Core Lithium Limited

CXO Details

Production at Finniss Lithium Project to start by the end of 2019:Core Lithium Limited (ASX: CXO), domiciled in Australia, is a metal and mining company currently targeting the production of lithium through its 100% owned Finniss Lithium Project. The company has six other 100% owned projects under its portfolio exploring copper, zinc, uranium, silver, and lead. Recently, the company has secured a grant of a mineral lease for its Finniss Lithium Project. The company is conducting a definitive feasibility study over the grants which is expected to be completed by March end with the first production at the end of 2019.


2018 Mineral resource summary (Source: Company Reports)

The company has not started generating revenuebecause of which it is not reporting any margins and not generating any returns for its shareholders.The company enjoys virtual debt-free status with the current ratio of 10.26x as on 30 June 2018. It reported a higher buyback yield of 39.8% as compared to the industry median of 18.2%indicatingthe stock to be attractively priced.

The company has ~693.87 million shares outstanding with the market cap of circa $40.24 million and a beta of 0.45x.During the past six months, the stock has generated a positive yield of 31.82%. Today, the stock was down by 3.448% as compared to the previous close, currently trading at the price of level $0.056. The Relative Strength Index is seen in a neutral position, and the price is currently trading above the Simple Moving Average line of the Bollinger band. With the grant of mineral lease, production to begin by the end of 2019, and higher than industry buyback yield, we have a ‘wait and watch’ stance on the stock at the current market price of $0.056 and we suggest to investors that they should wait for a few more trading sessions to get the better entry levels.


CXO Daily Chart (Source: Thomson Reuters)
 
 

Pilbara Minerals Limited

PLS Details

Stage 1 production started at the Pilgangoora Lithium-Tantalum Project:Pilbara Minerals Limited (ASX PLS), domiciled in Australia, is a metal and mining company engaged in the production of lithium through its 100%-owned Pilgangoora Lithium-Tantalum Project located in Australia. It also has 51% interest Mt Francisco lithium-tantalite exploration asset located in Western Australia. The company has started with the production over the Pilgangoora Lithium-Tantalum Project for Stage 1: 2MTPA and will complete the financing for Stage 2: 5MTPA in 1Q19 with the construction to begin in 2Q19 and commissioning in 1Q20.


Korean companies batter plant expansion over the next 10 years (Source: Company Reports)

During FY18, the company reported negative margins after a break of 2 years. Although the returns to the shareholders have improved over the years, the ROE is still negative for FY18.The company reported a favourable debt/equity ratio of 0.38x with a current ratio of 3.01x. The company has ~1.74 billion shares outstanding with the market cap of circa $1.21 billion, and a negative beta of 1.16x (5-Year, Monthly basis) indicating an inverse relation of the stock with the market. It reported a higher than industry EV/EBITDA of 19.0x showing the company to be overvalued.

During the last month, the stock has generated a positive yield of 12.10%. Today, the stock was down by 2.158% as compared to the previous close, currently trading at the price of level $0.680. The Relative Strength Index is seen in a positive position, and the price is currently trading on the Simple Moving Average line of the Bollinger band. With the improving returns to shareholders, favourable financial position, and current price scenario, we, therefore, maintain our“Hold” recommendation on the stock at the current market price of $0.680.


PLS Daily Chart (Source: Thomson Reuters)
 
 

Altura Mining Limited

AJM Details

Shipment of 24,000 dry metric tonnes:Altura Mining Limited (ASX: AJM) is an Australian based metal and mining company engaged in the production of lithium through itsAltura Lithium Mine at Pilgangoora. It commenced the production in 2018. The company recently provided an update over the shipment of 4 cargoes to Chinese based converters totalling 24,000 dry metric tonnes which exceeded their expectation with high grades of minerals. The company, further, plans to dispatch one shipment per month and will move to two once the nameplate capacity is achieved.


Stage 2 DFS result (Source: Company Reports)

Over the past five years,the margins of the company have been negative and fluctuating. Although the Return to shareholders has improved but is still negative.The company has ~1.82 billion shares outstanding with the market cap of ~$291.26 million, and trading at the lower level.

During the last one month, the stock has generated a positive yield of 6.67%. Today, the stock was down by 3.125% as compared to the previous close, currently trading at the price of level $0.155. Recently, it has made a new support level of $0.14. The Relative Strength Index is seen in a positive position, and the price is currently trading near the lower band of the Bollinger band. With the decent plans for the shipment in the future, trading at lower price levels, and a bullish indication through charts, we, therefore, propose a“Speculative Buy” recommendation on the stock at the current market price of $0.155.


AJM Daily Chart (Source: Thomson Reuters)
 

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