GoldSpot Discoveries Corp.

GoldSpot Discoveries Corp. (TSXV: SPOT) is a technology company that uses artificial intelligence (“AI”) and traditional domain expertise alongside a portfolio of software tools to assist in discovering new mineral deposits for its clients.

Key Updates:

• Robust performance from Consulting segment: For 9MFY21, the company reported its consulting income of CAD 6.342 million, considerably higher than CAD 3.461 million in pcp. The growth was supported by the addition of sixteen new clients, which indicates growing demand for the company’s services, which is encouraging. The group expect the same trend to continue for the near term as well.

Source: Company Presentation

• Impressive results from its innovative integrated approach: In the recent past, the company reported encouraging results from its innovative integrated approach, which combines traditional targeting and machine learning. Recently, the group reported impressive results for Quebec Precious Metals, which includes extended High-Grade Gold-Bearing Lloyd Vein System to a 4.2KM Prospective Corridor at the Elmer East Project. Additionally, the company also spotted potential Lithium Targets at the Critical Elements Bourier Claims within the Nemiscau greenstone belt. The above is expected to attract new clients in the coming days.

• Recent acquisition update: On December 16, 2021, the company reported its acquisition of DigiGeoData Inc, which is a Mineral Resource Mapping & Intelligence Data Provider. The above is enhancing the digital transparency at a regional scale with plans to incorporate DigiGeoData’s Atlas platform with the company’s diversified portfolio assets. Notably, DigiGeoData’s maps provide a detailed overview of regions that has significant exploration and mining activity.

Q3FY21 Financial Highlights:

• SPOT announced its quarterly results, wherein the company posted its Consulting income of CAD 2.051 million, higher than CAD 1.586 million in pcp. However, the group recorded a net investment loss of CAD 10.363 million, as compared to a gain of CAD 2.924 million in pcp.
• Total expenses stood higher at CAD 2.654 million, as compared to CAD 1.549 million in pcp, due to higher operating, general and administrative costs and an increase in Finance expenses.
• The group reported a net loss of CAD 9.566 million, as compared to a net income of CAD 2.962 million in pcp.

Q3FY21 Income Statement Highlights (Source: Company Report)

Risks: The company reported a huge loss from its net investments, which has impacted the company’s overall performance. Continuation of the above trend is likely to dampen the upcoming cash flows and profitability.

Stock Recommendation:

The stock of SPOT is trading at the lower range of its 20-days Bollinger band, which suggests a possible up move from the current level. Moreover, the RSI of the stock is hovering lower at 42.54, which indicates an oversold zone and result in a possible price appreciation in the coming trading sessions. The stock has generated a return of ~132% and ~126% in the last nine months and one year, respectively. Considering the aforesaid facts, we give a ‘Speculative Buy’ rating on the stock of SPOT at the last traded price of CAD 0.93 on December 16, 2021. 

Technical Analysis Summary

One-Year Technical Price Chart (as on December 16, 2021). Source: REFINITIV, Analysis by Kalkine Group

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

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