021. The company is also commencing 10,000 metres, multi-year underground exploration development program to establish underground drilling platforms in Area 51 and Tabasco/Cayenne zones.
  

Detour Fenelon Gold Trend

Source: Company Presentation 

• Exploration Property option payments and other commitments: The Company and Impala has agreed in March 2021 to extend the option payment to purchase 49.6% interest on its Parkin Properties for CAD 1,500,000 from June 30, 2021, to June 30, 2022. The Company also has done an option agreement to acquire a 100% interest in the Gargoyle Property in Ontario which it can exercise by making cash payment of CAD 50,000 on or before August 16, 2022.

• Focus on Exploration and Development: The Company has incurred cash in investing activities of CAD 48.54 million for the period ended on Sept 2021 and CAD 23.32 million for the prior comparable period. This shows that company has put focus on exploration and this will directly increase the revenue in coming quarters.
  

Risks associated with investment           

Since, the company competes in a highly competitive market, it must adapt to and compete with rapid changes in global metal prices, volatility of commodity prices, exchange rates and governmental actions, and interruption of production. This could result in significant input costs, which might increase losses of the company. 

Financial overview of Q3 2021 (In CAD, except share and per share amounts)

Source: Company’s Filing

• The company recorded other income gains of CAD 3.63 million in Q3 as compared to CAD 0.15 million in Q3 2020.
• During Q3 2021, reported EBIT stood at CAD 2.583 million v/s EBIT loss of CAD 2.641 million.
• Net loss for the Q3 2021 reduced to CAD 1.68 million versus CAD 3.409 million in the pcp mainly due to improved earnings.
• The Company has working capital of CAD 57.92 million on September 2021 and CAD 87.14 million was in December 2020. Also, Company believes that the 2019 tax credits of CAD 7 million will be received in 2021 as the audit has been completed. This will help company to show profits in annual reports for the current financial year.
  

Stock recommendation

Wallbridge’s future profitability, operating cash flows and financial position will be closely related to the prevailing metal prices, Canadian dollar performance, and the company’s ability to finance its current or future assets for increasing production. Although company has invested into major exploration activities in Fenelon gold hence and obtained total inferred resource of 1.467 ounces from Fenelon gold.

On the valuation front, the stock is available at a median price to book value of 1.0x on a TTM basis compared to the industry (Basic Materials) median of 1.9x. Hence considering the aforesaid facts, we recommend a “Speculative Buy” recommendation on the stock at the closing price of CAD 0.38 on January 5th, 2022.

Technical Summary Analysis

One-Year Price Chart (as on January 05, 2022). Source: REFINITIV, Analysis by Kalkine Group

*The reference data in this report has been partly sourced from REFINITIV.

Disclaimer

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