Lynas Rare Earths Limited (ASX: LYC)

Listed on ASX in 1986, LYC is a Malaysian company engaged in mining, exploration, and development of rare earth mineral resources mainly in Australia and Malaysia. Its major assets comprised of Mt Weld, Lynas Malaysia, Kalgoorlie and Lynas USA. Its market capitalization stood at AUD 8.04 billion as of 21^st February 2022.

2QFY22 Financial and Operational Updates:

• As per 21^st February 2022 announcement, the company is set to release its Half-Yearly results on 25^th February 2022.
• On 1^st February 2022, LYC got Ministerial approval for its Kalgoorlie Rare Earth Processing facility.
• FMR LLC and the entities first changed its substantial shareholder from ~6.46% to ~5.34% then ceased to be the holder from 1^st February 2022.
• As per the quarterly report released on 19^th January 2022, its sales grew from ~AUD 121.6 million in 1QFY22 to ~AUD 202.7 million in 2QFY22. Its customer sales receipts have increased from ~AUD 92.0 million in 1QFY22 versus ~AUD 151 million in 2QFY22.
• The company produced ~4,209 tonnes of REO as compared to ~3,166 tonnes in 1QFY22. Its NdPr production stood at ~1,399 tonnes and the average China Domestic price stood as ~USD 105.9/kg.
• The cash at the end of 31^st December 2021 was recorded as ~AUD 674.3 million versus ~AUD 667.3 million at the end of 31^st September 2021.

Technical Analysis: On the weekly chart, LYC's prices are sustaining below an upward sloping trend line breakout level for the past 1 month and currently consolidating around a crucial support level AUD 8.60. Prices are sustaining below the trend-following indicators 21-period and 50-period SMA, indicating the possibility of a downward trend in the near future. The momentum oscillator RSI (14-period) has also reversed from the upper levels and is trading at ~52.737, supporting a negative bias. An important support level for the stock is placed at AUD 8.60 while the key resistance level is placed at AUD 9.940.

Considering the stock’s trading at crucial levels, investment in the LYC at this price should be taken prudently and after keeping the support and resistance levels in mind, hence a ‘Watch’ stance is suggested. The stock was analyzed as per the closing price of AUD 8.790 per share, down by ~1.458%, as of 21^st February 2022.

Weekly Technical Chart – LYC

Source: REFINITIV

Silver Mines Limited (ASX: SVL)

Listed on ASX in 2007, SVL operates in mining and advancement of silver and gold projects like Bowdens Silver Project, Tuena Gold Project and Barabolar Project. Its market capitalization stood at AUD 271.28 million as of 21^st February 2022.

Financial and Operational Updates:

• As per the quarterly report released on 28^th January 2022, the company is at the final stage of Approvals for open-cut mine development at its Bowdens Silver Project and it continued the 30,000m drilling resource program with the high-grade results.
• High-grade results were also found at other various Zones like Bundarra Zone included BD21035 – 14.2m @374 g/t silver equivalent, BD21025 – 14.0m @264 g/t silver equivalent at Northwest and Aegean Zone.
• Drilling at Bundarra Zone continued during the second quarter of 2022, keeping four rigs operational in order to deliver maiden underground Mineral Resource estimation as a part of initial scoping study of underground mining scenarios.
• The operating cash outflow stood at ~AUD 448k in second quarter, with ~AUD 145k cash receipts from customers. The company closed its quarter with the cash at the end of 31^st December 2021 as ~AUD 28.46 million versus ~AUD 32.37 million at the end of 31^st September 2021.

In the Annual Report the revenue from continuing operations were reported as ~AUD 0.199 million for FY21 as against ~AUD 0.115 million in FY20. SVL converted its net losses after income tax for the FY20 of ~AUD 3.74 million into profits of ~AUD 5.36 million in FY21.

Technical Analysis: On the weekly chart, SVL prices are sustaining below the falling trend line resistance zone and facing the resistance of the same. Moreover, the momentum oscillator RSI (14-period) is trading at ~46.62 level, indicating negative momentum. Further, the prices are trading below the trend-following indicators 21-period and 50- period SMA, which may act as a resistance level for the stock. An important support level for the stock is placed at AUD 0.190 while the key resistance level is placed at AUD 0.227.

Though the company has converted its net losses in FY20 to net profits in FY21, but it is not prudent to enter at such indecisive price levels. Thus, investment in the SVL at this price should be taken with caution, hence a ‘Watch’ stance is suggested. The stock was analyzed as per the closing price of AUD 0.205 per share, down by ~2.381%, as of 21^st February 2022.

Weekly Technical Chart – SVL

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 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 the uptrend may take a pause due to profit booking or selling interest. 

The Green colour line reflects the 21-period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period, then it shows prices are currently trading in a bullish trend, (Vice – Versa).

The Blue colour line reflects the 50-period moving average. SMA helps to identify existing price trend. If the prices are trading above the 50-period, then it shows prices are currently trading in a bullish trend, (Vice – Versa).

The Yellow colour line reflects the Trendline, which shows whether the direction of the scrip is upwards or downwards.

The Purple colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

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