Red 5 Limited (ASX: RED)

RED deals into gold production with high-quality assets in Western Australia’s Eastern Goldfields, majorly holding Darlot Gold Mine, King of the Hills, and Mapawa Gold Project. As of 4^th March 2022, the market capitalization stood at AUD 754.03 million.

H1FY22 Financial Results – Sales revenue from Darlot stood at $80.07 million and gold production stood at 32,898 ounces with sales of 31,761 ounces. Multiple initiatives have been undertaken at Darlot, including investment in underground mine development. The underlying negative EBITDA stood at $4.96 million. During the period, RED received US$19 million from the sale of the Siana Gold Project in the Philippines. The net cash outflow from operating activities stood at $3.87 million. As of 31 December 2021, the cash and metal accounts held $49.27 million. Moreover, the King of the Hills Project is 83% completed.

Technical Analysis: On the daily chart, RED prices are trading below the falling trend line resistance zone and facing the resistance of the same. Moreover, the momentum oscillator RSI (14-period) trading at ~57.36 level, showing negative sign. However, the prices are trading above the trend-following indicator 21-period SMA and 50-period SMA, which may act as a support level. An important support level for the stock, is placed at AUD 0.25 while the key resistance level is placed at AUD 0.36.

On the daily chart, RED prices are trading below the falling trend line resistance zone and facing the resistance of the same. Moreover, the momentum oscillator RSI (14-period) trading  at ~57.36 level, showing negative sign. However, the prices are trading above the trend-following indicator 21-period SMA and 50-period SMA, which may act as a support level. An important support level for the stock, is placed at AUD 0.25 while the key resistance level is placed at AUD 0.36.

Due to the unclear technical signals, negative EBITDA, and recent geopolitical distress, investing in this stock at such uncertain levels should be taken with calculated approach, hence a ‘Watch’ stance is suggested. The stock was analyzed as per the closing price of AUD 0.330 per share, as of 7^th March 2022.

Daily Technical Chart – RED

Source: REFINITIV

88 Energy Limited (ASX: 88E)

88E is engaged in oil and gas exploration activities. Its projects include Project Icewine, Yukon Leases, and Project Peregrine. As of 04 March 2022, the market capitalization of 88E stood at $730.71 million. On 01 March 2022, 88E reported that the mobilisation of Arctic Fox rig stood completed and Spud of Merlin-2 is scheduled for the week commencing 7 March 2022.

Q1FY22 Financial Update – For Project Peregrine, Merlin-2 is aiming gross mean prospective resource of 652 million barrels at 56% aggregate geological chance of success. Optimisation studies continues on Umiat Oil Field, inclusive of full field development planning and the evaluation of oil field synergies with Project Peregrine. Assessment at Project Icewine (75% stake) indicates extension of Pantheon Resources’ Talitha – A targets. Due diligence processes and joint regional development negotiations are well advanced at Yukon Leases (100% stake). As of 31 December 2021, cash balance stands at $32.3 million with no debt.

Technical Analysis: On the daily chart, 88E prices are trading in a symmetrical triangle pattern and hovering near the upward band of the pattern, which is acting as a psychological resistance. Further, the momentum oscillator RSI (14-period) is trading at ~56.35 level, showing a negative sign. Recently, the stock has witnessed a gap up which needs to be filled by price action in coming trading sessions. A breakout above the upper band of the pattern may bullishness to the stock price. Currently, the prices are trading above the trend-following indicator 50-period SMA, which may act as a crucial support zone. An important support level for the stock is placed at AUD 0.042 while the key resistance level is placed at AUD 0.053. Will evaluate any entry near the support zone.

Stock Recommendation: The stock of 88E gave a positive return of ~360.00% in the past year. The stock is currently trading lower than the 52-weeks’ average price level band of $0.008 - $0.096. Given the extension of Pantheon Resources’ Talitha-A targets, continued optimisation studies on Umiat Oil Field, and current trading levels, we give a “Speculative Buy” recommendation on the stock at the close price of AUD 0.046, as of 7^th March 2022.

Daily Technical Chart – 88E

Source: REFINITIV

Kingwest Resources Limited (ASX: KWR)

KWR is an Australian company involved in mining, exploration, and development of gold in Eastern Gold Fields Region of Western Australia. Its major projects comprise of Menzies Gold Project (MGP) and Goongarrie Gold Project (GGP). Its market capitalization stood at AUD 40.09 million as of 7^th March 2022.

2QFY22 Financial and Operational Updates:  As per 3^rd March 2022 announcement, further extensions were proven to the Kanowna Belle style Sir Laurence Discovery at Lake Goongarrie through 62 aircore holes for 4,065m. As per the half report released on 28^th February 2022, with the $15.94 million as other income, the cash outflow from operating activities were reported as ~$0.55 million and closed the accounts with the cash at the end of 31^st December 2021 was recorded as ~$4.48 million versus ~$3.01 million at the end of 30^th June 2021.

Technical Analysis: Currently KWR’s prices are sustaining below the falling trend line resistance level and facing the resistance of the same on the weekly chart. Moreover, prices are trading below the trend-following indicator 21-period SMA and 50-period SMA, which may act as a crucial resistance zone. The momentum oscillator RSI (14-period) is trading at ~39.11 level, indicating negative momentum. An important support level for the stock, is placed at AUD 0.135 while the key resistance level is placed at AUD 0.195.

Considering the stock’s trading with bleak reversal signs yet, investment in KWR at such uncertain situations should be taken prudently and after keeping the support and resistance levels in mind, hence a ‘Watch’ stance is suggested. The stock was analyzed as per the closing price of $0.1650 per share, as of 7^th March 2022.

Daily Technical Chart – KWR

Source: REFINITIV 

Note: 88 Energy Limited (Company) is a client of Kalkine Media Pty Ltd (Kalkine Media), an affiliate of Kalkine. However, under no circumstances have Kalkine or its related entities been, directly or indirectly influenced in making any related insights concerning Company as contained in this report, and no form of compensation is or will be received by Kalkine, Kalkine Media or Kalkine’s other related entities for the publication of this report.

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 Yellow colour line reflects the Trendline, which shows whether the direction of the scrip is upwards or downwards.

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