Metallica Minerals Limited (ASX: MLM)

MLM operates as an exploration company with its flagship Cape Flattery Silica Sands project located in North Queensland. MLM holds a market capitalization of $23.30 million as of April 5, 2022.

Financial and Operational Updates: As announced on March 21, 2022, pre-feasibility studies at the Cape Flattery Silica Sands project confirm high-quality silica sand, and the project exhibited a Net Present Value of $290 million with an internal rate of return (pre-tax) of 34.9%. The cost of the project is estimated at $79 million.

On February 24, 2022, Queensland’s Department of Regional Development, Manufacturing, and Water assigned the Cape Flattery Silica Sands project a ‘Project of Regional Significance’ under the Water Plan (Cape York) 2019. As of February 21, 2022, Ilwella Pty Ltd. acquired additional voting rights reaching 22.63% in MLM.

On February 2022, MLM raised ~$3.03 million through the placement of shares to existing shareholders at a price of A 3.1 cents per share. A portion of funds will be utilized to complete environmental studies and completing pre-feasibility studies at the Cape Flattery Silica Sands project.

In H1FY22, MLM posted a net loss of $857.0k as compared to $2.57 million in H1FY21. It had closed the period with a cash balance of $5.07 million as of December 31, 2021.

Technical Analysis: On the daily chart, MLM price witnessed a breakout of a horizontal trendline at the AUD 0.033 level (on April 01, 2022). Since the breakout, prices are sustaining above the falling trendline, which indicates bulls are in action. Moreover, the prices are trading above the trend-following indicator 21-period SMA, which may act as a support level. Further, the momentum oscillator RSI (14-period) is trading at ~68.69 level, indicating positive momentum. An important support level for the stock is placed at AUD 0.030 while the key resistance level is placed at AUD 0.043.

Considering the positive results from the pre-feasibility studies on the Cape Flattery Silica Sands project, recent fundraising, decent liquidity, and current trading levels, we recommended a ‘Speculative Buy’ rating on the stock at the closing price of $0.036 as of 5^th April 2022, up ~2.86%. Investors with a high-risk appetite can consider entering the stock after evaluating the downside risk related to project delays and continuous losses that may erode available liquidity. Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

MLM Daily Technical Chart, Data Source: REFINITIV 

Arizona Lithium Limited (ASX: AZL)

AZL is a mining company with diverse mining assets covering Gold, Copper, and Lithium located in North America. AZL holds a market capitalization of $488.70 million as of April 5, 2022.

Financial and Operational Updates: On March 31, 2022, AZL received commitments to raise $32.5 million to fund the development of the Big Sandy lithium project. It had received commitments from institutional and professional investors at $0.125 per share. On March 21, 2022, AZL appointed Brett Rabe as Chief Technical Officer. On March 16, 2022, AZL signed an MOU with Nikola Corporation to purchase Nikola Tre battery electric vehicles to support two stages of development of the Big Sandy Lithium project. In H1FY22, AZL posted a net loss of $1.93 million as compared to a net loss of $1.86 million in the prior year.

Technical Analysis: On the daily chart, AZL stock prices are hovering below the rising trend line resistance level and facing the resistance of the same. Moreover, the momentum oscillator RSI (14-period) is trading at (~66.86 level) and formed a negative divergence which might indicate the possibility of a downside correction from the higher levels. However, the prices are trading above the trend-following indicators 21-period SMA and 50-period SMA, which may act as a crucial support zone. An important support level for the stock is placed at AUD 0.180 while the key resistance level is placed at AUD 0.250.

Considering the increase in net loss, nil core revenues, and current trading levels, a ‘Watch’ stance is suggested. The stock was analyzed as per the closing price of AUD 0.210 per share, as of 5^th April 2022, down ~12.50%.

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

AZL Daily Technical Chart, Data 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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