Andromeda Metals Limited (ASX: ADN)

Incorporated in 1993, ADN is an Australian company dealing in supply of industrial minerals. Its projects are Great White Kaolin Project, Mount Hope Kaolin Project, Camel Lake Halloysite Project and its gold and copper projects are Drummond Epithermal Gold Project, Eyre Peninsula Gold Project, Moonta Copper Gold Project and Eyre Kaolin Project. As of 24^th January 2022, its market capitalisation stood at AUD 571.25 million.

Operational Updates:

• As per the 24^th January 2022 announcement, ADN has extended the date of offer period to 14^th February 2022 related to bid acquiring all the ordinary shares in Minotaur Exploration Limited (MEP).
• As per the conditions of the deal, MEP agreed to demerger its copper and gold assets to its subsidiary – Demetallica. Previously, ADN held ~60% relevant interest in MEP.
• On 20^th January 2022, Mr Rhoderick Grivas has resigned as Chair and Non-Executive Director.
• Bulk sample program got completed at Great White Kaolin JV (75% interest) with a successful share purchase plan and raised ~AUD 15 million.
• Natural Nanotech (NNT - JV 50% interest) filed an application for patenting conversion process of halloysite and halloysite-kaolin in advanced, functionalised carbon nanomaterials.

1QFY22 Updates & Top and Bottom Line: In its quarterly update on 22^nd October 2021, ADN recorded its cash receipts as nil and closed the first quarter with a cash balance of ~AUD 46.17 million at the end of 30^th September 2021 versus ~AUD 4.99 million at the end of 30^th June 2021. For FY21, the revenues from ordinary activities reported as ~AUD 61.46k versus ~AUD 767.42k in FY20. The net losses after tax were ~AUD 6.43 million compared to ~AUD 3.36 million net losses in FY20.

Technical Analysis: On a weekly chart, ADN’s prices are sustaining above 21-period SMA and taking the support of upward sloping trendline and 50-period SMA, indicating a positive stance. The momentum oscillator RSI (14-period) is trading above the mid-point at ~56.60 levels, further supporting the positive bias. Now immediate support level for the stock is placed at AUD 0.190 while the resistance level is at AUD 0.245.

While incorporating the support and resistance in analysing the investment opportunity, the investors with a high-risk appetite might consider a ‘Speculative Buy’ position on this scrip considering the surge in cash balance as per the 1QFY22 report, new patent application, and takeover of MEP. The stock was analysed as per the closing price of AUD 0.210, down by ~8.696%, as of 24^th January 2022. However, the risk levels are extremely high considering the delay in realization of synergies from takeover, future mineral extraction, and its saleability.

Weekly Technical Chart – ADN

Source: REFINITIV

Balkan Mining and Minerals Limited (ASX: BMM)

BMM operates as an early-stage exploration company with lithium-borate mining projects in Serbia. The company was listed in ASX on July 14, 2021. It holds a market capitalization of $18.42 million as of January 24, 2022.

Operational and Financial Update:  

• As announced on January 21, 2022, BMM receives final boron assay results from its surface sampling program at the Dobrinja project. It plans to conduct ground geophysical surveys to estimate the thickness of sediments.
• On January 12, 2022, Sufian Ahmad becomes a substantial shareholding with voting rights of 5.03% in BMM.
• On December 01, 2021, it had appointed Mr. Harry Spindler as Chief Financial Officer effective immediately.
• As per the announcement on November 15, 2021, BMM received airborne magnetic field survey results at its Rekovac project. These results are encouraging and help to prioritize drill sites for follow-up testing.
• It had reported nil cash receipts from customers during September 2021 quarter and incurred operating cash outflows of $388k in Q1FY22. It had closed the period with a cash balance of $5.065 million.

Technical Analysis: BMM's prices are consolidating at lower levels, indicating the possibility of further downside movement. On the daily chart, the trend-following indicators 50-period SMA and 20-period SMA are placed above the CMP, further supporting a negative trend. However, the leading indicator RSI (14-period) is trading around the oversold zone at ~38.92 levels, indicating the possibility of upside reversal in the stock prices. Now an immediate resistance level for the stock is at AUD 0.4000, while support is at AUD 0.3250 level.

Considering the nil cash receipts, early-stage projects, and current trading levels, investing in this stock at such uncertain levels should be taken with a calculated approach, hence a ‘Watch’ stance is suggested. The stock was analyzed as per the closing price of AUD 0.360 per share as of 24^th January 2022.

Daily Technical Chart – BMM

Source: REFINITIV

Note: The purple color line in the chart depicts RSI (14-period), while the green-color histogram at the bottom of the charts represents volumes. The sky-blue and red-color lines show 21-Period SMA and 50-Period SMA, respectively. 

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 Valuation has been achieved and subject to the factors discussed above.

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. 

The Green colour line reflects the 21-period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period, then it shows prices are currently trading in a bullish trend, (Vice – Versa).

The Blue colour line reflects the 50-period moving average. SMA helps to identify existing price trend. If the prices are trading above the 50-period, then it shows prices are currently trading in a bullish trend, (Vice – Versa).

The Yellow colour line reflects the Trendline, which shows whether the direction of the scrip is upwards or downwards.

The Purple colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

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