Spanish Mountain Gold Ltd.

Spanish Mountain Gold Ltd. (TSXV: SPA) is focused on advancing its multi-million-ounce Spanish Mountain gold project in southern central British Columbia. 

Key Highlights:

• The Group announced that the Board of Directors had authorized management to proceed with a Preliminary Feasibility Study (PFS) for the proposed Phase 1 operation of its Spanish Mountain gold project in British Columbia, Canada. The PFS will build on extensive data collection and various scoping studies previously completed for the Project. 
• SPA announced that 16,666,666 warrants with the expiry date of October 23, 2020 had been fully exercised bringing proceeds to the company amounting CAD 833,333. The company further highlighted that all former and current insiders of the Company have elected to exercise and hold an additional 10,999,667 common shares. 

Key Takeaways from Q2FY20 Results:

• SPA announced its quarterly results, wherein the company posted loss before other items at CAD 0.082 million, improved drastically from a loss of CAD 0.176 million in the previous corresponding period (pcp). The improvement was driven by significantly lower salaries and wages, partially offset by increased share-based payments and investor relations, travel and filing fees.
• Net loss and comprehensive loss for the period stood at CAD 0.073 million, as compared to CAD 0.133 million in pcp.
• The company reported cash and cash equivalent of CAD 1.316 million, while total assets stood at CAD 78.542 million.                          

Q2FY20 Income Statement Highlights (Source: Company Reports)

Risks: SPA is an exploration stage company and is yet to report a successful gold deposit, and the company is yet to report revenue. Any negative outcome from the feasibility study would dampen the prospects.

Stock Recommendation:

As on June 30, 2020, the company reported a deficit of CAD 13.005 million, higher than CAD 12.779 million in FY19. The company is focusing on fast-tracking the development scenario for Phase I, which focuses on mining exclusively the near surface/ higher-grade portion of its multimillion ounce gold resource as a standalone operation. The company expects to deliver on its stated objective of completing the PFS during the first quarter of 2021. On the technical front, the stock is hovering in a bearish trend as the stock closed below the 20-day, 50-day and 100-day SMA. Hence, considering the recent price movement, we advise investors to keep a ‘Watch’ stance on the stock at the closing market price of CAD 0.395 on November 20, 2020.

SPA Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

GreenPower Motor Company Inc.

GreenPower Motor Company Inc. (TSXV: GPV) is the manufacturer and distributor of an all-electric charter, school and city buses. The company offers electric-powered transit bus deploying electric drive and battery technologies with a lightweight chassis and low floor body. The group’s product line includes All-electric transit buses and All-electric school and shuttle buses. 

Key Highlights:

• The company announced its grants of 300,000 incentive stock options with 100,000 stock options to each of Brendan Riley, Michael Sieffert and Fraser Atkinson. However, the stock options are subject to the approval of the TSX Venture Exchange and can be exercisable for a period of five years at a price consideration of USD 20/share.
• Recently, the company announced the sale of six electric school buses (B.E.AS.T.), to Thermalito Union Elementary School District through Greenpower's national distributor Creative Bus Sales.

Q2FY21 Financial Highlights:

• GPV announced its quarterly results, wherein the company reported a lower top-line of USD 2.835 million, as compared to USD 5.430 million in the previous corresponding period (pcp).
• Gross profit stood at USD 0.883 million, lower than USD 1.392 million in pcp, due to lower revenue.
• Total sales, general and administrative costs stood higher at USD 1.720 million, higher than USD 1.59 million in Q2FY20, due to higher administrative fees, significant increase in office expense and share-based payments costs, partially offset by product development costs, lower transportation costs and travel, accommodation, meals and entertainment expenses.
• Loss from operations before interest, accretion and foreign exchange stood at USD 0.836 million, widened from USD 0.198 million in Q2FY20. Net loss was reported at USD 1.486 million, as compared to USD 0.712 million, a year ago.
• The company reported a cash balance of USD 27.866 million, while total assets stood at USD 43.044 million.

Q2FY21 Financial Highlights (Source: Company Reports)

Risks: The company may witness setbacks from interest rates and foreign exchange. Furthermore, the company imports several raw materials from China and an increase in tariffs may hinder the company’s cost structure and as well as the overall profitability.

Outlook:

The Company would continue to develop and expand sales opportunities and increase its sales backlog. GPV is emphasizing on the completion of production and delivery of several models like EV Stars, BEAST school buses, EV 250s etc.

Stock Recommendation:

The stock of GPV recorded a stupendous return up 1361% so far this year. Also, the auto industry is recovering after a temporary setback on account of COVID 19 Pandemic. Furthermore, the company is planning to expand its assembly and manufacturing capabilities, including “Complete Knock Down” assembly of an EV Star, which is a key positive. The stock soared ~1006% and 117% in the last six months and one month respectively and we believe that the stock went ahead of its fundamentals and we expect a price correction in the coming trading sessions. On the valuation front, the GPV stock trades at an EV to Sales of 9.5x on NTM basis, higher than the industry (Automobiles and Auto Parts) median of 0.8x. Hence, considering the stretched valuation, we recommend a ‘Watch’ stance on the stock of GPV at the closing price of CAD 28.65 on November 20, 2020.

GPV Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Disclaimer

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