Trek Metals Limited (ASX: TKM)

TKM is a mineral resources exploration company with a portfolio that includes The Kroussou Project, Lawn Hill Project, Pincunah Gold Project, and Jimblebar Gold and Copper Project.

Recent Business Developments: The company commenced its 2022 exploration program at its Pincunah project in the Pilbara region with a soil sampling program in progress. On March 28, 2022, it had entered into a Farm-in and JV agreement with Buxton Resources. The coalition gives access to Buxton’s IOCG project located in the Great Sandy Desert region of Western Australia. The project provides high-quality Iron Oxide Copper Gold exploration opportunities. On March 25, 2022, TKM reached an agreement with Apollo Minerals Limited to sell the remaining 20% stake interest in the Kroussou zinc-lead project located in Western Gabon in Central Africa.

H1FY22 Financial Update: In H1FY22, TKM posted a net loss of $671.7k as compared to $11.9k in the prior period. An increase in share-based compensation and other expenses resulted in the widening of losses. It had posted operating cash outflows of $415.5k in H1FY22 as compared to operating cash outflows of $291.6k. It had closed the period with a cash balance of ~$2.92 million as of September 30, 2021.

Technical Analysis: TKM price broke the downward sloping trend line by upside and the prices are sustaining above the breakout level from past one week. Also, the prices are trading above its 21-period SMA on a daily chart that further provides strength to the stock. RSI (14-period) is hovering at ~65.57 on a daily chart that indicates the stock is trading in a positive momentum. Immediate support levels are AUD 0.089 and AUD 0.080, and immediate resistance levels are AUD 0.115 and AUD 0.123.

Considering the exploration opportunities for high-quality Iron Oxide Copper Gold in JV with Buxton Resource, proceeds and future earnouts likely to receive from the sale of its Kroussou zinc-lead project, decent cash balance, current trading levels, and key associated business risks, we recommend a ‘Speculative Buy’ rating on the stock at the closing market price of $0.098 as on 20 April 2022, up by ~6.52% Investors with a high-risk appetite may consider entering the stock given the downside risks such as widening of losses, exploration risks, project delays, etc. 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.

TKM Daily Technical Chart, Data Source: REFINITIV 

Australian Vanadium Limited (ASX: AVL)

AVL operates a vanadium project through its Exploration segment. Through its Energy Storage segment, it provides vanadium redox flow batteries.

Operational Highlights: AVL received a letter of intent from Rizhao Steel Holdings Group Co. Limited for the purchase of iron ore titanium (FeTi) coproduct which will be produced from the company’s Vanadium project. This is the third offtake agreement that the company received so far. AVL is expecting to produce ~900k tonnes p.a. of FeTi from the Australian Vanadium project. This is in addition to the 11.2k tpa of vanadium pentoxide to be produced from its proposed mines in the Mid-West of Western Australia. On March 16, 2022, AVL garnered $49 million in funding from the Australian government under the Modern Manufacturing Initiative to support the development of the Australian Vanadium project.

H1FY22 Result Update: AVL posted a net loss of $2.36 million in H1FY22 as compared to a net loss of $1.15 million in the prior year. It had incurred significant expenses towards share-based compensation, consulting & professional fees, and other administrative expenses. Its cash balance surged to $5.8 million as of December 31, 2021, as compared to $3.5 million as of June 30, 2021.

Technical Analysis: AVL prices are trading in a consolidation phase from past one week between AUD 0.068 and AUD 0.083 with no clear price direction in the stock. Prices are also trading near to the upward sloping trend line resistance that further indicates the stock might get correction in the coming period. RSI (14-period) is hovering at moderate zone i.e., ~58.05 on a daily chart that indicates indecision in the stock. Immediate support levels are AUD 0.068 and AUD 0.060 while immediate resistance levels are AUD 0.090 and AUD 0.105.

Considering the nil core revenues, widening of losses in H1FY22, and current trading levels, a ‘Watch’ stance is suggested. The stock was analyzed as per the closing price of AUD 0.079 per share, as of 20^th April 2022.

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.

AVL 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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