Silver Mines Limited (ASX: SVL)

Incorporated in 2004, SVL is a silver exploration company with Bowdens Silver Project, Tuena Gold Project and Barabolar Project. Its market capitalization stood at AUD 264.71 million as of 21st October 2021, at the stock price of AUD 0.22 per share.

Financial and Operational Updates: As per the release of Annual Report to Shareholders for FY21 on 24^th September 2021, it showed an increase in revenue from continuing operations and 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 profit of ~AUD 5.36 million in FY21. Cash at the end of FY21 was reported as ~AUD 31.42 million as of 30^th June 2021 versus ~AUD 12.12 million in PcP. On 19^th August 2021 SVL intimated, marking 6^th September 2021 as an expiry date for its SVLOB (Options), exercisable at AUD 0.06 per option. On 5^th August 2021, scoping study at Bowdens Silver Projects was initiated to proceed potential underground mining scenarios. As per the result updates at 30,000m drill program at Bowdens Silver Project on 4^th August 2021, Aegean Zone expanded (BD21014 results) to North with very high grades of silver.

Technical Analysis: SVL's prices started to recover from the lower levels after testing the important support level of AUD 0.1850. On the daily chart, the leading indicator RSI (14-period) is trading above mid-point at ~60.712 levels and CMP has crossed both the trend-following indicators 21-period SMA and 50-period SMA by an upside, indicating an uptrend for the short-term. The crucial support and resistance levels are AUD 0.192 and AUD 0.255, respectively.

Conversion of its net losses to profit in FY21, provides a positive stance for SVL’s future. Considering its current price levels, investors with a high-risk appetite may evaluate the stock for a ‘Speculative Buy’ position, keeping the support and resistance levels as crucial points. The stock was analysed as per the closing price of AUD 0.22 per share, up by ~7.317%, as of 21^st October 2021. However, the risk levels are high depending on price fluctuations of silver and gold.

Daily Technical Chart – SVL

Source: REFINITIV

Prospect Resources Limited (ASX: PSC)

Prospect Resources Limited is engaged in exploration and evaluation of battery minerals, in Australia and Zimbabwe. Its projects include Arcadia Lithium Project and Penhalonga Gold Project. Its market capitalization stood at AUD 176.42 million as of 21st October 2021, at the stock price of AUD 0.465 per share.

Financial and Operational Updates:  On 18^th October 2021, Eagle Eye Asset Holdings Pte Ltd has become a substantial shareholder and Lord of Seven Hills Holdings FZE ceased to be the substantial shareholder in PSC. As per the release of 11^th October 2021, as per Staged Optimised Feasibility Study (Staged OFS) executed by external agency Lycopodium confirmed the strong economic and technical viability for Arcadia Project and suggested +/- 12.5% capital expenditure in 2019 DFS and ore reserve increase from 37.4mt to 42.3mt, implying increase in pricing offset by lower metallurgical recoveries. On 4^th of October 2021, PSC delivered 25 tonne container of technical grade petalite concentrate (first shipment) found at Arcadia Pilot Plant to offtake its partner Sibelco.

As per the release of Annual Report to Shareholders for FY21 on 30^th September 2021, it showed an increase in revenue from continuing operations and reported as ~AUD 0.44 million for FY21 as against ~AUD 0.36 million in FY20. It reduced its Net Losses after Income Tax of ~AUD 4.60 million in FY20 to ~AUD 3.74 million in FY21. Cash at the end of FY21 was reported as ~AUD 7.87 million as of 30^th June 2021 versus ~AUD 1.69 million in PcP. On 7^th September 2021, Luzich Resources (Africa) LLC executed the option to 100% buy of PSC’s Penhalonga Gold Project by paying the balance amount of USD 750k of the USD 1.0 million total consideration. .

Technical Analysis: On the daily chart, PSC stock prices have significant gains and trading above its trend-following indicators 21-period SMA and 50-period SMA on a daily chart. However, prices have reversed after hitting its 52-week high at AUD 0.49 on 19th October 2021. The momentum oscillator RSI (14-period) is trading at ~58.34 levels. Also, there is a negative RSI divergence with prices clearly visible indicating a downside correction in the coming sessions. An important support level for the stock, is placed at AUD 0.387 and AUD 0.275 while the key resistance level is placed at AUD 0.504 and AUD 0.540.

Considering its Technical Analysis and latest financial performance, its current trading levels are on the higher side. The risk attached in investing in the scrip at this level should be taken in consideration with a cautious approach, hence a ‘Watch’ stance is suggested. The stock was analysed as per the closing price of AUD 0.465 per share, up by ~1.086%, as of 21^stOctober 2021.

Daily Technical Chart – PSC

Source: REFINITIV

Lake Resources N.L. (ASX: LKE)

LKE is an Australia based company, incorporated in 1997 and focused on the development and exploration of lithium brine projects in Argentina. Its projects are Kachi Project, Cauchari Project, Olaroz Project, Paso Project and Catamarca Pegmatite project. Its market capitalization as of 21^st October 2021 stood at AUD 904.91 million and the share price stood at AUD 0.77 per share.

Financial and Operational Updates: On 1^st October 2021, company revised its Stock Trading Policy. As per the release of Preliminary unaudited financial statements for FY21 on 1^st October 2021, it showed a decrease in Net Losses after Income Tax from ~AUD 4.90 million in FY20 to ~AUD 2.89 million in FY21. Cash at the end of FY21 was reported as ~AUD 25.65 million as of 30^th June 2021 versus ~AUD 55k in PcP. As announced on 28^th September 2021, Canadian Export Agency, Export Development Canada along with UK Export Finance (UKEF) have provided a letter of interest to fund ~70% for LKE’s flagship Kachi Lithium Project. On 23^rd September 2021, its partner Lilac Solutions announced fund raising of USD 150 million to ramp-up lithium supply to electric vehicles.

Technical Analysis: LKE's prices are trading with the higher highs and higher lows formation on the weekly chart, indicating an uptrend for the stock. Prices recently broke an upward sloping trend line resistance by an upside but were unable to sustain above the same, indicating the possibility of a downside correction. Prices are sustaining above the trend following indicators 21-period SMA and 50-period SMA, suggesting an uptrend; however, the momentum oscillator RSI (14-period) is trading in an overbought zone and forming a negative divergence with the price action, supporting a downside correction. The support level for the stock is placed at AUD 0.660 while the key resistance is at AUD 0.850.

As outlined above its high RSI levels and weak performance, a ‘Watch’ stance is suggested. The stock was analysed as per the closing price of AUD 0.77 per share, up by ~1.315%, as of 21^st October 2021.

Weekly Technical Chart – LKE

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 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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