Liquefied Natural Gas Limited

Share Transition Process: Liquefied Natural Gas Limited (ASX: LNG) develops and distributes natural gas liquefaction solutions. The company recently stated that it has received several inquiries with regards to the share transition process. In the release, it was mentioned that it wishes to reiterate the share listings legally eligible to transfer to the NASDAQ Stock Exchange as part of the previously announced re-domiciliation of the company.The Company's fully paid ordinary shares are traded on the ASX under the symbol of “LNG”. These shares are identified by the International Securities Identification Number (ISIN) AU000000LNG0. It sponsors a Level 1 American Depositary Receipt (ADR) traded over-the-counter (OTC) in the U.S. under the symbol LNGLY. Further, the Company keeps on foreseeing the completion of the re-domicile process in late 2019 or early 2020, which is subject to a shareholder vote at a Scheme Meeting, the length of regulatory processes in the U.S. and Australia, and on availability of Court dates in Australia.

June Quarter Highlights: During the quarter, the company received the Industrial Tax Exemption Program incentive for its Magnolia LNG project, from the State of Louisiana.Under the program, manufacturers who make a commitment to jobs and payroll in Louisiana are offered tax incentives. In the month of June, Magnolia LNG agreed to an updated legally binding LSTK fully wrapped EPC contract with KSJV.

Net operating cash outflow for the quarter amounted to A$6.7 million, as compared to A$7.9 million in the previous quarter. The following picture provides an idea of the company’s revenues from ordinary activities:


Revenues From Ordinary Activities (Source: Company Reports)

Stock Recommendation: The stock of the company generated negative returns of 16.67% and 49.37% over a period of 1 month and 3 months, respectively. The ongoing re-domiciliation of the company along with share transition process is expected to bring in significant benefits for the shareholders. The company will benefit from investments by the North American investors who hold significant capital and are familiar with the LNG industry. In addition, the transition is expected to provide improved valuation and better trading liquidity in comparison to its US-listed peers. As per ASX, the company’s stock is trading closer to its 52-week lower price of $0.195, indicating a decent opportunity for accumulation. Hence, considering the above-factors and current trading levels, we give a “Speculative Buy’ recommendation on the stock at the current market price of $0.200 (down 6.977% on 16 August 2019).
 

Liontown Resources Limited

Capital Raising for Development of Projects: Liontown Resources Limited (ASX: LTR) is engaged in the exploration of minerals, including lithium, vanadium, gold, and nickel deposits.The company recently announced a placement of 138,083,335 shares to institutional and sophisticated investors. In addition, the company will also issue 100,000 shares following the exercise of unlisted options. The funds from the share placement will be utilised in exploration and evaluation activities at the company’s wholly owned Kathleen Valley Lithium Tantalum Project and advancement of the Buldania Project.

June Quarter Highlights: With respect to Kathleen Valley Lithium Project (WA), it was added that new measured, indicated and inferred mineral resource estimate has been wrapped up for Kathleen Valley Lithium-Tantalum deposit. The net cash used in operating activities amounted to A$3,314,549 and the following picture provides a brief idea of the same:


Net Cash Used In Operating Activities (Source: Company Reports)

Stock Recommendation: The stock has risen sharply in the last 3-month, 6-month and 1-year with 32.53%, 403.98%, and 295.99%, respectively. On YTD, the stock has gained 326.45%. The recent capital raising of $18 million undertaken by the company through the placement of shares, puts it in a decent position to develop both of its high-quality lithium assets in Australia. We suggest investors to keep a close watch on the stock until the benefits of the recent capital raising unfold into the company’s business performance. Currently, the stock of the company is trading above the average of 52 weeks high and 52 weeks low price of $0.180 and $0.019, respectively. Hence, considering the aforesaid facts and current trading levels, we have a wait and watch stance on the stock at the current market price of $0.110 per share and wait for better entry levels.
 

AVZ Minerals Limited

Change in Interests: AVZ Minerals Limited (ASX: AVZ) is engaged in the business of mineral exploration. The company recently updated that one of the Directors, Graeme Johnston, acquired 4,000,000 ordinary shares and disposed of a similar number of performance rights. Another Director, Nigel Ferguson, acquired 3,000,000 ordinary shares and disposed of 3,000,000 performance rights. Rhett Brans acquired 1,500,000 ordinary shares, disposing of the same number of performance rights.

Highlights of June Quarter: During the period, the company maintained a strong balance sheet position with $8.7 million cash and no debt.The company’s equity ownership at Manono Project increased by 5%, with further increase in the planned ownership. The company also formed a strategic relationship with Hauyou for assistance in financing and logistics for Manono Project.

The following picture provides an idea of the company’s key numbers:


1HFY19 Income Statement (Source: Company Reports)

Stock Recommendation: The stock of the company generated returns of 27.20% and 15.91% over a period of 3 months and 6 months, respectively. Recently, the company reported that it has achieved positive results from initial metallurgical test work on Roche Dure Resource Samples. Moreover, the company has a robust balance sheet which might attract the attention of the market players. Also, the strong balance sheet position might help the company in witnessing long-term growth.

As per Australian Securities Exchange (or ASX), the market capitalisation of the company stood at ~$115.21 million. Currently, the company’s stock is trading closer to its 52-week lower levels of $0.037, proffering a decent opportunity for accumulation Based on the aforesaid factors and current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.051 per share (up 2% on 16 August 2019).

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