Why BMG Resources Could See Massive Gains in 2019

At the time of writing, shares of BMG Resources Ltd [ASX:BMG] are up by 16.67%, to 0.007 cents per share.

Why did BMG Resources Ltd shares do this?

As the company announced at an investor presentation last week, it appears a few investors are buying some shares, ahead of what could become a successful 2019. The company looks undervalued compared to other lithium explorers in Chile:bmg graph

Source: BMG Resources

At current share prices, with around $1.5 million in the bank, BMG Resources has an enterprise valuation (market cap less cash plus debt) of roughly $0.5 million. That’s pretty cheap. The company’s project areas located in Northern Chile’s ‘Lithium Triangle’ stand at over 20,000 hectares.

Some would say the share price is pretty cheap for the potential up for grabs.

Free Report: Economist reveals five stocks to sell today. Download now.

What now for BMG Resources Ltd?

Take a look at the share price action for BMG Resources this year:bmg commsec

Source: CommSec

BMG Resources has been relatively flat all year, until the latest market correction which began in September.

The share price has been pretty weak since that time.

Looking at the story, assuming the overall market holds up, things could turn around for shareholders early next year. Here’s the company’s plan over the next 6–12 months to turn its poor sentiment around:bmg resources

Source: BMG Resources

BMG Resources intends to drill Salar West in the first quarter of 2019. BMG Managing Director, Bruce McCracken, told the market on 23 October:

The Geophysics undertaken at the Salar West Lithium project as part of our due diligence assessment has delivered very encouraging results in what is the world’s best lithium brine province.

This significantly mitigates exploration risk with the results confirming the strong brine potential across a broad area of the project. We are continuing to assess the detail behind the results in order to define drilling targets and undertake 3D modelling of the brine target zones.

The early geophysics results are encouraging. But, as the saying goes, the proof will be in the pudding. If the company taps rich lithium brines sometime next year, the share price could explode higher.

Regards,

Jason Stevenson,
Resources Analyst, Markets & Money

PS: Interested in mining stocks? My new investor report, ‘A Detailed Look into Australia’s Top 10 Mining Stocks’, does exactly what it says in the name. I look at 10 companies that could make you huge money in 2019, and beyond. To download that report free, go here.

 


Jason Stevenson is Markets & Money’s resource analyst. He shares over a decade’s worth of investing and trading experience across resource stocks and commodity futures and options. He originally studied accounting and finance at Curtin University, where he was awarded a first-class honours degree. His professional background stems across high-net-worth, top tier accounting (corporate finance, tax and auditing), and sell-side equities research. Before joining the team at Markets and Money, Jason worked at boutique firms which advised fund managers and high-net-worth clients on where to invest. Whether it’s gold, crude oil, copper or an obscure metal like vanadium, you can rely on an in-depth analysis in Markets and Money. Jason also brings you extensive macro, political and geopolitical analysis from around the world. He leaves no stone unturned when it comes to telling the truth. Jason is also the lead analyst of Gold Stock Trader, a premium service for investors serious about precious metal stocks. Websites and financial e-letters Jason writes for:


Leave a Reply

Your email address will not be published. Required fields are marked *

Markets & Money