Stocks’ Details

Sayona Mining Limited

Growth in North America Battery Market: Sayona Mining Limited (ASX: SYA) is engaged in the exploration and development of minerals. The market capitalisation of the company stood at ~$28.43 Mn as on 6^th October 2020. Recently, the company referred to the recent supply agreement between Tesla and Piedmont Lithium for spodumene and other key battery metals, which is supporting the development of a North American supply chain for the battery sector. SYA added that the agreement happens to be a major milestone for the North American battery sector as well as regional spodumene suppliers including Sayona. This agreement might create headroom for growth in the future as the company is strengthening its position in Québec to become one of the most economical, environmentally sustainable, and strategic suppliers of spodumene to the North American battery market. In addition, the company is developing its flagship Authier Lithium Project and evolving Tansim Project in order to meet the growing spodumene supply gap.

FY20 Key Highlights: For the year ended 30^th June 2020, the company reported revenue amounting to $60,429 as compared to $124,098 in FY19. Loss for the year amounted to $5,403,751 against $2,225,651 in FY19. During FY20, the company was mainly focused on finishing the studies and seeking the approvals for initiating the development of the Authier lithium project.

Key Financials (Source: Company Reports)

Agreement with Altium: In the month of August 2019, the company reached an earn-in agreement with Altura Mining Limited, wherein Altura would spend A$1.5 million on exploration in the Pilgangoora project portfolio in the time span of three-year and retains a 51% stake in the project. SYA possesses the remaining interest as well as the right to contribute to project evaluation and development in the future to contribute to the upside potential.

Stock Recommendation: The stock of SYA has given a positive return of 25% and 42.86% in the past three and six months, respectively. In addition, the stock is inclined towards its 52-week low of $0.006, offering decent opportunities for accumulation.  On the technical analysis front, the stock price of SYA has a support level of ~$0.008 and a resistance level of ~$0.014. Therefore, considering the growth in the North American battery market, agreement with Altium, current trading levels and key risks, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.010 per share on 6^th October 2020.

Castillo Copper Limited 

Acquisition of Tenements in Broken Hill:  Castillo Copper Limited (ASX: CCZ) is involved in the exploration of base metals with a market capitalisation of $39.47 Mn as on 6^th October 2020. Recently, the company notified that its geology team have finished the review of the Eldorado prospect, within the Mt Oxide Project. The review demonstrates Eldorado prospect to be potential for operationally controlled copper mineralisation. In another update, the company announced that it has signed a binding agreement with Wyloo Metals Pty Ltd for the acquisition of two tenements. The company added that the acquisition delivers Castillo Copper a strong ground position in Broken Hill.

FY20 Sneak Peek: During FY20, the company recorded a total comprehensive loss of $1,870,690 as compared to $1,917,809 in FY19. In addition, the company successfully raised around $2.1 million (before costs) via a placement to sophisticated and institutional investors, which was well supported by current and new Australian shareholders. In the month of August 2020, CCZ also commenced trading on the London Stock Exchange Plc. 

Key Financials (Source: Company Reports)

Outlook: Looking forward, the company is focused on the development of its three pillared strategy including continued exploration efforts at Mt Oxide in Queensland, Cangai Copper Mine in New South Wales and its four Zambian properties.

Stock Recommendation: In the past six months, the stock of CCZ has moved up by 160%. As a result, the stock is inclined towards its 52-week high level of $0.053. In addition, the stock is trading at a price to book value multiple of 6.4x as compared to the industry median (Basic Materials) of 2.4x on TTM basis. Thus, it seems that the stock is overvalued at current trading levels. On a technical analysis front, the stock price of CCZ has a support level of ~$0.037 and a resistance level of ~$0.050. Hence, in light of the price movement in the stock recently, current trading levels and higher valuation, we give an “Expensive” rating on the stock at the current market price of $0.043 per share, up by 10.256% on 6^th October 2020, owing to the completion of the review of the Eldorado prospect. We further suggest investors to wait for better entry levels. 

Peako Limited

Rights Issue for Advancement of Projects: Peako Limited (ASX: PKO) is in the exploration and development of natural resources. The market capitalisation of the company stood at ~$5.68 Mn as on 6^th October 2020. On 10^th September 2020, PKO announced a non-renounceable pro-rata rights issue, which is currently in progress. Under the offer, every eligible shareholder can subscribe for one new share at an issue price of $0.032 per new share. In addition, every subscriber would also be eligible to receive one new option for every two shares subscribed for and received under this Rights Issue. The company is seeking to raise up to $1,010,171 (before costs) from the rights issue. The company would use these funds to improve its exploration activities at its projects. The rights issue would close on 7^th October 2020. For the year ended 30^th June 2020, the company recorded a net loss amounting to $487,110 as compared to $285,360 in FY19.

Financial Summary (Source: Company Reports)

What to Expect: The company is focused on testing new targets, which include field validation of high priority targets. PKO has scheduled to conduct its Annual General Meeting on 5^th November 2020.

Stock Recommendation: In the month of September 2020, the company finished a share placement and raised $939,500 before costs. The stock of PKO has moved up by 285.44% and 250.40% in the past three and six months, respectively. As a result, the stock is inclined towards its 52-week high level of $0.051. On a technical analysis front, the stock price of PKO has a support level of ~$0.034 and a resistance level of ~$0.039. Therefore, considering the low market capitalisation, current trading levels and rising business losses, we suggest investors to avoid the stock at the current market price of $0.036 per share on 6^th October 2020.

Comparative Price Chart (Refinitiv, Thomson Reuters)

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