Nova Minerals Limited

NVA Details

Shareholder Presentation Highlights: Nova Minerals Limited (ASX: NVA) operates The Estelle Gold project in Alaska and is a majority holder (74%) in Snow Lake Resources Limited (Thompson Brothers Lithium project). In a recent shareholder presentation released on 9 August 2021, NVA has mentioned the following highlights:

• The company has a fundamental multi-pillar growth strategy based on its project base, including The Estelle gold project in Alaska, the Thompson Brothers Lithium Project, a 13% stake in Torian Resources (ASX: TNR), and significant investments shareholding in RotorX, an aviation company.
• NVA is conducting de-risking studies and has works underway on the Korbel main project. The company is drilling for the resource update on the Korbel project and resource estimation for the RPM prospect in 2021.
• For 2021, NVA focuses on further drilling on the Korbel project and RPM prospect, conduct geochemical sampling and mapping programs, and more detailed metallurgical test-work across projects.

Lithium Project Listing Update: NVA recently updated that Snow Lake Resources Limited (74% owned) has submitted Amendment No. 2 to the Securities and Exchange Commission (SEC) on 30 July 2021 to raise $23 million of maximum capital via an IPO.

Key Takeaways from Q4FY21:

• Drilling Continued at Korbel: The company continued drilling at the Korbel project and discovered new gold intercepts in Q4FY21. The metallurgical test results have also been positive, indicating gold recoveries of up to 95.4%. NVA reported significant early test results from the drilling at the South-East zone of the deposit in Q4FY21.
• Drilling Started at RPM Prospect: In Q4FY21, NVA started drilling at RPM at the Estelle gold project based on the historical results and rock chip samples.
• Prep Lab at The Estelle project: NVA has commissioned a prep lab on-site at The Estelle gold project to split and crush samples before sending them for ore-testing.
• Resource Upgrade: On 3 June 2021, NVA updated on the Thompson Brothers project resource upgrade. The Indicated Resource Estimate now stands at 9.08 Mt @ 1.00% Li2O, and Inferred Resource Estimate is 1.97 Mt @ 0.98 % Li2O for less than 5% of the project area.
• Cash Balance: NVA had $15.51 million cash on hand as of 30 June 2021.

Net loss After Tax from 1HFY20-1HFY21; (Analysis by Kalkine Group)

Key Risks:

• Exploration Related Risks: NVA faces the risk of exploration and mining on the ongoing projects and ventures in which the company holds interest. Late or unsuccessful discoveries delay project development and increase exploration expenditure.
• Funding Risk: The company requires adequate finance to fund exploration and working capital needs. Hence, a lack of funds can halt/ delay its exploration programs.

Outlook:

• Lately, NVA started field reconnaissance exploration at all the prospects between RPM and Korbel Main. Based on the results, NVA will decide areas for further exploration programs.
• NVA expects the assay results from the drilling at RPM prospect in the next quarter.
• NVA will undertake a scoping study to outline Capex and Op-ex for the Korbel Main deposit as the project moves into the development phase.

Stock Recommendation: The stock of NVA gave a negative return of 24.99% in the past three months and a negative return of 32.25% in the past six months. The stock is currently trading lower than the 52-weeks’ price level of $0.044-$0.235. Considering the current trading levels, resource upgrade at Thompson Brothers, drilling results from the Korbel, start of drilling at the RPM, decent outlook, and associated exploration and funding risks, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.105, as on 11 August 2021, 12.00 PM (GMT+10), Sydney, Eastern Australia.

NVA Daily Technical Chart, Data Source: REFINITIV

The Food Revolution Group Limited

FOD Details

Highlights of Q4FY21: The Food Revolution Group Limited (ASX: FOD) produces a range of fibres, juices, wellness beverages, and supplements and markets them as branded ingredients or products to domestic and overseas customers. FOD has its food processing facilities in Mill Park, Victoria.

• Gross Revenue: FOD posted gross revenue of $9.0 million in Q4FY21 and continued to witness a robust performance of its Original Juice Co and FOD fresh juice business in Woolworths and Coles supermarkets on a year-to-date basis.
• Segments’ Performance: The recently launched Juice Lab Wellness shots has captured a 68% market share in the new Wellness shots segment. FOD reported Juice Lab Immunity product is the best-selling SKU in the segment based on the data (sourced from IRI Australia Scan Data).
• Refinancing Approval: In July 2021, FOD has obtained approval to refinance a business loan for five years with NAB.
• Leadership Changes: During Q4FY21, FOD appointed Steven Cail as the CEO and Jac Phillips as an Independent Director.
• Steady Cash Receipts Generated: The company collected $8 million cash receipts from its customers in Q4FY21 versus $7.8 million in Q3FY21. FOD held a $4.4 million cash balance as of 30 June 2021.
• Improved Interest Rate: The interest expense has been withdrawn for the Greensill loan facility as the company declared administration in March 2021. Besides, the new agreement entered with NAB for equipment finance at improved interest rates will significantly lower the interest costs.

Gross Revenue & Net Income After Tax from 1HFY19-1HFY21; (Analysis by Kalkine Group)

Key Risks:

• Financial Risks: FOD has interest rate bearing liabilities that may increase depending on the interest rate changes. Also, availing finance facility at a cost-effective interest rate is crucial for the company to keep a margin for equity shareholders.  

• Supply Chain Disruptions: FOD faces supply chain issues causing disruption in distribution and marketing and declining sales.

Outlook:

• The management believes that it is well placed for delivering growth in FY21, owing to increasing volumes, improving retail prices, the launch of new products, and cost control and operational efficiencies.
• The company has developed a strong baseline for its core juice range business, expanding its wellness shots segment and has a growing pipeline of new products to be declared in FY22.

Stock Recommendation: The stock of FOD gave a negative return of 9.99% in the past three months and a negative return of 22.85% in the past six months. The stock is currently trading lower than the 52-weeks’ average price level band of $0.025 - $0.055. On a TTM basis, the stock of FOD is trading at an EV/Sales multiple of 1.1x lower than the industry (Food & Tobacco) median of 1.8x, thus seems undervalued. Considering the current trading levels, steady cash receipts in Q4FY21, decent outlook, growth of Original Juice Co & fresh juice business, performance in the Wellness shots segment, valuation on a TTM basis, and associated financial risks, COVID-19 scenario, and changes in customer preferences and spending, we give a ‘Speculative Buy’ rating on the stock at the current market price of $0.027, as of 11 August 2021.

FOD Daily Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision 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 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 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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