10 TOP ASX PENNY STOCKS TO BUY IN FY24

1. Red 5 Limited (ASX: RED)

TEAM VEYE | 14-AUG-2023 ASX – RED

On 8 August 2023, Red 5 Limited (ASX: RED) shared a positive update about its King of the Hills (KOTH) Gold Mine. This mine is a pivotal component of Red 5’s gold mining activities located in the Leonora District of Western Australia. The company’s ongoing underground drilling efforts at the KOTH mine have yielded promising results.

Throughout the period spanning from January 1 to June 30, 2023, Red 5 executed an extensive program of underground diamond drilling, covering a cumulative distance of 19,196 meters. These focused drilling endeavors have produced noteworthy assay results, highlighting significant mineralization in key mining areas within the KOTH mine.

Importantly, Red 5 has achieved a significant milestone by completing grade control drilling for 85% of the KOTH underground mine plan for the fiscal year 2024.

On 26 July 2023, RED released its activity report for the quarter ending on June 30, 2023, outlining notable achievements in both financial and operational aspects. The report highlighted a significant increase in gold production at the King of the Hills (KOTH) Gold Mine, with 61,705 ounces produced in the June quarter, compared to 40,869 ounces in the previous quarter. The all-in-sustaining cost (AISC) for this production was reported at A$1,690 per ounce, showcasing efficient cost management.

Moreover, the company reported quarterly gold sales of 58,960 ounces, resulting in operating cash flows of $50.6 million during the June Quarter. RED also demonstrated improvement in its net debt position, reducing it by $44.5 million to reach $81.9 million as of June 30, 2023.

Cash and bullion holdings were reported at $45.9 million, and a significant portion of the bank debt, amounting to $22.0 million, was successfully repaid during the quarter. The KOTH Debt Facility had an outstanding balance of $127.8 million at the end of the quarter.

Outlook:

In the coming fiscal year, Red 5 Limited has outlined plans for additional underground drilling at the King of the Hills (KOTH) Gold Mine. This upcoming drilling campaign is intended to uncover extensions to the current mining fronts. Despite having conducted a substantial amount of drilling so far, significant portions of the King of the Hills orebody remain relatively unexplored. Red 5 acknowledges the significant untapped potential for expanding the existing Resource and Reserve inventory, which could lead to an extension of the mine’s operational life.

Looking ahead, Red 5 has provided its production guidance for the fiscal year 2024 (FY2024), estimating a production range of 195,000 to 215,000 ounces of gold. The all-in-sustaining cost (AISC) for this production is projected to be in the range of A$1,850 to A$2,100 per ounce.

Investment Rationale:

The company’s net debt position has notably improved, decreasing by $44.5 million to reach $81.9 million as of June 30, 2023. This reduction signifies effective debt management, enhancing the company’s financial flexibility. Moreover, the proactive repayment of $22.0 million in bank debt during the quarter demonstrates Red 5’s commitment to debt reduction. This not only lowers interest expenses but also enhances overall financial efficiency. These strategic actions collectively contribute to a stronger financial foundation, positioning Red 5 for continued growth and success.

Risk Analysis:

Investing in Red 5 Limited (ASX: RED) involves risks including market volatility, operational challenges, regulatory changes, exploration uncertainties, financial health concerns, and environmental/social responsibility.

Technical Analysis:

The stock has maintained the support at $0.160 and is rejecting the downside with price pattern trading above the 14/50-day EMA (Exponential Moving Average) and indicators positioning upside.

Veye’s Take:

The KOTH processing plant has achieved a significant milestone by currently operating at an annualized throughput rate of up to 5.5 million tonnes per annum (Mtpa), marking a substantial 37.5% increase compared to its original nameplate design of 4.0 Mtpa. This achievement underscores the efficiency and capacity enhancements of the processing facility, contributing to enhanced production capabilities. Furthermore, the positive outcomes derived from the ongoing drilling initiatives offer valuable insights into the untapped resource potential within the KOTH Gold Mine. These findings are poised to have a pivotal role in shaping Red 5’s strategic direction for the upcoming fiscal year. The company is well poised to fully unlock the mine’s inherent value, extend its operational timeline, and ensure continuous operational excellence. The combination of increased processing capacity and valuable exploration findings positions Red 5 for sustained growth and success in the mining sector. Veye maintains a “Speculative Buy” on “Red 5 Limited” at the closing price of $0.210 (As of 14 August 2023).

*All Data has been sourced from Company announcements and Refinitiv, Thomson Reuters.

2. PALADIN ENERGY LIMITED

TEAM VEYE | 14-AUG-2023 ASX – PDN

Paladin Energy Limited is an Australian company primarily focused on uranium mining and exploration. Its key asset is the Langer Heinrich Mine in Namibia, where uranium is produced and sold. The company also has exploration projects in Australia, Canada, and holds significant interests in the Michelin and Manyingee uranium projects.

Stock Performance Profile:

(Source: Trading View) PDN Three-Month Performance compared with ASX-All Ordinary Index (XAO) and Energy Index (XEJ)

Synopsis:

Paladin Energy Limited (ASX: PDN) is having high-grade uranium mining and exploration portfolio.

The company is bringing its Langer Heinrich Mine to production again. Strong demand growth for nuclear energy is driving the uranium market.

While there is a primary supply shortage, secondary supplies are declining. Paladin is well funded having a strong balance sheet.

From the Company Reports:

Paladin Energy Limited (ASX: PDN) on 20 July 2023, announced its quarterly activities report for the period ended 30 June 2023 wherein it provided an update on cash flow and activities for the quarter.

The company’s main aim is to return Langer Heinrich Mine (LHM) to production. The project continues on track to commence its first production in Q1 CY2024. It is also remaining on a budget (~US$118M).

The project making steady progress and has been approximately 60% completed.

With over 1,000 personnel on site, the contractor workforce is at an expected peak.

During the reporting period, key work packages progressed including delivery of critical equipment and plant to site inclusive of agitators, thickeners, cyclones, Hydrosort classifiers, prefabricated tanks and tank strakes, and structural steel.

On 7 July 2023, Paladin reported that post completing the process required under the Michelin Joint Venture Agreement, to sell the entirety of the JV on mutually acceptable terms; Paladin is to retain its 75% interest in the Michelin JV. The Michelin JV owns the exploration project of Michelin Advanced in Labrador, Canada.

Paladin had no corporate debt as of 30 June 2023, with cash at the bank at US$126.2 million, thus signifying sufficient available liquidity.

Paladin had disposed of ~390,363 shares in Global Atomic Corporation (TSX: GLO) during the quarter. The gross proceeds realised were US$0.8M.

Business Catalyst:

Paladin has already secured cornerstone offtakes when the uranium market is strengthening. It is actively pursuing to secure further offtake agreements with industry leaders ahead of production, with five agreements already in place in the USA, Asia, and Europe. The company has finalized negotiations on the final outstanding tender award and expects to execute the offtake agreement soon. Paladin is having a low-risk brownfield start with long term growth optionality at a time when uranium inventory levels are fast reducing.

Outlook:

Paladin is striving to obtain agreements prior to production, though varying in duration and pricing, they feature distinct pricing mechanisms, as part of their strategy. Through requests for proposals and off-market discussions, the company continues to engage with the industry’s top-tier counterparties on uranium sales. Partner ADP engineering provides company procurement and engineering services for the delivery of growth project process upgrades to improve operational ability and throughput capacity. The company is also in commercial negotiations with conversion facilities and shipping companies. It is having Life of Mine offtake with CNNC, one of the largest consumers of uranium in the world. With the market-related contract already in place with CNNC, Paladin is well-positioned to benefit from the strengthening uranium market fundamentals.

Technical Analysis:

On the monthly chart, the 50-day Exponential Moving Average (EMA) has acted as a robust support since May 2023. The stock has consistently maintained its price levels at or above this EMA, reflecting strong bullish strength. This suggests that the bulls have effectively prevented the price from dropping further. The formation of “higher highs” on the chart, coupled with the price pattern trading above the 14/50/200-day EMAs and surpassing the middle Bollinger Band, indicates a positive momentum for the stock. Furthermore, the indicators are pointing upwards, signaling a potential for bullish movement.

Looking at the weekly chart, the stock price continues to trade above the EMAs and resides near the upper Bollinger Band. The Relative Strength Index (RSI) at 60 is positioned in an upward direction, which is indicative of a bullish trend. Across different time frames, the price pattern remains above the EMAs and is well-supported by indicators, collectively suggesting a strong bullish momentum in the stock.

Veye’s Take:

Paladin is fast progressing to restart the Langer Heinrich Mine and securing uranium offtake agreements. The company had six offtake contracts worth approximately 18Mlb. This is 48% of the estimated production to CY2030. With shipping companies and conversion facilities ahead of Paladin’s return to production, its marketing continues to progress through commercial negotiations. The analysis of exploration data from the Michelin project in Canada will assist in identifying new drill targets for future exploration programs. Meeting all tenement expenditure commitments ensures the company retains the rights to mining tenements, and ongoing engagement with local communities, government, and native title holders is essential for maintaining positive relationships and social license to operate. These activities can potentially increase the company’s reserves and extend the life of the mine, contributing to its long-term growth and success. Paladin’s ongoing activities can significantly increase its reserves and extend the LOM (life of mine) to 17 years. It has a 10-year history of successful operations. Paladin’s disciplined approach to growth ensures value and delivers future optionality. With a significant global exploration portfolio, it is well-positioned for long-term growth potential. De-carbonization, support for nuclear power, energy security, and geopolitical events are some of the global macro drivers favoring PDN. Veye recommends “Buy” on “Paladin Energy Limited” at the closing price of $0.800 (As of 14 August 2023).

*All Data has been sourced from Company announcements and Refinitiv, Thomson Reuters.

3. MLG OZ LIMITED

TEAM VEYE | 14-AUG-2023 ASX – MLG

MLG Oz Limited is an Australia-based company offering integrated services to mining sites in Western Australia and the Northern Territory. They provide a wide range of value-added services, including bulk haulage, crushing, and screening, aggregate and sand supplies, civil construction, road maintenance, rehabilitation work, vehicle maintenance, machine and labor hire, and end-to-end bulk commodity export logistics solutions. Their expertise spans gold, iron ore, and other base metal clients, making them a crucial player in the mining industry.

Stock Performance Profile:

(Source: Trading View) One-Year Performance of MLG compared with ASX-All Ordinary Index (XAO) and Basic Materials Index (XMJ)

Synopsis:

MLG Oz Limited provides services to gold, iron ore, and other base metal clients.

It offers a range of services under a single contractual framework.

The company’s integrated service offering continues to be in high demand Significant growth in its statutory revenue and statutory Net Profit After Tax.

From the Company Reports:

(Source: Company Reports)

MLG Oz Limited’s HY23 financial results showed impressive growth across various key metrics. The company reported a Statutory Revenue of $175.9 million, a significant increase of $34.0 million compared to the prior corresponding period (pcp).

The largest business division, mine site services, and bulk haulage, experienced remarkable growth, with revenues reaching $150.6 million, up 22.1% from the pcp ($123.4 million in HY2022).

The crushing and screening division also performed well, generating $16.1 million in revenue, a notable increase of 23.2% ($3.0 million) from the pcp.

Export logistics revenues saw a significant boost, rising by 31.1% to $4.9 million, compared to $3.7 million in HY2022.

MLG Oz Limited’s profitability showed a strong performance, with Earnings before interest, tax, depreciation, and amortization (EBITDA) increasing by 16.8% to $16.5 million, compared to $14.2 million in the pcp. EBIT also showed a substantial growth of 72% from the pcp.

The company’s Statutory Net Profit After Tax (NPAT) witnessed impressive growth, surging by 40.5% to $2.6 million from $1.8 million in the pcp.

Additionally, MLG Oz Limited demonstrated robust cash flow from operating activities, increasing from $20.74 million as of 30 June 2022 to $22.29 million.

(Source: Refinitiv, Thomson Reuters) (Graphic: Veye Research)

The Free Cash Flow (FCF) yield also saw a significant increase, rising from 32.8% as of 30 June 2022 to 48.2%. The profitability matrices reflected positively, with Return on Assets (ROA) increasing from 4.1% in the pcp to 4.7%, and Return on Invested Capital (ROIC) reported at 4.1%.

Overall, MLG Oz Limited’s HY23 financial results indicate a successful period of growth and performance, showcasing the company’s strong position in the mining industry and its ability to navigate challenges like material cost and wage inflation pressures.

Forecasted Matrices:

(Source: Refinitiv, Thomson Reuters)

During the forecasted period from FY24 to FY25, the company is expected to witness significant improvements in its financial performance across various key metrics. The EV/Revenue multiple, which measures the company’s valuation relative to its revenue, is projected to decrease from 0.41x in FY24 to 0.38x in FY25. This indicates a positive shift in valuation and suggests potential growth in revenues.

Furthermore, the EV/EBITDA multiple is anticipated to decline from 3.5x in FY24 to 3.16x in FY25, signifying improved earnings and operating performance. Investors may find the company more attractive, as the PE multiple is expected to improve from 6.36x in FY24 to 5.38x in FY25, implying potential growth in stock price relative to earnings.

The Price-to-Sales ratio is expected to reduce to 0.23x by FY25 from 0.25x in FY24, suggesting that the stock may become cheaper relative to its sales revenue. Similarly, the Price-to-Cashflow ratio is projected to decrease to 2.41x by FY25 from 2.8x in FY24, indicating a more attractive valuation in terms of cash flow generation.

The company’s Return on Invested Capital (ROIC) is also expected to grow from 14.4% in FY24 to 17.2% by FY25, indicating an improvement in the company’s efficiency in utilizing its invested capital to generate returns.

These positive forecasts collectively signal a promising future for the company’s financial performance.

Business Catalyst:

MLG Oz Limited had significant new project wins which include having been awarded preferred supplier with Orabanda Mining (ASX. OBM) for a further two years to provide haulage and site services at their Davyhurst operation, and new contract awards to provide civil works for the Gruyere Gold Mine, and haulage services for Bellevue Gold. Moreover, with the sale of its high capacity crushing plants, it has been able to achieve material reduction in debt and financing costs. While it eliminates ongoing care and maintenance costs, potential costs of moving site before redeployment have also been avoided.

Outlook:

MLG Oz Limited has a favourable market position as its well integrated service offering continue to be in strong demand. The company’s existing clients are driving higher throughput rates through their processing facilities which as a result thereof is delivering increased demand for the full range of MLG’s services. MLG is also receiving material inbound enquiry for its integrated offering across both new projects and new customers. The company has improved its profits over the last six months despite continued cost pressures and labour market turnover. The input costs have started to stabilise and with the labour market remaining in line with the last few months it expects a stronger second half.

Technical Analysis:

The “Higher Highs” formation on the monthly chart with price patterns rejecting the downside and trading above the 14-day EMA (Exponential Moving Average) and above the middle Bollinger band indicates bullish potential in the stock.

On a weekly chart, the stock price trading above the EMA’s and rejecting the downside indicates upside trend. The price pattern is trading above the middle Bollinger band and is rejecting further downside.

The price pattern in both the time frames with indicators positioning upside signals bullish momentum in the stock.

Veye’s Take:

MLG is working strenuously to reset the business and optimise its performance in a very challenging operating environment. The efforts have been able to drive an improved performance in the first half of FY2023 as compared to the second half of FY2022. After the full impact of new projects over the next six months, the company is anticipating a material increase in profitability. It aims to further increase its monthly run rate and deliver a materially stronger six months to end the financial year well ahead of FY2022. Although there has been a material increase in the overall cost to deliver its services, the company is now well placed to increase its profitability and grow the business. Its recent trading performance and outlook for FY2023, along with the sale of its high-capacity crushing plants, will strengthen its financial position ensuring that it remains well placed for the future. With very high demand for services the company also has significant growth opportunities with existing clients. Veye recommends a “Buy” on “MLG Oz Limited” at the closing price of $0.670 (As of 14 August 2023).

*All Data has been sourced from Company announcements and Refinitiv, Thomson Reuters.

4. SRG GLOBAL LIMITED

TEAM VEYE | 14-Aug-2023 ASX – SRG

SRG Global Limited is an Australia-based company, which is engaged in engineering-led specialist asset maintenance, mining, and construction services. The operating segments include Asset Services, Mining Services, and Construction. The Asset Services segment includes Specialist Maintenance and Access Solutions. Specialist Maintenance services focused on refractory, oil and gas, industrial assets, and transport and marine infrastructure. Access Solutions includes structural and technical access solutions. The Mining Services segment includes core services of Production Drill and Blast, and Specialist Geotech. Production Drill and Blast includes a range of production drill and blast services working across multiple commodities, including gold, precious metals, and iron ore. The Construction segment includes Civil and Engineering, and Specialist buildings. Civil and Engineering includes specialist engineering, post-tensioning, and construction services for complex structures in key markets, including dams and bridges.

Stock Performance Profile:

(Chart Source: Trading View) YTD (Year to date) performance of SRG wrt ASX 200 (XJO) and Industrial index (XNJ)

Synopsis:

SRG Global Limited is a diversified industrial services company

Delivering record results with robust cash generation.

Strong work in hand with a stronger opportunity pipeline across a wide range of sectors.

Highly scalable business model.

From the Company Reports:

SRG Global Limited (‘SRG Global’ or ‘the Company) (ASX: SRG) on 18 July 2023 announced it having secured a contract with Lendlease on behalf of Exemplar Health / Victorian Health Building Authority (VHBA), is valued at ~$30m

The contract is for the design, supply, and installation of specialist engineered curtain wall facades at the Frankston Hospital Redevelopment located in Victoria. Scheduled to commence immediately, it is expected to be complete in 2024.

On 27 June 2023, SRG Global Limited announced having obtained multiple contracts in Queensland (QLD) and Western Australia (WA) valued at ~$65m.

The Queensland contracts include contracts with Rio Tinto, which will start immediately. Expected to carry on for a period of five years, it includes two one year options to extend. The contract with QAL will also begin immediately and is expected to continue for a three-year term.

On 20 June 2023, SRG Global reported having secured a specialist civil water infrastructure project with Water Corporation WA. The contract to construct an ocean outfall transition tower, associated pipework and other wastewater infrastructure assets will start immediately and is expected to be complete in 2025.

SRG Global, on 15 June 2023, announced that it had secured a specialist facades contract in Sydney valued at ~$40m.

The contract with Lendlease is for the design and supply of specialist engineered curtain wall facades at the One Circular Quay project located at Sydney’s Harbour-front Circular Quay Precinct. Planned to start immediately, it is expected to be accomplished execution in 2025.

The ~$3b One Circular Quay project will incorporate two high-rise towers. The 61-level Tower A is mainly high-end luxury apartments and penthouses with undisturbed views of the Sydney Harbour, Opera House and Harbour Bridge. The 26 level Tower B will be a 220-room luxury Waldorf Astoria hotel, marking the entry of Hilton’s iconic luxury brand into Australia.

SRG will collaborate with Lendlease to implement best practices and innovations in sustainable design, construction, health, and wellbeing, targeting both a 6-star Green Star rating and a Platinum WELL Building Standard rating.

Business Catalyst:

SRG Global has blue chip clients like BHP, Rio Tinto and Queensland Alumina Limited. The company’s winning term contracts with Tier 1 clients showcase its specialist skillset as a trusted partner. The company has $1.2b of new contract wins since the start of the FY23 financial year while continuing to convert its opportunity pipeline. Many of these being long-term, SRG Global is witnessing significant momentum. Moreover, the contract wins being achieved across a diversity of sectors and geographies, position SRG Global well for long-term, sustainable growth.

Outlook:

SRG Global is delivering above market financial performance. The company again upgraded its guidance to a range of $79m to $80m EBITDA for FY23. This included the EBITDA contribution of $4.5m to $5m from the recently acquired Asset Care business for the four month period of 1 March 23 to 30 June 23. The acquisition of ALS Industrial Pty Ltd by SRG Global Ltd brings together two highly complementary businesses, creating significant cross-selling opportunities with existing and complementary customers. SRG is transitioning to recurring earnings, because of the acquisition, with circa 99% of Asset Care’s FY23E revenue maintenance related and some part contracted. The Company continues to perform strongly overall in all three Operating Segments of Asset Maintenance, Mining Services and Engineering & Construction. The Company is well positioned for long-term sustainable growth into the future with a large pipeline of further opportunities and multiple organic levers to grow the business moving forward.

Technical Analysis:

The stock is exhibiting bullish potential on both the monthly and daily charts. On the monthly chart, since February 2022, it has been maintaining its trend line and has not violated its middle Bollinger band as well as 50 EMA (Exponential Moving Average) since then. It is trading above the Ichimoku cloud and its monthly support. It has also come up above 14/21/50 EMA, simultaneously rejecting any further downside. Along with this, the indicators pointing upside on the monthly chart also support the bullish view.

On the daily chart, the stock is moving above its EMAs, while rejecting any further downside from 14 EMA, indicating it in being an uptrend. It is trading above its daily support as well as the Ichimoku cloud while rebounding from the middle Bollinger band. With both daily/monthly charts in unison, the stock can have the potential of continuing bullish momentum.

Veye’s Take:

SRG Global is progressing significantly in the execution of its strategy. The company has strong business fundamentals, excellent cash generation and solid operational delivery for its blue-chip client base. A very strong work-in-hand and improved operating margins reflect the financial strength of the company. SRG Global winning significant project awards, while exhibiting its longstanding relationship clients, is further evidence of its strategy of winning work with key repeat clients. The company’s expected 25% growth in EBITDA in FY23 will help the company register over 50% expected growth in net profit during the same period. At its current market capitalization of $313.70 million, SRG is available for fiscal 2023 with an expected EPS of $0.07. Price to Earnings multiplier of 10x the estimated value is very attractive for a company that has clear revenue visibility and is expected to grow by over 15% – 20% on an annual basis. Veye recommends a “Buy” on “SRG Global Limited” at the closing price of $0.730 (As of 14 Aug 2023).

*All Data has been sourced from Company announcements and Refinitiv, Thomson Reuters.

5. Beam Communications Holdings Limited (ASX: BCC)

TEAM VEYE | 14-AUG-2023 ASX – ADX

On 28 July 2023, Beam Communications Holdings Limited (ASX: BCC) announced its quarterly activity report for the three months ended 30 June 2023 (4QFY23).

The company experienced a remarkable 75% increase in net operating cash inflow, reaching $2.4 million, and a 39% uplift in cash and cash equivalents, totaling $5 million compared to the previous quarter (3QFY23). With a total available funds balance of $6.1 million, including $5 million in cash and $1.1 million in available and undrawn debt facilities, Beam is in a robust financial position.

Beam’s wholly-owned business, SatPhone Shop, saw a substantial 53.1% revenue increase quarter-over-quarter (QoQ) and serves as the largest satellite dealer for Telstra Group Limited (ASX: TLS). Additionally, Beam Equipment sales (excluding ZOLEO) increased by 22% QoQ, while SatPhone Shop sales jumped by an impressive 53% QoQ. The ZOLEO annualised royalties also experienced an 18% QoQ growth, amounting to approximately $870,000.

Net ANZ subscriber numbers showed remarkable growth, with a 23.2% increase QoQ to over 6,200, while annualised royalty payments rose by 18.2% to around $870,000. Furthermore, the total number of global ZOLEO subscribers reached approximately 71,000 by the end of the quarter.

With a 17% QoQ growth in total recurring revenue during 4QFY23, and nearly doubling compared to the previous corresponding period (Pcp), Beam Communications has demonstrated strong momentum and significant growth in its operations.

Outlook:

BCC capitalizes on the robust expansion in the global mobile satellite services sector, positioning itself for substantial growth. The company’s recent 5-year contract worth US$12 million with Iridium Communications Inc (Nasdaq: IRDM) to supply portable satellite hotspots demonstrates its strong market presence and potential.

By 30 June 2023, Beam has already delivered 40% of the contract, outperforming expectations, and is on track to fulfill 80% of the commitment by the end of FY24 to meet the escalating demand. The company has reaffirmed its record FY23 guidance, with projected group revenue of around $40 million and anticipated earnings before interest, tax, depreciation, and amortization (EBITDA) of approximately $4 million.

The ZOLEO Inc. joint venture is also contributing significantly, with an expected total revenue of US$27 million in FY23, out of which $17 million is from subscription revenue. This further adds to Beam’s strong growth prospects and solidifies its position in the mobile satellite services market.

With a successful track record and a favorable market outlook, Beam Communications is well-poised to leverage the bullish trend in the industry and achieve sustained financial success in the coming periods.

Valuation Bias:

With a price-to-earnings ratio (PE) of 29.36x, a price-to-book ratio (P/B) of 1.09x, and a price-to-sales ratio (P/S) of 0.75x, Beam Communications Holdings Limited appears to be reasonably valued.

Risk Analysis:

Market volatility, competition, contractual dependencies, regulatory challenges, and economic uncertainties can impact its performance.

Technical Analysis:

The formation of “Higher Highs” on a monthly chart with indicators positioning upside with price pattern trading above the 14-day EMA (Exponential Moving Average) and above the middle Bollinger band indicates bullish momentum to continue in the medium to long term.

Veye’s Take:

During the reporting period, BCC experienced substantial growth in its subscriber base from Australia and New Zealand, indicating a strong demand for its services in the region. Additionally, the company witnessed growth in its recurring revenue base, reflecting the success of its offerings in the market. The range of unique and innovative solutions provided by BCC further solidifies its position as a prominent player in the global mobile satellite service space.With a strong balance sheet and growing cash flows, BCC is well-equipped to explore and pursue new growth opportunities in the short- to medium-term. This financial strength offers the company flexibility to invest in strategic initiatives and expand its market presence. Overall, BCC’s impressive performance and financial stability bode well for its continued success and expansion in the industry. Veye maintains a “Speculative Buy” on “Beam Communications Holdings Limited” at the closing price of $0.200 (As of 14 August 2023).

*All Data has been sourced from Company announcements and Refinitiv, Thomson Reuters.

6. ADX Energy Limited (ASX: ADX)

TEAM VEYE | 14-AUG-2023 ASX – ADX

On 31 July 2023, ADX Energy Limited. (ASX: ADX) reported quarterly activities for the period ended 30 June 2023.

Quarterly highlights are as follows:

Production details in Vienna Basin Fields and Anshof-3

Sales and Hedging Revenues reported growth of 1% to $3,233,016 for the quarter. Oil Equivalent Production rates increased by 8%, averaging a net 317 BOEPD.

Brent Oil prices dropped by 4%, averaging USD 78.39 per barrel. Gas prices have reduced by 48%, averaging EUR 37.90 per MWh.

Appraisal and Development updates in the quarter ended 30 June 2023 Anshof Field, Upper Austria

Anshof-3 test production is undergoing, at a stable rate, an exceeding reservoir performance.

Anshof development drilling is continuing with planning and procurement for Anshof-2 and Anshof-1 appraisal and development wells.

Anshof field production facility engineering and procurement for early production facility replacement

Exploration update in Upper Austria: exploration licenses for the period ended 30 June 2023.

ADX-AT-I shallow, low-risk gas prospects were developed with artificial Intelligence as per 3D seismic work.

The Anshof Satellite Prospect at GRB has been risk neutralized for assessment and matured for drilling.

Welchau 807 BCFE gas prospect: geotechnical studies support previous work and identify follow-up prospects.

Welchau-1 Well-developed approval is developing towards operations commencement in Q4 2023.

Exploration prospect inventory was upgraded with a 340% increase in the best technical prospective resources for the category of appraisal and low-risk prospects.

Outlook:

On 7 August 2023, ADX Energy Limited reported that its wholly owned subsidiary ADX VIE GmbH has signed an energy investment agreement for the Anshof Field Area in the ADX-AT-II licence with MND in Upper Austria, where in MND will have investment and payment obligations of up to EUR 11.52 million to gain a 30% economic interest in the Anshof Field Area. The following transaction will enhance the development of the Anshof field considering the potential of the field, which has an independently assessed 2P reserves base of 5.2 million BOE that will enable to deliver notable cash flow with the drilling of further wells. The company will get a combined advantage of MND’s substantial funding package along with extensive experience and operating capability across Europe. MND’s participation in exploration drilling opportunities within the company’s exploration licences will further develop industry recognition.

Investment rationale:

The company has good fundamental intrinsic value and foresees growing cash flow in the future.

The company has adequate, meaningful reserves and is projected to develop production growth from the new discovery.

The company has the competitive advantage of having a world-class exploration portfolio in the heart of Europe.

Value-adding complementary renewable energy projects, the Vienna Basin Green H2 project is undergoing an assessment of synergies with the Vienna Basin Solar Project in a matter related to the distribution of renewable electricity to produce green hydrogen energy.

Risk:

The risk of discovery and development in the Anshof field contains minimal risk of an oil prospect at GRB 9.5 mmbbl, which helps create a rapid pathway to further reserves and cash flow.

Technical Analysis:

The stock is trading above its EMAs (Exponential moving average) on the daily time frame. It is moving above ichimoku cloud on the weekly chart with MACD (Moving average convergence and divergence) having crossed over and RSI (Relative strength index) moving up. It is protecting its daily and monthly supports and can have the potential of further bullishness.

Veye’s Take:

ADX Energy Limited secured $1.5 million in loan note funding for the ongoing pre-investment in equipment and services to drill up to 4 wells, as well as engineering and services for the installation of a permanent production facility to replace an early production unit presently in operation at the Anshof-3 production well. The company’s role in Europe is well positioned in the near and long terms. Geothermal, oil, and gas have the potential, with the customer opportunities assessed for feasibility and maintaining investor interest. Oil and gas demand continues to increase as the transition to renewables takes longer than expected. The company reported a cash balance of $2.055 million for the period ended 30 June 2023. Veye maintains a “Speculative Buy” on “ADX Energy Limited” at the closing price of $0.009 (As of 14 August 2023).

*All Data has been sourced from Company announcements and Refinitiv, Thomson Reuters.

7. HORIZON OIL LIMITED

TEAM VEYE | 14-AUG-2023 ASX – HZN

Horizon Oil Limited, based in Australia, is an oil and gas company primarily engaged in petroleum exploration, development, and production. It operates across two distinct segments: New Zealand: This segment focuses on the development and production of crude oil from the Maari/Manaia oil field. It also encompasses the exploration and evaluation of hydrocarbon reserves within the permit area. The oil fields are located offshore in the Taranaki Basin in the Tasman Sea. China: In this segment, Horizon Oil concentrates on developing and producing crude oil from various oil field developments, including Block 22/12-WZ6-12, WZ12-8W, and WZ12-8E. Exploration and assessment of hydrocarbon potential within Block 22/12 are also part of this segment’s activities. Through its operations in New Zealand and China, Horizon Oil plays a significant role in the energy sector by extracting and utilizing petroleum resources from offshore oil fields.

Stock Performance Profile:

(Source: Trading View) One Year Performance of HZN compared with ASX-All Ordinary Index(XAO) and Energy Index (XEJ)

Synopsis:

Horizon Oil Limited (ASX: HZN) is a low cost, cash generative producer.

Record production, revenue and cashflow generation Efficient operations

Increasing profitability

From the Company Reports:

Horizon Oil Limited (ASX: HZN), on 27 July 2023, announced its quarterly report for the period ending June 30, 2023. Reporting an increase of 44% year-on-year in production to 1.9mmbbls, an increase of 42% in net operating cash flow to US$118 million, and an increase of 34% in revenue to US$151 million, the company delivered record production, cash flow generation, and revenue for the 2023 financial year.

Production volumes underwent a 12% reduction on the prior quarter, to 459,885 bbls. While the ‘Maari’ production had a 19% increase, following the successful workover of the MN1 well, it partially offset the expected block 22/12 production decline. Including a record ‘Maari’ lifting in early June of over 515,000 bbls, sales volumes during the quarter were 453,456 bbls.

The company delivered ~A$50 million or US$34.4 million Revenue for the quarter, at an average realized oil price of ~US$76/bbl. Net operating cash flow for the reported quarter was US$26.3 million. For the quarter, cash operating costs of US$18.34/bbl were produced.

Horizon Oil had cash reserves at US$43.6 million, subsequent to the additional ~US$4 million of debt repaid and ~US$16 million in distributions paid to shareholders. After the quarter end relating to June Maari lifting,

It received another US$10.6 million in cash receipts, post quarter end, which was relating to June Maari lifting.

Net cash at 30 June 2023 was US$35.7 million, with remaining debt outstanding of US$7.9 million scheduled to be repaid on 31 July 2023.

Reflecting its commitment to deliver value and because of positive performance, Horizon Oil released dividend of 1.5 cents per share representing a total of $24 million paid to shareholders on 21 April 2023.

Financial Matrices with Commentary:

(Source:Refinitiv, Thomson Reuters)
(Source: Refinitiv, Thomson Reuters)(Grpahic:Veye Research)

In the first half of the year, Horizon Oil Limited experienced a substantial 93% increase in revenue, reaching US$75.7 million (~A$108 million), which includes hedge settlements. This impressive revenue growth was achieved with a net realized oil price of US$94.55 per barrel. Additionally, a further US$11.5 million of Maari revenue was recorded in January 2023 due to deferred lifting. Comparatively, the revenue for the entire calendar year of 2022 reached US$144.5 million, marking an 88% increase compared to the previous year.

The company’s cash operating costs for the half-year were approximately US$16 per barrel, excluding workover costs. This indicates a level of efficiency in cost management.

Horizon Oil Limited reported an EBITDAX (Earnings Before Interest, Taxes, Depreciation, Amortization, and Exploration Expenses) of US$52.2 million for the first half of the year, showcasing a substantial 87% increase in comparison to the prior corresponding period.

As of December 31, 2022, the company held cash reserves of US$40.4 million, with a net cash position of US$24.8 million. This financial strength was further reinforced by an additional US$10.4 million received shortly after the end of the quarter, related to the Block 22/12 November 2022 oil sales.

Business Catalyst:

Horizon Oil continues to invest in production growth. It invested ~US$30 million net in successful WZ12-8E field development. The company is driving production growth to record levels at Block 22/12. Its recent reserves upgrade had total 2P developed oil reserves of 1.24 mmbbls (net) added before subtracting production. It accomplished WZ6-12 workover and infill drilling program successfully with other Block 22/12 wells being matured.

Maari facilities underwent life extension inspections and works in order to enhance Maari value.

Outlook:

Horizon is a low-cost oil producer, and is highly leveraged to oil price and generating strong cashflows. The company holds two producing assets besides non-operated interests in Block 22/12, Beibu Gulf, China (26.95%); Maari project, New Zealand

(26%). With a strong balance sheet (net cash over US$25m), its strong operating cashflow is supported by production growth and higher oil prices. Horizon Oil with a disciplined approach to capital management and continued focus on cost control has returned more than 70% of free cashflow to shareholders in the past 2 years. It is reinvesting remaining funds mainly in low risk, high value production growth opportunities within the Group’s conventional oilfield assets.

Technical Analysis:

The stock is exhibiting positive signals and potential for bullish growth:

Monthly Chart Analysis:

The stock has formed a base, indicating a period of consolidation and potential accumulation by investors.

A solid recovery has been observed, and the stock is trading above the 14-day Exponential Moving Average (EMA), suggesting positive momentum.

The stock is also trading above the middle Bollinger Band, which can be indicative of a sustained uptrend.

The stock’s approach towards the 200-day EMA is significant. If breached and sustained, it could trigger further upward movement.

Weekly Chart Analysis:

On the weekly chart, the stock price is trading above the middle Bollinger Band. This can indicate a potential continuation of the upward trend.

The Relative Strength Index (RSI) positioning upside suggests that the stock has room for further growth before potentially becoming overbought, which aligns with bullish momentum.

The stock’s price movements on both monthly and weekly charts, along with indicators like the RSI and Bollinger Bands, suggest a positive outlook.

Veye’s Take:

Horizon Oil witnessed a strong final quarter for the financial year which delivered a record year for the Company. Its strong production, aided by robust oil prices, realised record revenue of over US$150 million which in turn led to continued strong free cashflow generation. While it had standout production from Block 22/12 for the year, the production at Maari was now back above 5,300 bopd following the successful workover of the MN1 well. With a production growth of 44% to 1.9mmbbls, particularly, from the WZ12-8E field development, the company embraced the outstanding production results from block 22/12. With ongoing workover efforts and sustained production performance in the next 12 months, the company estimates that Maari production will remain strong, providing an opportunity to pursue an extension to the permit post-December 2027 expiry of the license. Veye recommends a “Buy” on “Horizon Oil Limited” at the closing price of $0.155 (As of 14 August 2023).

*All Data has been sourced from Company announcements and Refinitiv, Thomson Reuters.

8. MELBANA ENERGY LIMITED

TEAM VEYE | 14-Aug-2023 ASX – MAY

Melbana Energy Limited is an Australia-based oil and gas company having exploration and development projects in Cuba and Australia. In Cuba, the company holds the Block 9 Production Sharing Contract and operates the Santa Cruz oil field. In Australia, Melbana Energy has projects in the Bonaparte Gulf and the Tassie Shoal area, including the Tassie Shoal Methanol and LNG Project. Additionally, the company holds permits in the Petrel sub-basin in the Timor Sea.

Stock Performance Profile:

(Source: Trading View) One-Year Performance of MAY compared with Australian -All Ordinaries Index (XAO) and Energy Index (XEJ).

Synopsis:

Melbana Energy Limited (ASX: MAY) is drilling the Alameda-2 appraisal well, which is the first of two appraisal wells planned to be drilled off the Alameda pad in the Block 9 PSC area, onshore Cuba. Melbana is its operator having 30% participating interest.

Block 9 PSC is a large onshore area exceeding 2,300km2 in a proven hydrocarbon system.

Melbana has identified 19 structural prospects and leads within the block with an aim to appraise the three independent oil-bearing formations. These formations were encountered during the Alameda-1 exploration executed in 2022.

From the Company Reports:

Melbana Energy Limited (ASX: MAY) (Melbana or Company), which is operator holding a 30% interest in Block 9 PSC onshore Cuba, on 5 July 2023, announced the completion of the testing of the first and shallowest unit of the Amistad interval, marked Unit 1A.

The company is continuing with its preparations to re-commence drilling the 8½” hole to the next core point in Unit 1B at 929 mMD. Following the completion of Alameda-2, the second appraisal well, named Alameda-3, will test the two deeper intervals called Alameda and Marti. The scope of these appraisal wells includes coring, wireline logging, flow testing and quality analysis.

On 4 July 2023, Melbana Energy Limited announced the completion of an extensive review of its licence areas WA-544-P and NT/P87 (Melbana 100%). The company announced having identified a carbonate buildup within the licence areas. The Company named the prospect Hudson and has finished a maiden resource estimate for it using the probabilistic method.

Recent Quarter Highlights:

Melbana Energy Limited introduced a Small Parcel Share Sale Facility on February 20, 2023. This facility targeted eligible shareholders with small holdings of the company’s ordinary shares, valued at less than $500. By allowing these shareholders to sell their shares without incurring brokerage or handling costs, Melbana Energy aimed to reduce administrative expenses. The Sale Facility was offered to over 2,100 shareholders out of the total shareholder base. After the reporting period ended, the facility closed, resulting in the placement of 5.9 million shares and the removal of 1,824 shareholders from the company’s registerThe Sale Facility has been instrumental in reducing costs, simplifying shareholder management, and enhancing operational efficiency for Melbana Energy.

As of March 31, 2023, Melbana Energy Limited reported a total cash on hand of $37.5 million.

Outlook:

Isolated carbonate build ups host some of the world’s largest oil reservoirs, but an untested play type. The Hudson prospect is a carbonate build up located in licence areas WA-544-P and NT/P87 (Melbana 100%) along with the undeveloped Turtle and Barnett oil discoveries. These offshore licence areas are in the Bonaparte Gulf in northern Australia immediately next to WA-488-P having the big Beehive prospect, which is also a carbonate buildup.

This is anticipated to be drilled by a US oil major in 2024. Melbana’s estimate of Prospective Resources (unrisked mean recoverable estimates): Oil Only Scenario: 395 million barrels of oil, Gas Only Scenario: 2,034 billion cubic feet.

Melbana is not exposed to the cost of that exploration well but has contingent cash and royalty interests, respectively, depending upon future choice made by the purchaser and production after a successful exploration well. Melbana desires to farmout some of its 100% interest in the licence areas to fund the acquisition of a 3D seismic survey to further derisk the prospect.

Business Catalyst:

Black oil was found to be present in naturally fractured limestone in two whole rock cores which were taken within the upper portion of the reservoir at separate intervals. After Flow testing operations of Unit 1A over a gross open hole interval of 63 metres, Black oil flowed to surface. A total volume of 40 barrels of oil were recovered at surface and samples sent for laboratory analysis. Early results reveal that the recovered oil is having an API gravity of 11.7° (at standard temperature). This is a quality typical for shallow oil. This type of API and viscosity values are like found in other shallow oil fields in the northern Cuban fold belt where oil in excess of 200 million barrels has been produced over the past 20 years. Since the testing operations for this first and shallowest unit were now complete, results are being assessed.

Technical Analysis:

The stock price of Melbana Energy has experienced an upside breakout on the monthly chart. The price has breached the previous one-year close and high and is currently trading above the 14-day and 50-day EMAs. It is also trading at the 200-day EMA and near the upper Bollinger band. The RSI indicator is at 60, further supporting the bullish momentum.

On the weekly chart, the price pattern is also trading above the EMAs and near the upper Bollinger band. It is approaching a minor resistance level at $0.115, and a break above this level could trigger further upside movement.

The consistent position of the price pattern above the EMAs in both the monthly and weekly time frames, along with the support from the RSI indicator, suggests that there is upside momentum in the stock.

Veye’s Take:

Melbana Energy delivered encouraging results of the first appraisal of the uppermost portion of the Amistad reservoir section. The unit was evaluated whilst drilling through the formation. Although being a good oilfield practice, it had low expectations because of the shallow depth and associated low reservoir pressure and temperature. Therefore, no resource was included from this interval in its estimates of the most likely oil resource estimate for Unit 1. It was discovered that this was typical of the quality of crude found in Cuba at shallow depths. But its unassisted flow to surface from a depth of about 500 metres exceeded the company’s expectations. This notable interval of oil rich fractured carbonate will now need to be taken into account for potential field development planning after completing testing Units 1B, 2 and 3. These are deeper targets for Alameda-2 which the company views as more prospective. After this first appraisal well, which, with multiple encouraging intervals still to be tested, Melbana Energy will commence the second appraisal well (Alameda-3) later this year. Veye recommends a “Buy” on “Melbana Energy Limited” at the closing price of $0.105 (As of 14 Aug 2023).

*All Data has been sourced from Company announcements and Refinitiv, Thomson Reuters.

9. HILLGROVE RESOURCES LIMITED

TEAM VEYE | 14-AUG-2023 ASX – HGO

Hillgrove Resources Limited is an Australian mining company specializing in copper production. They operate the Kanmantoo Copper Mine in South Australia, which includes the Giant, Nugent, and Emily Star Open Pits. The company also has a fully operational ore processing plant and tailings storage facility. In addition to their mining operations, Hillgrove holds exploration licenses spanning approximately 6,150 square kilometers in south-eastern South Australia, with a focus on priority targets such as Stella and North West Kanmantoo located near the main processing plant.

Stock Performance Profile:

(Chart Source: Trading View) Three-Month Performance of HGO compared with Australian - All Ordinaries Index (XAO) and Basic Materials Index (XMJ)

Synopsis:

Hillgrove Resources Limited (ASX: HGO) has focused on copper production from the Kanmantoo Copper Mine in South Australia.

The Company has a strong pipeline of exploration opportunities over more than 6,100 km2 of tenements.

The current year has been very eventful year for those involved in the copper industry in general. The world’s largest mining companies view copper as a critical metal, proven by Glencore’s takeover bid for Teck, Newmont’s bid for Newcrest and BHP’s successful takeover of OZ.

Drilling has returned further multiple high grade zones within wider zones of lower grade material. As such, the potential opportunity to mine underground at Kanmantoo has continued to grow.

Fully permitted and fully funded for a <$30M capex restart

From the Company Reports:

On July 3, 2023, Hillgrove Resources Limited (ASX: HGO) announced the drilling updates at its Kanmantoo Mine Lease situated at Kanmantoo, into the ‘’Emily Star lode system, which is 55 km in South Australia. Over all, four-diamond holes were drilled at the end of May 2023 for 1,395.2 meters of drilling. Drilling has now been completed and all assays have been received.

On June 19, 2023, Hillgrove Resources Limited advised that the management had approved stage 1 development of the Kanmantoo underground copper mine. Stage 1 is projected to deliver 43.5 kt of copper in concentrate over the initial 4-year schedule. The Stage 1 mine plan focuses on two of the nine known mineral lodes on the mining lease. These lodes remain open at depth and along strike, and drilling is already underway to aim at expanding mine life and annual copper production.

(Graphic Source – Company Reports)

A positive investment decision has created a direction for the underground development, which commenced in May. On June 5, 2023, Hillgrove Resources Limited had announced the completion of a Freepoint Placement approved by the foreign investment review board (FIRB), with gross proceeds of approximately $17.2 million received through the issue of 325,000,000 new Ordinary Shares in the Company at an issue price of $0.053 per share. This brings the total proceeds raised to approximately $38 million, which is adequate to achieve the target completion of the underground development and continue mine life expansion drilling.

Business Catalyst:

Hillgrove Resources Limited has a decent Price to Book ratio of 1.95x when compared to the sector median and average. The company’s total proceeds of ~$38 million are sufficient to continue mine life expansion drilling and complete the underground development. The Company is in a very encouraging position to start the mining operation without debt and simply to focus on the delivery of the mine plan and growing the mining inventory. Hillgrove is on track for its first copper concentrate production to occur in the first quarter of 2024. With up to 16,000mt of hedging facilities, the company expects to place the first 6,000mt of AUD copper hedging to protect early revenues.

Outlook:

Hillgrove Resources Limited, after the completion of four drill holes from a surface at Kanmantoo into the Emily Star lode system witnessed the continued intersection of strongly mineralised alteration zones, hosting higher grade Cu-Au breccia zones. The drilling has indicated the occurrence of wide zones of mineralisation in the Emily Star lode system, having higher grade copper-gold zones within. This is similar to the Kavanagh lode system which is the primary focus of the Stage 1 Kanmantoo Underground development. The success of the 2023 drilling at Emily Star confirms that the copper mineralisation continues below the base of the open pit and remains open down plunge and to the north along the strike. The company continued to drill test the mineralised zones below and adjacent to the open pit which returned further multiple high grade zones within wider zones of lower grade material. As a result, the potential opportunity to mine underground at Kanmantoo continued to grow, with the compilation of the Kavanagh and Nugent drilling programs adding a further 1.3M tonnes to the Mineral Resource Estimate base. Furthermore, over 5.2M tonnes of Resources were now classified as either Indicated or Measured (up from 3.7M tonnes), which materially improved the geological confidence of the Mineral Resource Estimate.

Technical Analysis:

The stock has formed a solid base at $0.044 on the monthly chart and is showing signs of recovery from the lows. The presence of a “Bullish Engulfing” pattern in June suggests that buyers are in a strong position to drive prices higher in the medium to long term. The current price pattern is trading above the previous month’s closing price, indicating bullish potential. The RSI (Relative Strength Index) is positioned upwards at 51, further supporting the growth potential.

On the weekly chart, the price pattern is trading above the 14/50-day EMA (Exponential Moving Average) crossover and above the middle Bollinger Band, indicating an upward trend. Both the charts show a positive price pattern, and on the daily chart, the price is trading above the EMAs and near the upper Bollinger Band while rejecting the downside, suggesting bullish momentum.

Overall, the technical analysis across different timeframes indicates a positive outlook for the stock, with potential for further upside movement.

Veye’s Take:

Hillgrove Resources Limited is one of the only near-term new copper producers on the ASX having multiple opportunities to increase resource base, annual production, and mine life through lower-cost underground drilling. The Kanmantoo economic assessment is set to generate a free cash flow of $205 million, an IRR of 231%, an NPV8 of $165 million, and a capital requirement of $25 million. While the Mine life increased to 4 years, with a further 6 kt Cu of defined Mineral Resource Estimate, not yet included in the plan. The underground development that commenced in May 2023 will increase more towards the end of the year with the commencement of mine production. Despite continuing inflationary pressures, the existing infrastructure and close proximity of the mineral lodes have kept the cost at an optimal level of $25 million, making it one of the least capital-intensive copper development projects in the world. Further, the company’s equity funding model has enabled the project to start without debt, leading to increased operational flexibility, ensuring that the mine is developed for maximum value return, rather than geared to meet a debt repayment schedule, thus making it the most optimal funding outcome. Veye recommends a “Buy” on “Hillgrove Resources Limited” at the closing price of $0.070 (As of 14 Aug 2023).

*All Data has been sourced from Company announcements and Refinitiv, Thomson Reuters.

10. CANYON RESOURCES LIMITED

TEAM VEYE | 14-Aug-2023 ASX – CAY

Canyon Resources Limited is an Australian company focused on the development and exploration of bauxite resources. Its primary objective is to expedite the development of the Minim Martap Bauxite project in central Cameroon, which is owned by its subsidiary, Camalco. The Minim Martap project is a global direct shipping ore (DSO) project that has significant potential for development. It is located near the main rail line connecting the region to the Atlantic port of Douala, enabling efficient transportation of the bauxite. The Minim Martap project has an estimated production capacity of up to 6.4 million metric tons of bauxite per year. The project consists of the Makan and Ngaoundal research permits, as well as the Minim Martap permit. Additionally, Canyon Resources’ portfolio includes the Birsok Bauxite Project, which encompasses the Birsok, Mandoum, and Mambal areas. The company operates through various subsidiaries, including Neufco Pty Ltd, Canyon West Africa Pty Ltd, Askia Sarl Pty Ltd, Canyon Derosa Pty Ltd, Canyon Cameroon Pty Ltd, Askia Minerals Sarl, Canyon West Africa Sarl, and CSO Sarl. Canyon Resources is dedicated to advancing its bauxite projects in Cameroon and maximizing their potential as valuable mining assets.

Stock Performance Profile:

(Source: Trading View) Six-Month performance of CAY compared with the ASX-All Ordinaries Index (XAO) and the Australian Basic Material Index (XMJ)

Synopsis:

Canyon Resources Limited (ASX: CAY) is mainly focused on its flagship Minim Martap Bauxite project.

Its wholly owned subsidiary, Camalco Cameroon SA, has completed the application process for the grant of the Mining Permit for development of the Project.

BFS results establish Minim Martap as a robust long-term project, producing some of the highest-grade bauxite in the world for an initial 20 years of mining

Strategic premium placement of ~$12.1m at $0.06 per share

From the Company Reports:

Canyon Resources Limited (ASX: CAY) (“Canyon” or “the Company”) on 26 April 2023 announced its Quarterly activities report for March 2023. Wherein, it highlighted on activities at its projects including its flagship 100%-owned Minim Mart in Cameroon during the quarter.

The Company continues to have positive communication with Cameroon Government regarding granting of the Mining Permit for the development of the Project. It is also continuing discussions with parties aiming for pursuing jointly.

Ever since the release of the Minim Martap Bauxite Project Bankable Feasibility Study (BFS) in June 2022, Canyon was in receipt of strong inbound interest from potential joint venture and strategic partners. The robust economics demonstrated in the BFS, and the mining scheduling highlighted the world-class nature of the Project. The ability of Minim Martap to deliver consistently high-grade bauxite over multiple decades being particularly attractive.

The Company is also progressing with early-stage resource definition work and the identification of long-term Direct Shipping Ore (DSO) options at the Makan Permit, which has not been as extensively explored as the Ngaoundal and Minim Martap Permits.

Business Catalyst:

Canyon, after securing the support of Eagle Eye Asset Holdings Pte. Ltd, ratified the strategic placement of ~$12.1m at $0.06 per share to progress the Minim Martap Project. EEA is a Monetary Authority of Singapore registered single family office based in Singapore. It is having offices in Dubai, and plans to build a strong investment portfolio covering the mining, clean-energy and health technology industries. Importantly, EEA has a long and successful track record in identifying and investing in high-quality projects in Africa. EEA has a long-term vision to develop an integrated bauxite and aluminium value chain from Africa. EEA is a highly attractive, long term strategic partner, with capability to assist Canyon with project funding solutions to facilitate the Minim Martap Project moving towards development.

Outlook:

Canyon Resources Limited had completed its Bankable Feasibility Study, from which the results confirmed that the Project will produce up to 6.4Mt of high-grade bauxite annually over a period of 20 years, reflecting a 28% growth from the Pre-Feasibility Study. Updates have established an Ore Reserve of 108.9Mt, producing high grade bauxite with total Alumina averaging 51.1% and 2.0% average total Silica for the initial 20 years of operation. The project economics got better after optimised rolling stock configuration and scheduling increased rail capacity, that reduced the OPEX significantly from the PFS phase. The 20-year mining schedule covers only 10.6% of the present Minim Martap Resource. Technical studies have recognised opportunities for a substantial future increase in production tonnages. On a gross JV basis, the Project has a pre-tax NPV of US$452M and a Project IRR of 22%. Initial mine life is 20 years and the project payback of 4.1 years. The capital expenditure is US$253M for project development. This also comprises the capital cost of the initial fleet of Company acquired rail rolling stock. C1 operating costs for a 51.1% Al2O3 export product comes to US$23.95. This leads Minim Martap to develop into being competitive in delivering some of the world’s highest-grade bauxite.

Technical Analysis:

On the monthly chart, the stock has formed a base at $0.044 and has maintained its trading position above this level. The recovery from the lower Bollinger Band, along with the price trading near the 14-day Exponential Moving Average (EMA), suggests the bullish potential for the stock.

On the weekly chart, the stock has formed consecutive higher highs over the past four weeks, indicating strength in the bullish trend. It is trading above the 14-day and 50-day EMAs, as well as above the middle Bollinger Band. The upside momentum is further supported by the Relative Strength Index (RSI) being above 55 and showing an upward positioning.

These technical indicators suggest a positive outlook for the stock of Canyon Resources Limited, indicating potential upward movement in the near term.

Veye’s Take:

Canyon signed a Memorandum of Understanding outlining the declaration of intent with the Port Authority of Douala regarding future development of critical infrastructure at the Port of Douala-Bonaberi. Basically, the Port has plans to deliver an efficient operation that caters to the region by becoming a logistics hub for the Gulf of Guinea. The company delivered an impressive Bankable Feasibility Study (BFS) for its flagship Minim Martap Bauxite Project in Cameroon which established the robust nature of the Minim Martap Project as well as the significance of this Tier 1 asset. Moreover, the Company completed the negotiation of the key terms of the Mining Convention for the Minim Martap Project, a significant undertaking by both Canyon management and representatives of the Government of Cameroon. Canyon’s focus had been on the negotiation of the key terms of a Mining Convention and bankable feasibility study for its 100% owned Minim Martap Bauxite Project. The achievement of these main objectives provided significant impetus to the ongoing movement of the Project towards the construction and production phases. The Project is located adjacent to the Camrail rail line which connects the region to the accessible and available Atlantic port of Douala. The rail line is presently not being used to its full potential which along with the existing port of Douala, supports a low capex, low opex solution offering very high grade, low contaminant, seaborne bauxite to market to fuel the large and growing aluminium industry. Veye recommends a “Buy” on “Canyon Resources Limited” at the closing price of $0.067 (As of 14 Aug 2023).

*All Data has been sourced from Company announcements and Refinitiv, Thomson Reuters.

 Disclaimer

Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website www.veye.com.au), and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.

ACN 623 120 865 | ABN 58 623 120 865
Copyrights© 2018 veye