Encounter Resources Limited (ASX: ENR)

ENR is one of the productive project generation and active mineral exploration companies focused on discovering major gold and copper deposits in Australia. The company holds a major position in the Paterson Province where it is exploring for copper-gold deposits at its 100% owned Lamil Project and for copper-cobalt deposits at the Yeneena project with IGO Limited (ASX:IGO). The market capitalization stood at $49.01 million at $0.160 per share.

Financial & Operational Update – On 9^th August 2021, the company released an exploration update from Lamil in the Paterson Province. As per the update, EIS co-funded drill program is advancing at the Dune Prospect within the Lamil Project in the Paterson Province of WA. On 30^th July 2021, the company stated its intention, subject to shareholder approval, to demerge and launch an IPO of its wholly owned subsidiary, Hamelin Gold Limited, that will hold a 100% interest in the West Tanami Gold Project in WA. On 28^th July 2021, the company released its quarterly activities report for the period ended 30^th June 2021, where it stated that the company held cash reserves of ~$5.7 million as of 30^th June 2021 and a listed investment valued at ~$0.75 million. Two diamond rigs are currently operating at the 100% owned Lamil Copper-Gold Project located 25km north-west of Telfer.

Technical Analysis- ENR's prices are consolidating around an upward sloping trend line support level for the past 2 months, indicating a directionless movement for the stock. On the weekly chart, the leading indicator RSI (14-period) is consolidating around the mid-point (at ~49.05), further unable to provide any indication about future direction. However, the CMP is trading below the trend following indicators 21-period SMA and 50-period SMA; supporting a downside trend. Now, an immediate resistance level for the stock appears at A$0.200 while support is at A$0.125 level.

Weekly Technical Chart:

Source: REFINITIV

Note: The purple color line in the chart depicts RSI (14-period), while the yellow color line represents the trend line. The sky-blue and red color lines show 21-Period SMA and 50-Period SMA respectively, while green color histograms at the bottom of charts represent weekly volumes.

Considering lack of receipts from customers, regulatory risk, and stock volatility, we give the stock the rating of ‘Avoid’ at the closing price of $0.160, up by 3.225%, as of 24^th August 2021.

Si6 Metals Limited (ASX: SI6)

SI6 is an exploration company focused on Southern Africa primarily targeting projects containing “battery or new world” metals to gain from the sector momentum due to recent global technology advances and rising demand for these commodities. The company recently entered into an option agreement with DiscovEx Resources Ltd to acquire the Monument Gold Project in Western Australia. The market capitalization stood at $18.11 million at $0.012 per share.

Financial & Operational Updates – On 23^rd August 2021, the company stated that it has completed the acquisition of 100% of the ordinary shares in Monument Exploration Pty. Ltd., as announced on 26^th July 2021. The company informed that the final consideration amount of A$400k was paid in both cash and shares ($100k cash and $300k worth of shares were issued). On 30^th July, the company released its quarterly report for the three-month ended 30^th June 2021. In the Botswana project, the company completed geophysical surveys, where it highlighted several significant targets at Airstrip, Dibete and Maibele prospects. Cash position stood at $4.6 million as of 30^th June 2021.

Technical Analysis-

Weekly Technical Chart

Source: REFINITIV

Note: The purple color line in the chart shows RSI (14-period) and the yellow color line represents trend line. The red and green lines show 21-Period SMA and 50-Period SMA, respectively.

On the weekly chart, SI6 prices are continuously sustaining below the falling trend line and facing the resistance of the same. Moreover, the prices are trading above the trend-following indicators 21-period SMA and 50-period SMA, indicating a resistance zone for the stock. The leading indicator RSI (14-period) is trading at ~42.91 level, which indicates the neutral sign for the trend. An immediate resistance level for the stock, is placed at AU$0.013 while the key support level is placed at AU$0.009.

Due to a lack of operating revenues, exploration risks, environmental regulations, and volatile stock prices, we give the stock the rating of ‘Avoid’ at the closing price of $0.012, down by 7.693%, as of 24^th August 2021.

Netlinkz Limited (ASX: NET)

NET provides a physical and virtual secure ‘Network as a Service’ for enterprises with focus on cloud-first, security, scalability, and simplicity. The VSN technology makes Fortune-500 security commercially available for organizations. The company has received multiple industry awards for its technology, including being a worldwide winner of the Global Security Challenge. The market capitalization stood at $80.79 million at $0.025 per share.

Financial & Operational Updates – On 29^th July 2021, the company released its quarterly activities report & appendix 4C for the quarter ended 30^th June 2021. The company continued to perform well, with rise in unaudited revenue by 174% in FY21 as compared to FY20, and revenue for Q4FY21 consistent with previous quarter at ~$2.7 million. Revenue from Asia increased by 10% QoQ as expected. Total cash receipts from customers for FY21 stood at ~$15 million, being 2.7x FY20. Further, the operating expenses were considerably lower in Q4FY21 (~$3.5 million vs. ~$4.4 million averaged for the prior 3 quarters of FY21). Further, it completed a $15 million entitlement offer to accelerate growth and reported an acceleration in European market strategy. Also, it ventured a new strategic partnership in MENA and Australia.

Technical Analysis-

Weekly Technical Chart

Source: REFINITIV

Note:  The purple color line in the chart depicts RSI (14-period), while the yellow color line represents the trend line. The green and sky blue lines show 21-Period SMA and 50-Period SMA respectively.

NET prices are trading in a primary downward trend. Prices are continuously taking resistance of the downward sloping trend line. RSI (14-period) is hovering around the oversold region (at ~36.78), further unable to provide any bullish indication in the stock. However, the CMP is trading below the trend following indicators 21-period SMA and 50-period SMA; supporting a downside trend. Now, an immediate resistance level for the stock appears at AU$0.029 while support is at A$0.020 level.

Considering aforesaid rationales, we give the stock the rating of ‘Avoid’ at the closing price of $0.025, as of 24^th August 2021. 

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. 

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