Wallbridge Mining Company Limited

Wallbridge Mining Company Limited (TSX: WM) is engaged in the acquisition, discovery, development, and production of metals focusing on gold, copper, nickel and platinum group metals. The company owns Sudbury Projects, Quebec Projects and Equity Investments. 

Key Highlights:

• Impressive Drilling result: On March 08, 2021, the company reported new results from its definition drill program at the Fenelon Gold Property. The result includes strong gold intersections and confirms the grade and geometry of the central portions of the Tabasco-Cayenne and Area 51 Zones. Notably, the company expects a possibility of a maiden mineral reserve from the above property from Q3FY2021 onwards. Moreover, the land package Detour–Fenelon area offers s long-term organic growth potential, with the potential of exploring multi-million ounces of gold.

Detour-Fenelon Drilling Area (Source: Company Presentation)

• Positive Long-term Prospect: Gold, as an asset class, has given exponential return in the past, and the long-term prospect of Gold remains bright, supported by economic cycles, declining interest rates etc. We expect the momentum to continue, which is positive for the group.

Q3FY20 Financial Highlights:

• WM announced its quarterly result, wherein the group reported loss before income taxes of CAD 2.64 million, significantly higher than CAD 0.728 million in the previous corresponding period (pcp). The increase in losses was due to higher general and administrative expenses (CAD 0.84 million versus CAD 0.54 million in pcp), higher provision for closure plan costs (CAD 1.639 million versus CAD 0.698 million in Q3FY19) coupled with a significantly higher depreciation of property and equipment (CAD 0.342 million versus CAD 0.033 million in pcp).
• Net loss for the period stood higher at CAD 3.409 million, as compared to CAD 2.204 million in pcp.
• The group reported cash and cash equivalents of CAD 37.259 million, while total assets were recorded at CAD 280.673 million.

Q3FY20 Income Statement Highlight (Source: Company Report).

Risks: The Company’s activities may be impacted due to strict environmental regulation within the jurisdictions in which its mineral properties operate. Such regulations include several matters including prevention of waste, pollution and protection of the environment, labour relations and worker safety etc. Moreover, any setback to the drilling activities or negative outcome of the drilling program would affect the business prospect.

Stock Recommendation:

In 2021, the Company intend to complete ~170,000 metres of drilling program from Fenelon Gold Property. Currently, the company has eight drill rigs operating at Fenelon and is planning to add a ninth rig soon. Moreover, in the coming months, seven drill rigs would be targeting the Fenelon Gold System to ~1,000 metre vertical depth, carrying out a combination of definition and expansion drilling at a nominal 75-metre drill spacing.  On the valuation front, the stock of WM is available at a price to book value of 1.9x on TTM basis, as compared to the industry (Basic Materials) of 2.3x. Considering the aforesaid facts, we give a ‘Speculative Buy’ recommendation on the stock of WM at the closing price of CAD 0.68 on March 17, 2021.

One year-Price Chart (as on March 17, 2021). Source: Refinitiv (Thomson Reuters)

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