TOP 10 ASX PENNY STOCKS

RPM Automotive Group Limited(ASX: RPM)

TEAM VEYE | 02 MAY 2022

RPM Automotive Group Limited (ASX: RPM) is an Australia-based automotive company. The Company is principally engaged in importing, wholesaling and retailing of tires, mechanical repairs, motorsport apparel and safety equipment, manufacturing and roadside assistance service for the transport industry. The Company operates across multiple sectors of the Australian automotive aftermarket industry, including wheels and tires, repairs and roadside, auto accessories, and motorsport. The Company’s brands include RPM Racewear, Carline, Genie, Air Anywhere, Formula Off-Road, Wildcat, RW Tyres, Fix My Truck, Revolution Racegear, RPM Autoparts, Bell Motorsport Helmets, Alpinestars Racewear, Longmarch, Hans, Tianli, Long March and Genie Headers.

From the Company Reports:

RPM Automotive Group Limited (ASX: RPM) (“RPM” or the “Company”) on 27 April 2022 provided the following market update for the quarter ended 31 March 2022.

Highlights:

  • Growth across all key financial metrics.
  • Strong organic growth across all four divisions, with overall organic revenue growth of 16.2% YOY as of 31 March 2022 – RPM is serving more customers in more markets than ever before.
  • RPM’s all four business units had Revenue and Gross Margin growth with three units also generating double-digit EBITDA growth.
  • RPM upgraded its guidance for FY22 due to the Company’s solid performance in H1 FY22, and strong start to H2 FY22.:
    • Revenue expected to be between $80 million and $85 million as compared to earlier $78m.
    • EBITDA expected between $7.2 million and $8.2 million (prev. >$7m).
  • Successfully completed the acquisition of Safety Dave with sales of $1.6 million from two months of trading as an RPM subsidiary during Q3.
  • Became the official distributor of Stamford Sports Wheels in Victoria and Queensland.
  • Announced two geographic fill-in acquisitions of Victoria Wide Tyre Service and ACT Total Tyres post Quarter end to extend our customer reach and product extension capability.
  • Signed leases for two new tyre service stores in Sydney and Adelaide to extend organic growth.
  • Secured primary debt acquisition facility (up to 2x EBITDA) to facilitate further growth.
  • Sound balance sheet, with net cash of $3.8 million as at 31 March 2022, continuing to support working capital requirements and further growth initiatives.

Q3 FY22 revenue was up 48% to $21.5 million, because of continued demand from its customers for commercial and wholesale passenger tyres, a normalised Formula One calendar, successful integrations of acquired businesses, fleet contract roll-out, cross-channel selling and a solid distribution network.

Strong revenue growth, combined with operational optimisation and disciplined cost management, led to Gross Profit is up 79% to $7 million, and EBITDA up 77% to $2.3 million when compared to Q3 FY21. As a result, the Company grew its Gross Margin by 5.4 percentage points to 32.6%, while the EBITDA margin increased by 1.7 percentage points to 10.5%.

The results achieved during Q3 FY22, along with the continued successful execution of the Company’s expansion strategy and initiation of cross-channel selling strategy has RPM well placed to deliver strong growth in Q4 FY22 and beyond.

RPM Automotive Group Limited on 5 April 2022 announced the acquisition of two specialist tyre businesses – Victoria Wide Tyre Service (“Vic Wide”) and ACT Total Tyres (“ACT Tyres”).

Key highlights:

  • With the acquisition of Victoria Wide Tyre Service and ACT Total Tyres, two specialist commercial and industrial tyre businesses, RPM has expanded its Repairs and Roadside division.
  • Further strengthens RPM’s distribution platform and footprint on Australia’s east coast.
  • Both businesses are well-respected and have experienced management teams that have been retained in the business.
  • Expected to generate a combined $14 million of revenue in FY22, $2 million of EBITDA, and generate an additional $350k in synergies.
  • Strategically aligned acquisitions strengthen RPM’s Network Effect, provide increased vertical integration capability, enable further cost savings and have strong cultural alignment with the RPM Group.
  • Immediately value and earnings per share (EPS) accretive, acquiring both businesses for a consideration of $7.67 million (cash and equity) on a combined 3.8x multiple versus RPM forecast FY22 EV/EBITDA of ~6.2x (before acquisitions).
  • The cash component of these acquisitions will be funded from cash flow and existing credit facilities paid over 36 months.

Relative Valuations:

(Source: Refinitiv, Thomson Reuters)

RPM with its Trailing Twelve Month Key Metrics of P/B at 1.44x compared to Industry P/B at 2.51x, EV/Sales at 0.96x compared to Industry EV/Sales 1.88x sits at a good value proposition.

*Forecasted Twelve Months or NTM (Next Twelve Months): of any financial metrics measure such as EV/Sales, EV/ EBITDA, or P/B, PCF, P/E is the calculation forecasted for the immediate next twelve months from the current date based on projections applied to the revenues, EBITDA etc.

*TTM or Trailing Twelve Months refers to a company’s past 12 consecutive months of performance data from the current date used in financial reporting.

Industry Overview

The Australian automotive aftermarket is large, growing and remains highly fragmented. RPM has some of Australia’s most pre-eminent companies in their respective sectors of the automotive industry. The RPM Group holds the rights to some of the most well known Australian automotive brands with a rich history of association in the sector.

With the motorsport calendar back to normal and the Formula 1 Grand Prix returning to Melbourne after a two-year break, the Company’s Motorsport division is bouncing back with a very strong quarter. In anticipation of strong demand in Motorsport, RPM had prepared off the shelf inventory which allowed it to convert it to strong sales across the Quarter.

Outlook

RPM Automotive Group is on track to exceed its medium-term (3-year) targets and again grow substantially in FY22 versus FY21. With impact of COVID-19 continuing to decline, RPM is strengthening its going-in position for FY23. The Company’s solid cross-channel selling strategy is turning over well for the Group and a larger, faster and more cost-effective distribution capability to support the increased demand for its products.

Technical Analysis:

(Chart Source: TradingView) Technical Chart-Daily Candlestick Price Chart

The stock has formed a base at $0.255 in the month of February 2022. The EMA (Exponential Moving Average) crossover in a positive zone with a price pattern well above it is reflecting upside momentum in the stock. The “Higher Highs” on a daily price chart, with indicators pointing up signal bullish potential in the stock.

The Fibonacci is drawn from a swing high at $0.465 in April 2021, to a swing low at $0.255 in February 2022, the stock has shown retracement of more than 23.6% of the fall.

The 200 day EMA intersecting with the 23.6% Fibonacci level acts as a support and price pattern trading above EMAs and rejecting the downside indicates upside potential in the stock.

Vmoto Limited(ASX: VMT)

TEAM VEYE | 11 APR 2022

Vmoto Limited (ASX: VMT) is a scooter manufacturing and distribution company. It is engaged in development, manufacture, marketing and distribution of electric two-wheel vehicle, which includes electric mopeds and electric motorcycles. The Company’s geographical segments include Australia, China, Europe and Singapore. In China, manufacturing facilities are operated in Nanjing. In Europe, the warehouse and distribution centre are operated in Netherlands and Italy. The Company’s E-Max brand is targeting international business to business (B2B) markets with its products. Its Super Soco, a business to consumer (B2C) brand for which Vmoto holds international marketing rights outside of China. It has supplied samples to a range of B2C and B2B distributors and customers, which includes Austria, Bahrain, Bulgaria, Denmark, Guatemala, Georgia, India, Korea, Rwanda, Malaysia, Russia, Saudi Arabia, Singapore, South Africa, Spain, Switzerland, Thailand, United Arab Emirates, Ukraine and United States.

From the Company Reports

Vmoto enters strategic partnership and investment agreement with leading European automotive entrepreneurs.

Global electric vehicle company Vmoto Limited (ASX: VMT) (Vmoto, or the Company) on 4 April 2022 announced that it had entered into a strategic advisory and investment agreement with Giovanni Castiglioni (Castiglioni) along with a partnership and investment agreement with Graziano Milone (Milone). both well-known and experienced European entrepreneurs, investors and executives in the global motorcycle industry.

FY21 Operational Review

Vmoto Limited on 28 February 2022 announced its unaudited preliminary final results for the full year ended 31 December 2021 (FY21), during which the Company continued strong operational and commercial growth across all sectors (B2C and B2B), driven by increasing demand for the Company’s zero emission1 electric motorcycle/moped products.

Financial Overview for FY21

  • Statutory results
    • Total revenue of $86.2 million, up 41% on FY20.
    • Net profit after tax (NPAT) of $8.0 million, up 120% on FY20.
    • Earnings before interest, tax, depreciation and amortisation (EBITDA) of $10.2 million, up 76% on FY202.
  • Strong positive cash flows from operating activities of $3.8 million.
  • Strong cash position of $18.6 million as at 31 December 2021, up 24% from $15 million as at 31 December 2020.
  • No bank debt as of 31 December 2021.
  • Net tangible assets of $46.0 million on 31 December 2021, up 39% on FY20.

(Graphic Source – Company Reports) International Sales Units

4Q21 Market Update

Vmoto Limited on 31 January 2022 provided the following update on its activities for the quarter ended 31 December 2021 (4Q21), during which the Company again delivered strong operational and commercial performance, due to increasing demand for the Company’s products, particularly its B2B products. 

Highlights

  • 7,410 units in total sold in 4Q21, in line with the Company’s expectations, bringing total unit sales for FY21 to 31,275 units, up 33% on FY20 and up 57% in FY19.
  • Record international unit sales for FY21 of 29,945 units, up 40% on FY20 and up 74% on FY19.
  • 4Q21 witnessed strong positive operational cash flows.
  • Strong net cash position of $18.6 million, with no bank debt as at 31 December 2021.
  • Firm international orders of 12,488 units as at 31 December 2021, providing a very solid runway for FY22 sales.
  • New international distributors were appointed. Discussions were continuing and samples were shared with a number of potential new B2C and B2B customers.
  • Vmoto expanded its partnership with Helbiz (NASDAQ: HLBZ), an intra-urban transportation company headquartered in New York, USA, and will supply 2,000 additional electric mopeds to Helbiz for deployment in the Italian market.
  • Vmoto launched a new VMOTO premium brand and products and exhibited its new and existing range of products at 2021 EICMA, a world class international motorcycle exhibition.

Relative Valuation:

(Source: Refinitiv, Thomson Reuters)

VMT with its key metrics PE(TTM) at 14.07x and PE(NTM) at 11.07x well below Industry PE(NTM) of 13.63x, EV/EBITDA (TTM) at 9.43x compared to Industry EV/EBITDA (TTM) at 9.9x and EV/Sales (TTM) at 1.13x and EV/Sales (NTM) at 1.28x compared to Industry EV/Sales (NTM) at 2.11x is positioned at a good proposition.

*Forecasted Twelve Months or NTM (Next Twelve Months): of any financial metrics measure such as EV/Sales, EV/ EBITDA, or P/B, PCF, P/E is the calculation forecasted for the immediate next twelve months from the current date based on projections applied to the revenues, EBITDA etc.

*TTM or Trailing Twelve Months refers to a company’s past 12 consecutive months of performance data from the current date used in financial reporting.

Financial Metrics:

(Source: Refinitiv, Thomson Reuters)
  • Margin Growth: Operating margins and net margins witnessed growth with net margin improvement of 3.33 % (year on year) to 32 % (December 2021) well above Industry net margins at 3.19%.
  • Strong ROE: ROE improved by 5.72 % (year in year) to 20.29%, well above Industry ROE of 7.25%.
  • Debt To Equity: D/E ratio reduced by 0.68 % (year on year) to 0.85% well below Industry D/E of 12.21%

Outlook

The Company remains focussed on both the B2C and B2B markets. Both of these are showing no signs of slowing. Rather, on the contrary, continue to grow exponentially. COVID-19 led to a substantial increase in the market for food delivery vehicles in particular, with this market continuing to rapidly adapt the use of electric modes of transport, providing strong growth opportunities for the Company.

Technical Analysis:

(Source: TradingView) Technical Chart-Weekly and Monthly Candlestick Price Chart Pattern

On a monthly t/f the stock from its low at $0.050 in 2018 to a high at $0.350 in February 2020 completed Wave 1 of Elliott. The stock then retraced 78.6% of the length and formed 2nd Wave of Elliott. The high of $0.350 has been breached and the stock completed exactly 1.618% of the wave 1 and made high of $0.670. The stock after completing the 4th corrective wave of Elliott by 50% has just initiated with 5th wave of Elliott which will be the impulsive wave of at least 61.8% of the wave 1- wave 3, thus signaling bullish potential in the stock.

On a weekly t/f the stock price is trading at the juncture of EMA (Exponential Moving Average) crossover, with price pattern rejecting the downside and signaling upside potential in the stock.

With both the charts in different t/f’s confirming the bullish trend, the upside potential in the stock is well expected.

Jupiter Mines Limited (ASX: JMS)

TEAM VEYE | 04 APR 2022

Jupiter Mines Limited (ASX: JMS) is an Australia-based mining company. The Company is engaged in operating of the Tshipi Manganese Mine in South Africa and the sale of manganese ore. The Company owns 49.9% interest in Tshipi e Ntle Manganese Mining Limited (Tshipi), which operates the Tshipi Borwa Manganese mine (Tshipi Borwa) in South Africa; and in Australia, the Central Yilgarn Iron Project (CYIP), which includes the Mount Ida Magnetite Project (Mount Ida) and Mount Mason Hematite Project (Mount Mason). The Tshipi Borwa mine is an open-pit manganese mine with an ore processing plant located in the Kalahari Manganese Fields, in the Northern Cape Province of South Africa. The Company’s Central Yilgarn Iron Project (CYIP) area is located approximately 130 kilometers by road northwest of the town of Menzies. The CYIP Consists of Mount Ida Magnetite project and the Mount Mason Hematite DSO project.

From the Company Reports

Jupiter Mines Limited (ASX: JMS) (Jupiter, or the Company, and together with its subsidiaries, the Group) on 31 March 2022 provided the following activities report for the quarter ended 28 February 2022.

Highlights

  • 3 million tonnes were sold and 3.7 million tonnes produced for FY2022 (FY2021: both 3.4 million tonnes). FY2022 EBITDA $139.1 million and NPAT $85.7 million (FY2021: $206.3 million and $134.9 million, respectively).
  • No LTI’s in the quarter, TRIFR is 0.95 (Q3: 0.98).
  • February quarter achieved graded ore mining of 244,259 bcm (Q3: 255,036 bcm).
  • Overall total in-situ movement for the February quarter was 2.3 million bcm (Q3: 2.9 million bcm), 8% behind the target (adjusted for rehandle).
  • On land logistics, 9% behind target for the year due to continued rail outages, delays; low grade sales suspended.
  • High grade production exceeded the target for the year, with 720,730 tonnes (Q3: 804,137 tonnes) achieved over the quarter (775,114 tonnes overall production) (Q3: 909,510 tonnes).
  • Jupiter’s attributable cash balance is $75 million at end of the quarter (Q3: $76 million).

For the financial year, Tshipi ended up 1% ahead of the target for graded ore mining and 5% behind on total in-situ mining movement (rehandle accounted for 0.52 million bcm which is not included in total mining movement). Tshipi’s operational improvement program with mining contractor Moolmans has continued to show progress with Q4 total movement improving over Q3.

Discussions have commenced in the quarter with mining contractor Moolmans in regard to production profiles over the coming term of the contract and the possibility of new equipment to aid in the overall performance. These have been positive and are expected to be concluded in the next quarter.

The focus has continued on waste stripping in the barrier pillar with both in-situ and ramp rehandle material a focus in February. This has now exposed a large block of graded ore which is available to Tshipi over the next year and can be readily mined as opportunities arise in the market. Mining will continue at the life of mine strip ratio.

Bulk freight rates have continued to decrease through most of Q4, however, Jupiter noted more volatility in the freight market recently following Russia’s invasion of Ukraine. Manganese ore stocks at main Chinese ports continued decreasing through the quarter following the trend of the preceding 12 month period due to the strong global demand from downstream alloy and steel mills, as noted below. This resulted in more manganese ore being exported from main producing countries to regions outside of China.

Value Proposition:

  • P/B vs Sector JMS is at a good valuation based on its P/B at 1.11x compared to Sector average P/B at 17.65x and Index average P/B at 6.23x.
  • P/E vs Sector vs Index: JMS is at a good valuation based on its P/E at 7.76x compared to Sector P/E at 189.5x and Index P/E at 45.19x.
  • ROE vs Sector: JMS is at a good proposition based on its ROE at 15.32% compared to Sector ROE at –57.53%.
  • Dividend Yield vs Sectors vs Index: JMS is at a good proposition based on its dividend yield of 9.62% compared to Sector dividend yield of 6.33% and Index dividend yield of 5.27%. (Source: Refinitiv, Thomson Reuters)

Relative Valuation:

(Source: Refinitiv, Thomson Reuters)

JMS with its next twelve months key metrics of P/E at 6.5x compared to Metals and Mining industry at 8.4x and Basic Materials Sector at 9.3x, P/B at 1.1x compared to Industry and Sector at 2x and 1.9x, Dividend Yield of 15% compared to Industry and Sector at 2.7% is positioned at a good value proposition.

*Forecasted Twelve Months or NTM (Next Twelve Months): of any financial metrics measure such as EV/Sales, EV/ EBITDA, or P/B, PCF, P/E is the calculation forecasted for the immediate next twelve months from the current date based on projections applied to the revenues, EBITDA etc.

*TTM or Trailing Twelve Months refers to a company’s past 12 consecutive months of performance data from the current date used in financial reporting.

Peer Analysis:

(Source: Refinitiv, Thomson Reuters)

JMS with P/E at 7.76x and P/B at 1.22x, with zero debt and ROE of 15.2% sits well above its peers.

Outlook

The manganese market was stable for most of the quarter, with prices generally moving within a narrow range. The market started strengthening in the latter half of February 2022, after the Chinese Spring Festival and strong restocking by alloy plants and continued to strengthen through most of March 2022. The high-grade ore market was supported by reduced supply from producers and reduced availability at the port. The continued strong demand for high-grade ore led to a price increase in February and March 2022. The downstream steel market in China showed a promising recovery in Q4 from the reduced levels seen in Q3 and as a result increased manganese alloy production in Q4, led support to manganese ore consumption and the market in general. Industry sources are forecasting 2022 (calendar year) crude steel production in China to be largely in line with 2021 production of 1.03 billion tons. Monetary policy and easing financing restrictions should promote growth in the Chinese economy in 2022.

Technical Analysis:

(Chart source: Trading View) Technical Chart: -Daily and Monthly Candlestick Price Chart Pattern

On a long term chart, the stock from its all-time high at $0.430 has remained in bearish territory with pullbacks in between. The stock has shown signs of reversal in the month of December 2021, the December month candle closing with a “Bullish Engulfing “pattern. The “Higher Highs” formation in the month of February- March 2022, signals buyers’ strength in pushing prices further on the upside. At the current juncture, the price is trading above the 14 day EMA (Exponential Moving Average). The retracement of more than 23.65% of the total fall, with a price pattern rejecting the downside signals bullish potential in the stock.

On a daily price chart, the stock price is trading well above the middle Bollinger band and the price pattern closing with downside rejection, and indicators pointing up signals bullish potential in the stock.

With charts on two different t/f signaling upside potential in the stock, the upside price move in the near term can be well expected.

Fenix Resources Ltd (ASX: FEX)

TEAM VEYE | 28 MAR 2022

Fenix Resources Limited (ASX: FEX) is an Australia-based company engaged in exploring, developing, and mining mineral tenements in Western Australia. It focuses on its 100% owned flagship Iron Ridge Iron Ore Project. The Company operates through two segments: Iron Ridge Project and Trucking Joint Venture. The Iron Ridge Iron Ore Project is located approximately 600 Kilometers north-northeast of Perth and approximately 67-kilometre northeast of the township of cue in the Murchison region. The Company holds three licenses (L20/83, L20/84, and L20/85) in Iron Ridge Iron Ore Project.

From the Company Reports

Fenix Resources Limited (ASX: FEX) on 10 March 2022 announced its half yearly results for the period ended on 31 December 2021.

Highlights

  • Revenue of $114.6m drives Operating Profit before tax of $19.9m.
  • Net Profit after tax of $14m.
  • Outstanding production performance at the Iron Ridge Mine in WA, with total iron ore sales of 698,000 wet metric tonnes in the period (wmt), comprising 386,000wmt of lump and 312,000wmt of fines.
  • C1 Cash costs of $90.52/wmt in line with expectations.
  • The average price received of A$116/t FOB (US$126/t on a CFR Basis and US$92/t FOB).
  • Iron Ridge achieved cumulative sales of 1 million dry metric tonnes on 1 December 2021.
  • Cashflow from operations of $14.3m before mine development expenditure of $5m and exploration costs of $100,000.
  • Cash of $54.6m on 31 December 2021 after paying $24.1m in dividends during the period.
  • Strong outlook for positive full-year results based on current high spot iron ore prices and ongoing excellent performance across the Fenix business.
  • Dividend policy reaffirmed with a decision on a final dividend for the current financial year to be made in September.

Fenix secures 100% ownership of iron ore rights over Scorpion’s Pharos project

Fenix Resources Limited on 9 February 2022 announced that it had executed a Deed of Amendment agreement with Scorpion Minerals Limited (Scorpion) (ASX: SCN) in relation to tenements E20/953 and E20/948 (currently 100%-owned by Scorpion) (together with the Pharos Project Tenements).

Highlights

  • Fenix has executed a new agreement with Scorpion which accelerates and expands the previous Farm-In agreement for the iron ore rights of the Pharos Project.
  • Pharos tenements are contiguous to Fenix’s flagship Iron Ridge Project.
  • Under the new agreement, Fenix has secured a 100% interest in the Iron Ore Rights, free from encumbrances, of the Pharos Project tenements for the life of the tenements.
  • Consideration to be paid by Fenix to Scorpion consists of:
  • Upfront Consideration of 4 million ordinary shares in Fenix; and
  • Deferred consideration of:
  • 5 million Fenix ordinary shares on the delineation of an inferred resource of at least 10Mt Fe, or an indicated and/or measured resource of at least 1Mt Fe; and
  • 5 million Fenix ordinary shares on the first shipment from Pharos Project tenements.
  • Fenix and Scorpion have agreed to collaborate on future exploration and mining activities.

Fenix Resources Limited on 21 January 2022 reported on its activities during the December 2021 quarter, in which the Company shipped a record 357,000 tonnes of high-quality iron ore from its Iron Ridge project in Western Australia’s Mid West.

Highlights

  • Six shipments totalling 356,710 wet metric tonnes (wmt) of iron ore from the Iron Ridge Project in Western Australia were sold during the December 2021 Quarter, consisting of 188,391 wmt of lump and 168,319 wmt of fines.
  • The average price received was US$55.96 (~A$77) per dry metric tonne (dmt) FOB, which is equivalent to US$89.50/dmt (~A$123/dmt) CFR. Received prices were adversely impacted by quotation period price adjustments from the previous quarter that amounted to US$4.6m or US$13.48/dmt (~A$19/dmt).
  • C1 FOB cash costs for the quarter were A$94.09/wmt shipped.
  • Cash and receivables as of 31 December 2021 of $60.8m which consisted of cash of $54.9m and a receivable of $5.9m (US$4.2m) relating to a shipment dispatched in late December 2021 but paid for in early January 2022; Cash balance is after deducting $24.1m in dividend payments made in the quarter.
  • Fenix commenced delivering into hedge contracts from October 2021 at the rate of 50,000t a month for 12 months and at a fixed price of $230.30/dmt. Cash settlement under the hedge contracts occurs 10 days after the end of each month with a total of approximately A$8m received for the two contracts (October and November) settled during the quarter.
  • Stronger March 2022 quarter anticipated due to recent rises in iron ore price, reduced freight rates and high likelihood of quotation period adjustments.

Value Proposition:

  • P/E vs Sector: FEX is at a good valuation based on its P/E at 1.91x compared to Sector average P/E at 10.54x.
  • P/B vs Sector: FEX is at a good valuation based on its P/B at 1.85x compared to the Sector average P/B at 6.54x.
  • ROE vs Sector: FEX is at a good valuation based on its ROE at 115.8% compared to Sector ROE at 3.28%.

Relative Valuation:

(Source: Refinitiv, Thomson Reuters)

FEX with its trailing twelve months key metrics of P/E (TTM) at 1.91x and EV/EBITDA at 0.89x and P/B at 1.85x is positioned at a good value compared to Industry median  P/E(TTM) at -10.94x and EV/EBITDA(TTM) at -10.36x and P/B(TTM) at 2.27x.

Earnings are forecasted to grow at a CAGR of 15.3% between FY22-FY26.

*Forecasted Twelve Months or NTM (Next Twelve Months): of any financial metrics measure such as EV/Sales, EV/ EBITDA, or P/B, PCF, P/E is the calculation forecasted for the immediate next twelve months from the current date based on projections applied to the revenues, EBITDA etc.

*TTM or Trailing Twelve Months refers to a company’s past 12 consecutive months of performance data from the current date used in financial reporting.

Peer Analysis:

(Source: Refinitiv, Thomson Reuters)

FEX with P/E at 1.91x Debt to Equity at 2.6% sits at a good value proposition compared to its peers, providing Return on Average Common Equity of 141.8%.

Financial Metrics:

(Source: Refinitiv, Thomson Reuters)

Margin Growth: Operating margins and net margins witnessed growth with net margin improvement of more than 99% to 42.83% well above Industry margins at 2.97%.

Strong ROE: ROE improved by more than 99 % (year in year) to 115.8%, well above Industry ROE of 11.81%.

Outlook

Fenix secured 100% ownership of the iron ore rights over a vast area of highly prospective ground in and around its existing mine. The new agreement with Scorpion has several advantages for Fenix. The earn-in structure now has greater clarity for both parties, Fenix has secured the sole and exclusive right to explore for iron ore, and its agreement to collaborate in the future means Fenix will enjoy Scorpion’s support for any mining licences, miscellaneous licences or other licence applications required by Fenix to expand its operations. Fenix can now explore with confidence that any commercially viable iron ore deposit it defines can be processed and mined for the benefit of Fenix using its existing infrastructure and capabilities.

Technical Analysis:

(Chart source: TradingView) Daily and Weekly Candlestick Price Chart Pattern)

The stock from its all-time high at $0.455 in the month of July 2021, encountered a bearish trend and dropped more than 50% from its high. The stock has formed a base between $0.200-$0.240 and made a significant upside move. At the current juncture, the price is trading in close conjunction with EMAs (Exponential Moving Average) crossover with major resistance at $0.285. The indicators pointing up to signal the upside move in the near term.

On a daily chart, the stock is testing the 200 day EMA and managed to close above it, signalling bullish trend strength. RSI (Relative Strength Index) pointing up further supports the bullish view on the stock.

With both the charts confirming the upside move, the stock is expected to witness its growth potential in the near to medium term.

Infinity Lithium Corporation Limited (ASX: INF)

TEAM VEYE | 21 MAR 2022

Infinity Lithium Corporation Limited (ASX: INF) is an Australia-based mineral company that is focused on developing its 75% owned San Jose Lithium project in Spain. The Company’s integrated industrial project is focused on the production of battery-grade lithium chemicals from a mica feedstock. The San Jose project provides an essential component in the European Union’s development of a vertically integrated lithium-ion battery supply chain. The San Jose project is located in the mining friendly, western Spanish region of Extremadura and is in proximity to the town of Caceres. The project can be reached by high quality multi-lane sealed highway. The project is located approximately two and a half hours west of Madrid by car. San Jose project also delivers battery grade lithium hydroxide, utilizing the sulphate-roast, water leach flow sheet common to other European lithium developer.

From the Company Reports

Infinity Lithium Corporation Limited (ASX: INF) (‘Infinity’, or ‘the Company’) on 10 February 2022 announced the production of increased quantities of battery grade lithium chemicals from the completion of metallurgical test work from the San José Lithium Project.

Highlights

  • Successful scaled-up production of battery grade lithium carbonate & hydroxide as part of Feasibility Study.
  • Retention of samples of dual end products for verification purposes and advancement of offtake discussions.
  • Tranche 3 funding under the Project Agreement is due upon finalisation.
  • Provisional patents covering the novel aspects of the sulphate roast process flowsheet to be advanced.
  • Successful production of battery-grade lithium hydroxide marks the end-point of the test work program pursuant to the agreement with EIT InnoEnergy.

Quarterly Activities Report

Infinity Lithium Corporation Limited on 28 January 2022 announced its Quarterly Activities Report for the period ending 31 December 2021.

Highlights

San José Lithium Project

  • Fundamental realignment of the Project through the delivery of an Integrated Underground Scoping Study which delivered:
  • Outstanding financial outcomes aligned to positive environmental impacts and societal benefits.
  • Compliments ongoing technical studies and results of the PreFeasibility Study.
  • Progression and submission of writ regarding the status of Investigation Permit Valdeflórez in the Contentious-Administrative Court in Cáceres.
  • Positive Court Decision for San José on rehabilitation and restoration in the Contentious-Administrative Court in Cáceres.

Commercial

  • Infinity and Thyssenkrupp BU Mining enter MoU to assess Green Hydrogen at San José.
  • Infinity Greentech applied for provisional patents on next generation processing technology.

Corporate

  • Available cash as of 31 December 2021 of A$18.71 million.

GreenTech Broadens Test Work Scope

Infinity Lithium Corporation Limited and its wholly owned subsidiary Infinity GreenTech Pty Ltd (‘Infinity GreenTech’) on 13 December 2021 advised further progress in test work following the successful recoveries from lithium micas and the completion of stage 1 open circuit test work.

Highlights

  • Test work program on schedule with locked cycle test work underway following the good recoveries of lithium from open circuit test work on San José lithium micas.
  • Accelerated pilot-scale development commencing with major equipment orders lodged with preferred suppliers.
  • Scope of test work will be broadened to assess the application of the processes to other lithium-containing materials.
  • Potential to unlock value for the exploitation of comparatively small-scale resources through on-site processing.

MoU: Infinity & Thyssenkrupp BU Mining to Assess Green Hydrogen at San José

Infinity Lithium Corporation Limited and wholly owned subsidiary Infinity GreenTech Pty Ltd on 6 December 2021 announced a collaboration with thyssenkrupp Industrial Solutions AG Business Unit Mining (‘tk BU Mining’) to assess the potential to use green hydrogen to power the lithium chemical conversion process.

Highlights

  • MoU with global leading engineering and industrial group thyssenkrupp Industrial Solutions AG BU Mining.
  • San José in global leading first project to assess the potential to use green hydrogen to power the lithium chemical conversion process.
  • The potential application to San José Lithium Project and the advancement of Infinity GreenTech technologies.

Value Proposition:

  • P/E vs Sector: INF is at a good valuation based on its P/E at 15.18x compared to Sector P/E at 177.93x.
  • P/B vs Sector: IMA is at a good valuation based on its P/B at 2.29x compared to Sector P/B at 15.34x.
  • ROE vs Sector: IMA is at a good valuation based on its ROE at 16.57% compared to Sector ROE at -61.59%.

Peer Analysis:

(Source: Refinitiv, Thomson Reuters)

INF with P/B at 2.29x and P/E at 15.18x and zero debt and ROE of 16.6% sits well above its peer groups.

Financial Metrics:

(Source: Refinitiv, Thomson Reuters)

INF witnessed strong margins with Net margins of 923.1%, growth of more than 99% compared to Industry margins at 12.18%. ROE growth of more than 99% to 16.57% compared to Industry ROE of 10.76%.

Outlook

Infinity Lithium Corporation Limited had delivered a Scoping Study for an Integrated Underground Mine and Lithium Hydroxide production facility at the San José Lithium Project. The outstanding financial outcomes from the Study are aligned to positive environmental impacts and societal benefits with increased levels of employment from prior technical studies. The Scoping Study was completed to highlight the viability of developing the underground mine and the associated production of battery grade lithium hydroxide at San José.

Technical Analysis:

(Chart source: TradingView) Technical Chart-Daily and Monthly Candlestick Price Chart Pattern

On a long term chart, the bearish trend in the stock, since November 2021, has taken support at 50 day EMA (Exponential Moving Average) and trading well above the February 2022 closing, signaling bullish potential in the stock. The stock is trading exactly at the July 2021 high. The minor resistance at $0.160 once breached can trigger stock upside. On a daily chart the “Higher Highs” with price trading above the 14 day EMA and managing to trade at 50 day EMA, with indicators holding in the positive zone, represent bullish trend strength.

With both the charts signaling bullish momentum, the upside move in the near term is expected.

Image Resources NL 

TEAM VEYE | 14 MAR 2022

Image Resources NL is an Australia-based mineral sands focused mining company. The Company is engaged in operating an open-cut mine and ore processing facility at its zircon-rich Boonanarring Project. The project is located approximately 80 kilometers (km) north of Perth in the North Perth Basin. The Boonanarring Project consists of open pit mine and wet concentrate plant (WCP). The project produces heavy mineral concentrate (HMC), which is exported to international markets through the port of Bunbury. The Atlas Project is located approximately 90 km north of Boonanarring. The project is a pit mine. Its mineralization extends from surface to 16 meters (m) depth and has an average thickness of 3.5 m and a maximum thickness of 12 m. The Company owns mineral sands tenements in the Eneabba mining district located 275 km north of Perth in Western Australia. The tenements contain approximately 6.3 million tonnes total heavy minerals (THM).

(Chart Source: Trading View) IMA outperformed the Australian Market index and S&P/ASX 200 Materials Index with one year return of 78.79%.

From the Company Reports

Image Resources NL (ASX: IMA) (“Image” or “the Company”) on 11 March 2022 provided a Mineral Resources update on seven of the eight projects associated with the Company’s recent strategic acquisition of a package of tenements located in the historic Eneabba mineral sands mining district in Western Australia, located 275km north of Perth.

Highlights:

  • 199 million tonnes total Mineral Resources at 2.8% total heavy minerals.
    • 137 million tonnes (69%) in JORC Measured and Indicated categories.
    • Image’s total Mineral Resources accessible by dry mining triples to 284 million tonnes.
  • 5 million tonnes contained heavy minerals.
    • Image’s total contained heavy minerals accessible by dry mining doubles to 11.0 million tonnes.
    • Image’s current production of heavy mineral concentrate is approximately 0.3 million tonnes per annum.
  • 84% valuable heavy minerals (“VHM”) within the mineral assemblage.
  • 19% zircon plus rutile in total heavy minerals.
  • Mineralisation located from the surface in some places with a low overall average strip ratio.

Boonanarring annual Ore Reserve Update

Image Resources NL on 11 March 2022 provided an annual update of Ore Reserves at its 100%-owned, high-grade, zircon-rich Boonanarring and 100%-owned, high-grade Atlas mineral sands projects located in the infrastructure-rich North Perth Basin in Western Australia. This update is presented as at 31 December 2021 to align with the Company’s calendar year reporting period.

  • Boonanarring Ore Reserves of 3.9Mt at 7.1% THM and 19% zircon in the HM.
  • Atlas Ore Reserves unchanged at 9.5Mt at 8.1% THM and 11% zircon in the HM.
  • Total Ore Reserves at Boonanarring and Atlas stand at 13.4Mt at 7.8% THM and 13% zircon in the HM.

Image Resources NL on 31 January 2022 announced the quarterly activities report for the period ended on 31 December 2021.

Increased demand for mineral sands commodities, along with supply constraints, is continuously pushing commodity prices to higher levels, effecting positively the overall performance of the Company. IMA witnessed increased cash flow and profitability in 2H 2021 from mining operations at its 100%-owned, high-grade, zircon-rich Boonanarring mineral sands project.

Value Proposition:

  • P/E vs Sector: IMA is at a good valuation based on its P/E at 11.9x compared to Sector P/E at 229.59x.
  • P/B vs Sector: IMA is at a good valuation based on its P/B at 3.13X compared to Sector P/B at 10.14x.
  • ROE vs Sector: IMA is at a good valuation based on its ROE at 26.03% compared to Sector ROE at -19.23%.

Peer Analysis:

(Source: Refinitiv, Thomson Reuters)

IMA with D/E of 0.4% and ROE of 26.03% and P/B at 3.13x sits well above its peer groups.

Outlook

The total combined Ore Reserves for Boonanarring and Atlas are 13.4Mt at 7.8% THM. Boonanarring is one of the highest-grade, zircon-rich, mineral sands projects in Australia. The project was constructed and commissioned on-time and on-budget in 2018. Production of HMC commenced December 2018 and ramped-up to exceed name-plate capacity in only the second month of operation.

Technical Analysis:

(Chart source: TradingView) Technical Chart-Weekly and Monthly Candlestick Price Chart Pattern)

On a monthly price chart, the stock is forming “Higher Highs” and trading well above the EMAs (Exponential Moving Average). The minor resistance of $0.305 once breached will trigger stock to move further upside. The bullish momentum is well built up, with daily closing at $0.295, well above the July 2019 close of $0.255. The stock had been trading in a band for the past year and is now showing strong bullish momentum and has breached the band, well supported by volumes. The Indicators RSI (Relative Strength Index) and MACD (Moving Average Convergence and Divergence) crossover in a positive zone signals bulls well intact and pushing prices further upside.

On a weekly price chart, the Fibonacci is drawn from swing high at $0.305 in July 2019 to low at $0.120 in March 2020, the stock has retraced more than 78.6% of the fall with price pattern maintaining support at EMAs and rejecting the downside.

With both the charts signaling bulls well intact and taking control over sellers, the stock is expected to witness the upside potential in the stock in the near to medium term.

Red River Resources Ltd (ASX: RVR)

TEAM VEYE | 07 MAR 2022

Red River Resources Limited (ASX: RVR) is an Australia-based company, which is engaged in mining business. The Company’s projects include Thalanga Operation and Hillgrove Gold Mines. The Thalanga Operation is located approximately 60 kilometers South West of Charters Towers in Central Queensland, Australia. It consists of approximately 650 kilotons per annum capacity milling facility, which produces separate copper, lead and zinc concentrates. Thalanga Far West is located approximately 500 meters from the Thalanga Mill. The minerals contained in the massive sulfide mineralisation are chalcopyrite, galena and sphalerite. It also contains material quantities of silver and gold. The Liontown polymetallic volcanogenic hosts massive sulfide deposit is located 40km southwest of Charters Towers in North Queensland. The Hillgrove Gold Mine is located 30 kilometers from Armidale in New South Wales. It has produced approximately 730,000 ounces of gold, 50,000 tons of antimony as metal.

From the Company Reports

Red River hits more high-grade at Liontown, adding the potential for resource growth

Red River Resources Limited (ASX: RVR) on 22 February 2022 announced high-grade polymetallic results from a multipurpose RC drilling program at Liontown, part of its Thalanga Operation in Qld, which have rapidly increased the knowledge of the oxide gold, Gap and Western footwall.

Liontown contains a sulphide Mineral Resource of 4.1Mt @ 0.6% Cu, 1.9% Pb, 5.9% Zn 1.1 g/t Au and 29g/t Ag for 12.7% Zn Eq.

Summary:

  • Final results received from Red River’s successful reverse circulation (RC) drilling program at Liontown.
  • Red River will continue resource delineation and extensional drilling over the next 12 months.

RVR hits 14.5m @ 3.0 g/t gold and 1.1% antimony at Hillgrove

Red River Resources Limited on 3 February 2022 announced the results of four holes at the Hillgrove Gold mine in NSW.

Highlights:

  • Further high-grade intercepts from four holes at Eleanora-Garibaldi at Red River’s Hillgrove Gold Project, NSW.
  • Results include broader mineralised zones which build confidence for the Hillgrove operations:
  • 5m @ 3.0 g/t Au and 1.1% Sb from 22.5m downhole (ELG164).
  • 0m @ 0.6 g/t Au and 0.1% Sb from 131.0m downhole (ELG161).
  • 0m @ 0.6 g/t Au and 0.2% Sb from 7.0m down hole (ELG163).
  • RVR has eight holes completed awaiting assays and two rigs continue drilling at Hillgrove.

The planned drilling program at Eleanora-Garibaldi had been completed and the deposit remains open; drilling at Sunlight and Cosmopolitan was continuing. A further seven holes had been completed and were awaiting assays; results will be announced when they are received.

RVR hits 86m @ 2.3% Zn Eq from a surface at Cougartown

Red River Resources Limited on 20 January 2022 announced results from reverse circulation drilling at Cougartown, Cougartown West and Max Cu-Au exploration prospects near its Liontown Project, part of its Thalanga Operations in north Queensland.

Summary:

  • RC drilling identifies mineralisation at Liontown satellite prospects – Cougartown, Cougartown West and Max Cu-Au.
  • Drilling was being planned for Max Cu-Au East and other satellite targets around Liontown that may increase mill feed to Thalanga.
  • Liontown drill program continues to focus on Mineral Resource delineation and extension.
  • RVR is developing Liontown as the third deposit to be mined at its Thalanga Operations.

Quarterly Activities Report for the period ending 31 December 2021

Quarter Highlights:

  • Thalanga royalty dispute settled, resulting in no ongoing obligation to TCM.
  • Board approved re-commencement of underground mining at Syndicate (Hillgrove).
  • Strong drill hole assays were received from Liontown Gap Lode and Hillgrove Sunlight and Eleanora-Garibaldi.

Thalanga Mine:

  • Quarterly zinc concentrate production of 4,697 DMT, lead concentrate production of 1,100 DMT and copper concentrate production of 1,996 DMT.
  • December production improved in October and November. Additional ground control installation requirements are being caught up and production expected to improve this quarter.
  • Drilling continued at Liontown with seven diamond drill holes completed (2,379m); assays pending.

Hillgrove Gold Project:

  • Drilling continued at Hillgrove with eight diamond drill holes (1,667m) completed at Sunlight, Eleanora-Garibaldi and Freehold; assays pending.
  • Planning for underground mining restart continues; negotiations advanced with several mining contractors.

Value Proposition:

  • P/E vs Sector: RVR is at a good valuation based on its P/E at 18.98x compared to Sector P/E at 235.74x.
  • P/B vs Sector: RVR is at a good valuation based on its P/B at 1.91x compared to Sector P/B at 10.52x.
  • ROE vs Sector RVR is at a good valuation based on its ROE at 10.37% compared to Sector ROE at – 20.35%. (Source: Refinitiv, Thomson Reuters)

Relative Valuation:

(Source: Refinitiv, Thomson Reuters)

RVR with its next twelve months key metrics EV/Sales at 0.6x compared to Metals and Mining Industry at 2.1x and Basic Materials Sector at 1.9x and EV/EBITDA at 1.2x compared to Industry and Sector at 3.6x and 3.7x and P/CF at 1.4x compared to Industry and Sector at 4.8x and 5.5x, P/E at 2.3x compared to Industry and Sector at 8.3x and 9.1x provides it with a good value proposition.

Revenue is forecasted to grow by 59.7% compared to Industry growth of 11.3% in the next twelve months.

*Forecasted Twelve Months or NTM (Next Twelve Months): of any financial metrics measure such as EV/Sales, EV/ EBITDA, or P/B, PCF, P/E is the calculation forecasted for the immediate next twelve months from the current date based on projections applied to the revenues, EBITDA etc.

*TTM or Trailing Twelve Months refers to a company’s past 12 consecutive months of performance data from the current date used in financial reporting.

Peer Analysis:

(Source: Refinitiv, Thomson Reuters)

RVR with P/B at 1.91x and P/E at 18.98x and D/E of 2.3% and ROE of 10.37% is placed relatively well compared to its peer groups.

Financials Metrics:

(Source: Refinitiv, Thomson Reuters)

RVR strong margins growth with Net margins growth of 17.98% (year on year) to 4.98% along with ROE growth of 22.8% (year on year) to 10.27% and D/E at 2.27% and asset margin growth of 89.66% (year on year) provides it with robust financials.

Outlook:

Red River controls the entire Hillgrove Mineral Field of 225sqkm ELs & 17sqkm MLs. The Company is developing 100%-owned projects with long asset lives of 10+ years and a diversified revenue mix. There is Resource upside at known deposits and potential for new discoveries – Currys, Hopetoun, Becks Point, Cosmopolitan and Freehold. All deposits open at depth and strike. RVR has a Low CAPEX path to boost free cash flow. It has near-term growth options at Thalanga and Hillgrove.

Technical Analysis:

(Chart source: Trading View) Technical Chart-Daily and Monthly Candlestick Price Chart Pattern

On a monthly t/f, the stock has formed a base at $0.170, with a “Higher High” formation. The price pattern is moving above the Ichimoku cloud, signaling a bullish trend gaining strength. The stock has minor resistance at $0.245 and is currently trading above its resistance and at 52 week high signaling bullish trend strength in the stock. The RSI (Relative Strength Index) pointing upside with price pattern above EMAs (Exponential Moving Average) indicates upside potential.

On a daily price chart, the stock is trading above the Ichimoku cloud and MACD (Moving Average Convergence and Divergence) in a positive territory further supporting the bullish view.

With both the charts confirming the bullish trend, the upside potential in the stock is expected in the near to medium term.

Lindsay Australia Limited (ASX: LAU)

TEAM VEYE | 28 FEB 2022

Lindsay Australia Limited (ASX: LAU) is an integrated transport, logistics and rural supply company. The Company is focused on servicing customers in the food processing, food services, fresh produce, agriculture and horticulture industries. The Company operates through following segments: Lindsay Rural, Lindsay Transport and Lindsay Fresh Logistics. Lindsay Rural segment is engaged in the sale and distribution of a range of agricultural supply products. Lindsay Transport segment includes cartage of general and refrigerated products, ancillary sales, and warehouse and distribution. Lindsay Fresh Logistics segment provides unloading, cross-docking, storage, ripening, fumigation, and import and export services. The Company operates approximately above 40 stores and depots.

From the Company Reports

Integrated transport, logistics and rural supply company Lindsay Australia Limited (ASX: LAU, “Lindsay” or “the Company”) on 18 February 2022 announced its financial results for the half-year ended 31 December 2021, delivering growth in revenue, profit and dividends.

Highlights:

  • Strong demand for Transport and Rural services help deliver H1 FY22 underlying EBITDA growth of 20.2% to $31.4 million.
  • Rail growth strategy remains on track with the addition of 50 refrigerated containers in H1 FY22, with 350 refrigerated containers in operation entering H2 FY22.
  • Lindsay remains well-positioned to take advantage of future growth opportunities across both Transport and Rural segments to deliver positive returns on capital.
  • Lindsay Board of Directors has declared an interim unfranked dividend of 1.4 cents per ordinary share (up 16.7% from H1 FY21: 1.2 cent per share fully franked).
(Graphic Source – Company Reports) Strong Financial Performance

The Company increased its half-year revenues to $273.9 million, up by 25.3% as compared with the prior comparable period. 

Underlying profit before tax (PBT) gained from the strong revenue growth and cost controls from both divisions, increasing $4.5 million (+44.0%) from H1 FY21 to $15.0 million.

Lindsay ended H1 FY22 with $17.2 million in cash and a rolling 12-month net leverage ratio2 of 2.04 (H1 FY21: 2.38), strengthening the balance sheet and providing flexibility and capacity to fund the Company’s growth objectives.

Lindsay’s growth strategy remains focused on diversifying its range of products, services and geographical reach to continue meeting its customer’s evolving needs. The Company is implementing this strategy by investing in capacity, facilities, equipment, technology and cost efficiency initiatives, ultimately delivering value for customers, employees and shareholders.

New Rail Haulage Agreement Between Lindsay Transport Pty Ltd and Pacific National Services Pty Ltd.

Lindsay Australia Limited on 30 September 2021 announced that subsidiary Lindsay Transport Pty Ltd had executed a new Rail Haulage Agreement with Pacific National Services Pty Ltd (PN). The execution of the Agreement underpins the service requirements supporting Lindsay’s expanding rail freight business over the next 5 years.

Under the Agreement, PN will provide rail freight related services nationally across key corridors including between Brisbane, Sydney, Melbourne, Adelaide and Perth and into North Queensland destinations.

Financial Metrics:

(Source: Refinitiv, Thomson Reuters)

LAU with its margins, asset turnover and ROE well above Industry provides it with a sound financial position.

Relative Valuation:

(Source: Refinitiv, Thomson Reuters)

LAU with its next twelve month key metric P/B at 1.3x compared to Freights and Logistics Services Industry at 3x and Industrials Sector at 1.8x, P/E (NTM) at 8.8x compared to industry and Sector at 11.8x and 12.6x, EV/EBITDA at 4x compared to Industry and Sector at 6.2x and 7.6x and a Dividend yield of 5.5% well above Industry and Sector dividend yield of 4.6% and 3.4%, positions it at a good value proposition.

Revenue for the next twelve months is expected to grow by 8.6% and earnings to grow by 16.6% compared to industry growth of 15% in the next twelve months.

*Forecasted Twelve Months or NTM (Next Twelve Months): of any financial metrics measure such as EV/Sales, EV/ EBITDA, or P/B, PCF, P/E is the calculation forecasted for the immediate next twelve months from the current date based on projections applied to the revenues, EBITDA etc.

*TTM or Trailing Twelve Months refers to a company’s past 12 consecutive months of performance data from the current date used in financial reporting.

Peer Analysis:

(Source: Refinitiv, Thomson Reuters)

Outlook

Lindsay’s primary growth strategies remained focused on diversifying revenue through less capital intensive investments. The expansion into rail has been a critical organic growth strategy for Transport, complimenting the division’s refrigerated facility network. The integrated road and rail service offering uniquely meets customers’ evolving logistic requirements.

Technical Analysis:

(Chart source: TradingView) Technical Chart- Weekly and Monthly Candlestick Price Chart Pattern

The formation of bullish engulfing on a monthly chart, with prices trading above the Ichimoku cloud and above the EMAs (Exponential Moving Average) and 200 day EMA as major support indicates bullish potential in the stock. The RSI (Relative Strength Index) pointing up signals bulls can continue the upside move in the near term.

On a weekly price chart, the stock is trading above the upper Bollinger band with MACD (Moving Average Convergence and Divergence) entering in a positive zone and indicators pointing up, signalling bullish momentum.

With both weekly and Monthly price patterns along with indicators turning in a positive zone, it can have the potential of further upside potential in the near term.

MEDUSA MINING LTD (ASX: MML)

TEAM VEYE | 21 FEB 2022

Medusa Mining Limited (ASX: MML) (Medusa) is an Australia-based gold producer company. The Company is engaged in the mineral exploration, evaluation, development, and mining/production of gold. Its segments include Mining, Exploration and Other. The Company’s lead project, Co-O mine, is located in Central Eastern Mindanao in the Republic of the Philippines and is accessed by the national highway north of Davao City. The project consists of 410 square kilometers of tenements, which cover approximately 70 kilometers of strike length. Its other projects include the Royal Crowne Vein Prospect, Bananghilig Gold Deposit, Saugon Gold Deposit, and Tailings Storage Facility (TSF) #1 Project. The Royal Crowne Vein Prospect is located approximately 2 kilometers north of the Co-O mine and corresponds to a projected vein segment along the northern portion of the 1,500-meter long Sinug-ang vein system. Its subsidiaries include Philsaga Mining Corporation (PMC) and Medusa Overseas Holding Corporation.

From the Company Reports

Drummond Basin gold acquisition

Medusa Mining Limited (“Medusa” or the “Company”) (ASX: MML) on 3 February 2022 advised that it had entered into definitive documentation to acquire a 4,150 sqkm exploration land package in the southern Drummond Basin region of Central Queensland through the acquisition of Australian unlisted public company Ten Sixty Four Limited (“1064”) (the “Acquisition”).

  • Medusa agrees to acquire Australian unlisted public company Ten Sixty Four Limited to secure a 100% interest in a large gold exploration portfolio in Central Queensland
  • Consideration comprising the acquisition of 20 million Medusa shares, with the majority of shares escrowed for a period of 24 months
  • The land package of 4,150 sqkm in the southern Drummond Basin region is prospective for large, intrusion-related gold systems
  • The acquisition includes a highly experienced technical team which has driven the Drummond Basin exploration program for the past five years
  • Multiple targets have been advanced to drill targeting with potential for drilling in the March quarter of 2022
  • Recent activity in the region by GBM Resources Ltd and QX Resources Ltd

The Acquisition will deliver Medusa a 100% interest in a pipeline of exploration targets that have been built and advanced by the 1064 team over the past five years. Only two targets have been subject to small initial drilling programs and multiple fully permitted drill-ready targets exist across the tenements based on previous exploration programmes.

As part of the Acquisition, 1064’s exploration team will continue to support the exploration program in partnership with Medusa. Having been operating in the region for the past decade, the 1064 team has strong local landowner relationships and has established critical local infrastructure to support exploration including extensive access roads.

Tigerway Update

Medusa Mining Limited on 19 January 2022 advised that the Tigerway (Decline) project was making significant progress with a total advance of ~161m (as of 15 January 2022) with no health and safety issues registered.

The establishment of the decline is the best option to access ore below Level 12 to underpin the longevity and enhance operational flexibility at Co-O. The Tigerway construction is on track as originally scheduled.

The current heading-face was now past the expected shallow surface poor ground and now on fairground that is expected to ramp up the development meterage.

Tigerway Decline Project is critical infrastructure project which will set-up the Co-O Operation for the next decade. A long-term infrastructure study determined the establishment of a decline is the optimal long-term infrastructure solution to improve efficiency and unlock value.

Mining activities and decline construction to run concurrently with no interruption to gold production.

Value Proposition:

  • P/E vs Sector: -MML is at a good valuation based on its P/E at 2.54x compared to Sector P/E 252.14x.
  • P/B vs Sector vs Index: MML is at a good valuation based on its P/B at 0.6x compared to Sector P/B at 16.32x.
  • ROE vs Sector: MML is at a good valuation based on its ROE of 27.33% compared to Sector ROE at -12.33%.
  • Earnings Growth: Earnings projected to grow at a CAGR of 20.5% between FY22-FY26. (Source: Refinitiv, Thomson Reuters)

Relative Valuation:

(Source: Refinitiv, Thomson Reuters)

MML with its trailing twelve month metrics of P

E at 2.56x and P/B at 0.63x and Dividend yield of 6.62% sits at a good value proposition compared to Industry.

*Forecasted Twelve Months or NTM (Next Twelve Months): of any financial metrics measure such as EV/Sales, EV/ EBITDA, or P/B, PCF, P/E is the calculation forecasted for the immediate next twelve months from the current date based on projections applied to the revenues, EBITDA etc.

*TTM or Trailing Twelve Months refers to a company’s past 12 consecutive months of performance data from the current date used in financial reporting.

Peer Analysis:

(Source: Refinitiv, Thomson Reuters)

MML with its P/B at 0.6x and P/E at 2.5x and D/E of 1.7% sits at a good value proposition among its peer group with ROE of 27.3%.

Financial Metrics:

(Source: Refinitiv, Thomson Reuters)

Improved Margins: MML witnessed improved margins with net margin growth of 6.31% (year on year) to 26.39% compared to industry at 12.97%.

Strong ROE: MML ROE increased by 5.85% (year on year) to 27.33% compared to Industry ROE of 11.19%.

Debt to Equity: MML debt to equity at 1.66% well below Industry D/E of 20.48%.

Outlook

MML’s Co-O Gold Mine has been continuously producing gold for well over a decade. Its Reserves have been consistently replenished for the past five years. The combination of 1064 and Medusa has the potential to create considerable value for all shareholders through a broader asset base. The consistent production profile and profitability of Co-O coupled with the significant exploration potential of the Drummond Basin in Central Queensland may help secure the future growth potential of Medusa and make good use of capital to identify growth opportunities.

Technical Analysis:

(Chart source: TradingView) Technical Chart-Daily and Weekly Candlestick Price Chart Pattern

On a weekly price chart, the formation of “Higher Highs” indicated a bullish trend gaining strength. The MACD (Moving Average Convergence and Divergence) positive crossover that has just started on a weekly chart, further supports that the buyers were gaining strength over sellers, and driving prices upside. The RSI (Relative Strength Index) on a weekly chart recovering from lows and turning positive, provides a bullish indication.

On a daily price chart, the price closing above the EMA (Exponential Moving Average) crossover and closing above the 200 day EMA, along with MACD in positive territory, represents bullish trend strength.

With both the Weekly and the daily charts confirming the bullish view, the upside potential in the stock is expected in the near term.

Eagle Mountain Mining Limited (ASX: EM2)

TEAM VEYE | 14 FEB 2022

Eagle Mountain Mining Limited (ASX: EM2) (Eagle Mountain) is a copper-gold explorer focused on the exploration and development of prospective greenfields and brownfields projects in Arizona, United States. Its Oracle Ridge Copper Mine Project is located northeast of Tucson and approximately 26 kilometers(kms) from BHP’s San Manuel mine. Its Oracle Ridge Copper Mine Project is underpinned by a copper resource with gold and silver. The Silver Mountain copper, gold project is located in Arizona north west of Phoenix. Silver Mountain Project encompasses three main prospects: Pacific Horizon, Scarlett and Red Mule. Pacific Horizon has copper, gold, silver and other base metals value deposits along the horizon; Scarlett prospect is located immediately west of the Pacific Horizon prospect, with a northwest-southeast fault dividing the Scarlett prospect into two domains; Red Mule is enriched with gold and porphyry copper minerals.

From the Company Reports

Quarterly Activities Report for the Period Ending 31 December 2021

Eagle Mountain Mining (ASX: EM2) (“Eagle Mountain”, the “Company”) on 27 January 2022 provided shareholders and investors with an exploration and operations overview for the quarter ending 31 December 2021.

Highlights

  • Thick and high-grade mineralised intercepts highlight strong potential for JORC Resource expansion.
  • A new geological feature known as the ‘Wave’ defined along the Leatherwood contact. The Wave zone:
  • Hosts some of the thickest intercepts at Oracle Ridge
  • Extends for over 500 metres (north to south) and is open to the east
  • Outcrops at the historic Leatherwood Mine with historic production records reporting grades up to 12% Cu and 200g/t silver
  • Assays received from Golden Eagle confirmed two separate mineralised zones enhancing the prospectivity for large mineralised systems to occur. The two systems are:
  • Vein-hosted polymetallic system with alteration extending over 500 metres of strike
  • Separate gold rich system exceeding 650 metres of strike and open to the west and at depth.
  • Drilling ongoing with three rigs and assays pending for 48 holes
  • JORC Mineral Resource Estimate update in progress with results expected in Q1 2022

Further High-Grade Assays Enhance Resource Expansion Potential at Oracle Ridge

Eagle Mountain Mining Limited on 12 January 2022 provided an exploration update at its 100% owned Oracle Ridge Mine Project (“Oracle Ridge”, “Project”) in Arizona, USA. Assays have been received for seven drill holes completed in the Western Talon area.

  • High-grade copper assays continue to be received at the Western Talon, outside the existing JORC Mineral Resource of 12.2Mt at 1.51% Cu for 184kt contained copper.
  • Multiple thick zones of mineralisation intersected, providing potential for larger scale and lower cost mining methods to be considered
  • Drilling recommenced with three drill rigs following a short break over Christmas
  • Assays are currently pending for 28 holes in the mine area and 11 holes at Golden Eagle
  • Recent assays will be included in the update to the JORC Mineral Resource Estimate, which is on track for completion in Q1 2022

Peer Analysis:

(Source: Refinitiv, Thomson Reuters)

EM2 with a market cap of $146.06M and P.B of 19.55x sits relatively well compared to its peer groups

Investment thesis

  • Surrounded by major mining operations
  • Close proximity to: – Smelters – Rail network – Tucson workforce
(Graphic Source – Company Reports)
  • Accelerating drilling program with recent transition to three drills
  • Good credentials to potentially be a low emission mining operation
  • Well leveraged to the rising copper price

Outlook

Eagle Mountain aims to become a lower cost producer of low-emission copper at the Oracle Ridge Copper Project. The Company continues to undertake various exploration activities at and around the mine. Oracle Ridge has significant infrastructure in place, including approximately 18 kilometres of underground development, access roads, tailings facility (since closed), underground electrical and water services. The Company is aiming to increase the size and confidence of the existing Resource and also explore other prospective targets, which could result in a step change to the project.

Technical Analysis:

(Source: Refinitiv, Thomson Reuters)

Improved Margins: MML witnessed improved margins with net margin growth of 6.31% (year on year) to 26.39% compared to industry at 12.97%.

Strong ROE: MML ROE increased by 5.85% (year on year) to 27.33% compared to Industry ROE of 11.19%.

Debt to Equity: MML debt to equity at 1.66% well below Industry D/E of 20.48%.

Outlook

MML’s Co-O Gold Mine has been continuously producing gold for well over a decade. Its Reserves have been consistently replenished for the past five years. The combination of 1064 and Medusa has the potential to create considerable value for all shareholders through a broader asset base. The consistent production profile and profitability of Co-O coupled with the significant exploration potential of the Drummond Basin in Central Queensland may help secure the future growth potential of Medusa and make good use of capital to identify growth opportunities.

Technical Analysis:

(Chart source: TradingView) Technical Chart- Daily and Weekly Candlestick Price Chart Pattern

The stock from its high at $1.390 in April 2021 had remained in a bearish trajectory with minor pull backs in September 2021 but failed to gain momentum. It made a low at $0.470 in the month of December 2021 and formed a base between $0.475-$0.49. The bottom formation clearly signalled stock reversal from the support zone. The stock has been maintaining bullish momentum from the last week of December 2021. On a daily chart, it is trading above Ichimoku cloud after June 2021. The Fibonacci drawn from swing high at $1.390 to swing low at $0.470, indicates that the stock has retraced more than 23.6% of the fall and is closing the weekly price pattern with a solid bullish candle, signalling bulls getting stronger over sellers. This can have the potential to push the prices further up in the near term with the next resistance at $0.820, which once breached will trigger stock for a further upside.

On a daily price chart, the stock price is trading well above the major EMAs (Exponential Moving Average) with indicators on daily and weekly chart pointing up, indicating upside potential in the stock.

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

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