Battery Minerals Limited

Battery Minerals Limited (ASX: BAT) is focused on high-quality assets and is advancing its portfolio via exploration and discovery. The company is progressing its Stavely-Stawell gold/copper project in Victoria and the Russells copper project in the Kimberley region of Western Australia. Further, the company is advancing its two world-class graphite projects, Montepuez Graphite Project and Balama Central Graphite Project in Mozambique.

Financial and Operational Update: On 12 January 2022, the company declared that drilling to start at its Stavely-Stawell Copper-Gold Project in Victoria later this month. The company also mentioned that the aircore rig would return to the site on 26 January 2022. Besides, on 24 December 2021, the company announced the issue of 243,995,372 fully paid ordinary shares at $0.011 per share for a placement to sophisticated, professional and institutional investors. Earlier, on 17 December 2021, BAT mentioned that it had bagged firm commitments for ~$2.7 million in a share placement at 1.1 cents per share. On the financial front, BAT reported a loss of $2.92 million from 1 January 2021 to 30 June 2021 compared to the loss of $2.00 million in the pcp. The company continued to effectively control the operating cost base to ensure the better use of its available funding.

Technical Analysis

Daily Price Chart

Note: The purple color line in the chart depicts RSI (14-period).

On the daily chart, BAT prices broke the downward sloping trend line and the prices are trying to move up from the breakout level that indicates stock has upside potential. RSI (14-period) has moved up from oversold region to ~51.87 level that further indicates stock is trading in a positive momentum. There was an RSI positive divergence with price clearly visible on a daily chart that also supports our bullish stance on stock. Immediate support levels are AUD 0.011 and AUD 0.009 while immediate resistance are AUD 0.0145 and AUD 0.016.

Stock Recommendation

With the fruitful share placement of ~$2.7 million, the company has the funds to carry out its exploration programmes at its StavelyStawell Project in Victoria and the Russell Copper Project in WA.

Therefore, considering the facts above and the current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of A$0.0125 as of 20^th January 2022 (Time: 1:36 PM (GMT+10), Sydney, Australia).

Arafura Resources Limited

Arafura Resources Limited (ASX: ARU) is focused on becoming a leading global supplier of rare earth elements (REE), especially two high-value and in-demand REEs: Neodymium and Praseodymium (NdPr). The company is transitioning from exploration and development to construction and operation at the Nolans Project.

Financial and Operational Update: On 20 January 2022, the company announced the quarterly activities report for the quarter ended 31 December 2021, where it highlighted that NdPr price grew 45% in December quarter to US$133/kg following a 26% rise in September 2021 quarter. Further, it is expanding its engagement with Arafura and critical European and South Korean clients looking to secure a long-term strategic supply of NdPr. It reported a strong cash position of $41.7 million to support Front-End Engineering Design (FEED). This strong cash position has enabled ARU to continue FEED, offtake and project financing activities to meet its development timeline and target final investment decision by H2FY22.

During the December 2021 quarter, the company spent ~$0.8 million on exploration and evaluation activities, ~$1.6 million on corporate, administration & business development costs, and ~$5.0 million on project development activities which relates to FEED.

Technical Analysis:

Daily Price Chart

Note: The purple color line in the chart depicts RSI (14-period), while the yellow color line represents the trend line.

On the Daily chart, ARU's prices are trading with the higher highs and higher lows formation and sustaining above a downward sloping trend line breakout level, indicating the possibility of an upside direction. On the daily chart, the leading indicator RSI (14-period) is trading in positive territory at ~59.27 levels. The trend-following indicator 21-period SMA and 50-period SMA are sustaining below the CMP with a positive crossover, further supporting a positive bias. Now an immediate support level for the is placed at AUD 0.2000 while resistance is at AUD 0.2650 level.

Stock Recommendation

The international demand for critical minerals linked to EV and clean energy infrastructure continues to rise while supply chain security poses a high risk. Therefore, considering the facts above and the current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of A$0.23 as of 20^th January 2022 (Time: 1:27 PM (GMT+10), Sydney, Australia).

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 on 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 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 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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