Kidman Resources Limited (ASX: KDR)

 
Kidman Resources has recently inked a binding head of agreement with Mitsui & Co for the supply of lithium hydroxide and agreed volumes will eventually increase and equate to less than 15% of their share of nameplate production from the Mt Holland Lithium Refinery of 22.6kt per annum. The group is in discussion with high quality counterparties on securing binding contracts to cover 75% of its share of production.
 
Improved Financial Metrics:Revenues grew at a Cumulative annual growth rate (CAGR) of 32.1% up to $521,091 in FY18 from $129,524 in FY14. Significant reduction was reported under the operating loss, which has reduced to $9,681,568 in FY18 as compared to 31,310,271 in FY17. Of the total loss, $9,661,620 was from continuing operations and $19,948 was from discontinued operations. KDR had cash and cash equivalents of $10,025,863 in FY18 as compared to $2,554,441 in FY17.
 
Focused on achieving higher margins: The growing demand of the electric vehicles will increase the demand for lithium globally. Addressing this growing shift towards the electric vehicles, KDR with its joint venture with SQM is all set to develop the Tier 1, globally significant Earl Grey lithium deposit at Mt Holland in Western Australia and KDR is implementing a fully integrated mine, concentrator and refinery model to produce lithium hydroxide that forms a major part for the producers of lithium concentrate. Sale of lithium hydroxide will help in capturing higher margins.
 
Technically, the scrip has been in downtrend from the month of June till the month of September. The scrip showed some recovery in the month of October and is currently making higher high formation along with the positive divergence on the Relative strength index (RSI) indicator. Price chart along with the indicator points towards bullish move now.
 
The Kidman/SQM joint venture management vehicle, Covalent Lithium Pty Ltd (Covalent Lithium) expects to complete the definitive feasibility study into the Mt Holland mine in the near term and for the refinery by the end of CY18. KDR is working on with varied strategic parties for offtake agreements of lithium hydroxide and achieve higher margins by tapping the growing demand for lithium in Electric vehicles.
 
The market cap of KDR was recorded at $554m, with a beta over 1x. At current juncture, the scrip is trading at the price levels of $1.525. Improved financial performance with focus on margin improvements and stock trading at higher highs as per technical charts, exhibit a “Buy” scenario at the current levels of $1.525, up 9.7% on November 07, 2018.
 

Toro Energy Limited (ASX: TOE)

 
Toro Energy has advanced to the next stage of its beneficiation and process design studies for the Wiluna Uranium Project on April 2018. Field preparations have been indicated to commence at Yandal Gold Project.
 
Improved Financial Metrics: TOE posted net loss after income tax of $4,298,679 in FY18 as compared to $39,741,819 in FY17. The net loss was primarily related to an assessment of the extent to which impairment triggers have impacted on the carrying value of capitalized exploration and evaluation expenses for the Wiluna Uranium Project.
 
TOE completed the leach test work being conducted with Strategic Metallurgy Pty Ltd in respect of the Wiluna Uranium Project BPD Studies on September 12, 2018. The results of the final phase of that test work far exceeded the projected expectations, with efficiencies, pulp densities and post leach liquor tenors.
 
Technically,the scrip has remained flat from the month of April and has continued the same pattern till the month of October. The scrip has shown slight upside move from the month of November and is currently trading above the previous month closing. Relative strength index (RSI) points towards sideways to bullish move and moving average convergence and divergence indicator (MACD) is in positive territory indicating that at current juncture scrip is good to watch for any catalyst that can lead to breakout levels.
 
The market cap of TOE was recorded at $73.48m, and we have a wait and watch view on the scrip at the current price levels of $0.033.

 

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