Novonix Limited (ASX: NVX)

NVX operates in the battery technology space with capabilities in the production of anode materials and cathode technology. The company’s operating segment comprises Graphite Exploration and Mining, Battery Technology, and Battery Materials. NVX holds a market capitalization of $2.44 billion as of February 23, 2022.

Financial and Operational Highlights: As per the announcement on February 2, 2022, NVX began trading on the Nasdaq stock exchange through American Depository Receipts (ADRs) under the ticker ‘NVX’. The owners of ADRs will get the same rights to dividends and voting powers as holding ordinary shares of NVX. On February 1, 2022, NVX executed the investment and supply agreement with KORE Power, Inc. Under the agreement, NVX has purchased 3.33 million shares of KORE Power common stock at an issue price of US$7.50 per share. The new issue represents 5% of the common stock of KORE Power. NVX will begin to supply graphite anode materials at a rate of 3,000 tonnes per annum in 2024 and is expected to ramp up to 12,000 tonnes per annum by 2027. Effective December 3, 2021, NVX was included in S&P/ASX 200 Index. It had received about C$1.675 million from Next Generation Manufacturing Canada which helps to progress battery materials development.

It had received $1.66 million for the three months ending September 30, 2021, and posted negative operating cashflows of $6.94 million owing to sizeable staff costs and corporate overheads. It had closed the quarter with a cash balance of $290.97 million, up from $131.38 million reported in the preceding quarter. As of September 30, 2021, NVX had loan facilities totalling $50.86 million.

Technical Analysis: On a daily chart, NVX stock prices are sustaining above the horizontal trendline support and taking support of the same. The momentum oscillator RSI (14-period) is trading near an oversold territory at ~28.45 level, which might indicate the possibility of a rebound from the lower levels. However, prices are trading below the trend-following indicators 21-period SMA and 50-period SMA, which may act as a resistance zone. An important support level for the stock is placed at AUD 4.50 while the key resistance level is placed at AUD 6.20.

Considering the anode supply agreement with KORE Power, trading on Nasdaq through ADRs, ample liquidity, and current trading levels, investors with a high-risk appetite might consider a ‘Speculative Buy’ position. The stock was analysed as per the current market price of AUD 5.170 as of 23 February 2022, 10:50 AM (GMT+10), Sydney, Eastern Australia. However, the risk levels are high depending on the volatile lithium spodumene prices and delay in anode supply.

Daily Technical Chart – NVX

Bowen Coking Coal Limited (ASX: BCB)

BCB is a mineral exploration company with a portfolio of coking coal assets. Its projects include the Broadmeadow East Coking Coal Project, Isaac River Coking Coal Project, Cooroorah Coking Coal Project, and Hillalong Coking Coal Project. It holds a market capitalization of AUD 242.88 million.

Financial and Operational Highlights: On February 17, 2022, BCB informed the exchange that it had raised $41.5 million from share placement to sophisticated investors at an offer price of $0.20 per share. The funds will be utilized towards restart operations at Burton and general working capital requirements. In addition, it had signed a binding agreement to acquire New Hope’s interest in the Lenton JV on December 24, 2021. This is expected to boost the production base in the Bowen Basin reaching to 5Mtpa by 2024. On February 15, 2022, BCB forged unconditional sales contracts with two Tier-1 Asian customers (Posco and Formosa) for 250,000 metric tonnes. About 40k metric tonnes are expected to be delivered by Q2 FY22 and the remaining capacity spread over H2 FY22.

BCB achieved its first coal production at Bluff Mine. The binding agreement for the acquisition of the Burton Mine and Lenton project was completed during the quarter ending December 2021. In Q2FY22, it had incurred negative operating cash flows of $1.93 million wherein the majority of outflows were attributed to administration and corporate costs and nil customer receipts. It had closed the period with a cash balance of $23.17 million as of December 31, 2021.

Technical Analysis: On a daily chart, BCB stock prices are trading above an upward sloping trendline support and taking support of the trendline. The momentum oscillator RSI (14-period) is trading at ~47.01 level, reversing form the lower levels. However, prices are trading below the trend-following indicator 21-period SMA, which may act as a resistance zone. An important support level for the stock, is placed at AUD 0.165 while the key resistance level is placed at AUD 0.22.

Considering the recent fundraising, restart plan at Burton operation, expected synergies from the acquisition of Lenton assets, and two offtake agreements, investors with a high-risk appetite might consider a ‘Speculative Buy’ position. The stock was analysed as per the closing market price of AUD 0.190, up ~2.702% as of 23 February 2022. However, the risk levels are high depending on delay in restart operations at Burton and increased cash burn.

Daily Technical Chart – BCB

Source: REFINITIV

Note 1: The reference data in this report has been partly sourced from REFINITIV

Note 2: Investment decisions should be made depending on the investors' appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the analysis has been achieved and is subject to the factors discussed above alongside support levels provided.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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