Magnis Energy Technologies Limited

Electric Vehicle Segment to Aid Future Growth:Magnis Energy Technologies Limited (ASX: MNS) is engaged in the development and operational work on the Nachu Graphite Project and iM3TSV (Imperium3 Townsville). Recently, the company informed that it has engaged National Australian Bank as a Financial Advisor to iM3TSV in relation to its Townsville Battery Project. The Management further informed that it has made major progress for 18 GWh lithium-ion-cell processing facility in Townsville, Queensland. The company has a one third stake in the iM3TSV project. National Australian Bank’s services will include advice in connection with seeking debt funding for the project.

Fourth Quarter Operations Highlights:Magnis Energy Technologies Limited declared its 4QFY19 cash flow statement for the period ended 30 June 2019 wherein the company posted net cash used in operating activities at $1.139 million and net cash used in investing activities at $0.84 million. The company reported a cash balance of $1.87 million as on 30 June 2019. The company provided estimated cash outflows for Q1FY20 wherein it projected total estimated cash outflows of $1.521 million which includes $0.339 million of exploration and evaluation costs, $0.47 million of staff costs, and $0.71 million of administration and corporate costs.


Q1FY20 Estimated Cash Outflow (Source: Company Reports)

During H1FY19, MNS reported an income at $0.06 million as compared to $0.042 million on pcp while net losses came in at $2.55 million as compared to $3.24 million in H1FY18. During the quarter ended June 2019, the company made several improvements in graphite processing techniques with one significant result being the ability to process oxide material as mined. The above improvements in project fundamentals are likely to drive engineering cost efficiencies and the advancement of financing negotiations. The company also informed that its technology partner Charge CCCV (C4V) has supplied batteries to the US-based Martac, using its proprietary BMLMP cathode technology. MNS currently owns a 10% stake in CCCV.

Stock Recommendation:The stock of MNS is trading at $0.170 and has a market capitalization of ~$97.78 million. The 52-week trading range of the stock stands at $0.150 to $0.375 and currently, it is quoting near the lower band of its 52-week trading range. The stock has delivered a negative return of 13.51% and 45.76% in the last three-months and six-months, respectively. The company operates in graphite processing and manufacturing of lithium-ion cell with its Nachu Graphite Project and iM3TSV project, respectively. The prospect of global electric vehicle remains bright and electrification of mobility and the transition to renewables continued unabated in 2018. Global growth in electric vehicle sales was over 50%, above that for 2017 with 2019 forecast to deliver even greater growth as automotive manufacturers broaden their EV offering across their fleet. Looking at the recent price movement and current business scenario, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.170, up 6.25% as on 18 September 2019 on account of positive updates from Townsville Project.
 

Lepidico Limited

MoU with Gulf Fluor LLC:Lepidico Limited (ASX: LPD) is engaged in the exploration, production and development of lithium chemicals. LPD owns a technology which is used for a metallurgical process for the production of lithium carbonate from non-conventional sources like lepidolite and zinnwaldite. Recently, the company announced that L-Max® process technology has received patent protection subject to International Patent Application PCT/AU2015/000608 under the United States Patent and Trademark. Earlier, in October 2015, LPD had submitted an international patent application for the invention of L-Max® Process under the Patent Cooperation Treaty (the PCT), administered by the World Intellectual Property Organisation.

Fourth Quarter Operations Highlights:The company announced its 4QFY19 cash flow statement for the period ended 30 June 2019 wherein the company reported net cash used in operating activities at $1.76 million, net cash used in investing activities at $.001 million while net cash from financing activities stood at $10.480 million. LPD reported a cash balance of $13.66 million as on 30 June 2019. The company has also provided with the estimates of cash outflows for Q1FY20. Total estimated cash outflows are likely to come in at $7.333 million where exploration and evaluation expense are likely to be at $0.664 million and development cost at $1.5 million. During the quarter, the Company entered a non-binding Memorandum of Understanding (MoU) with Gulf Fluor LLC for the supply of sulphuric acid; provision of land to construct the Phase 1 Plant Project and the marketing of Phase 1 Plant by-products to be sold within the region.


Q4FY19 Cash Flow Statement (Source: Company Reports)

Stock Recommendation:The stock of LPD is trading at $0.018 with the market capitalization of ~$74.78 million. The stock is trading at the lower end of its 52-week trading range of $0.015 to $0.043. The stock has delivered negative returns of 39.29% and 36.27% during the last three-months and six-months, respectively. The outlook of Lithium remains decent, aided by its application in lithium batteries used for Electric Vehicles. Positive indications from the L-Max® for PCT International Patent Applications and the upcoming patent protection license assure further business application in the Lithium segment. Thus, considering the aforesaid facts, high-risk driven by commodity in nature, and development-in-progress, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.018, up 5.882% as on 18 September 2019.

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