E2 Metals Limited

E2M Details

Exploration at Conserrat Projects: E2 Metals Limited (ASX: E2M) is engaged in the exploration and evaluation of mineral deposits in Australia and Argentina. The market capitalisation of the company stood at ~$86.80 million as on 30^th December 2020. Recently, the company provided an update on exploration for the Conserrat project, and highlight of results can be seen in the following picture:

Drilling Update (Source: Company Reports)

A Look at September 2020 Quarter: During September 2020 quarter, the company was focused on its Santa Cruz projects in Argentina. In addition, the company’s exploration work programs in Santa Cruz were on hold through most of the reporting period, with work resuming in late September with a 4000m diamond and reverse circulation (RC) drill program commencing at the Conserrat project. During the quarter, E2M executed a share sale facility of fully paid ordinary shares for shareholders who hold less than a marketable parcel of shares. During FY20, the company recorded a loss amounting to $2,363,468 as compared to $2,979,521 in FY19.

Outlook: Looking forward, the company is focused on the development of conserrat project and expects to receive positive results from drilling at Mia and Patricia.

Stock Recommendation: The company closed September 2020 quarter with a strong financial position supported by cash balance of $5.2 million. The stock of E2M has moved up by 134.69% and 219.44% in the past three and six months, respectively. As a result, the stock is trading above its 52-week low-high average of $0.535. In addition, the stock is trading at a price to book value multiple of 19.9x as compared to the industry median (Basic Materials) of 2.8x on TTM basis. On a technical front, the stock has a support level of ~$0.55 and a resistance level of ~$0.89.  Hence, considering the higher valuation and steep price movement in last months, we are of the view that most of the positive factors have been discounted at current trading level and give an “Expensive” rating on the stock at the current market price of $0.570 per share, down by 1.725% on 30^th December 2020.

E2M Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Australian Vanadium Limited

AVL Details

Signing of MOU with U.S. Vanadium LLC: Australian Vanadium Limited (ASX: AVL) is involved in the exploration of vanadium, copper & gold, uranium. The market capitalisation of the company stood at ~$41.02 million as on 30 December 2020. Recently, the company has inked a non-binding Memorandum of Understanding (MOU) with U.S. Vanadium LLC (USV) with respect to offtake from the Australian Vanadium Project. The company added that MOU sets a framework for progression to a possible formal and binding agreement before its Project Final Investment Decision. During Q1FY21, the company managed to return to normal operations after the disruption of lockdowns considering the initial COVID-19 global responses. In addition, the company finished the placement of $5 million. The net cash outflow from operating and investing activities stood at $509k and $756k, respectively.

Cash Flow (Source: Company Reports)

Outlook: Moving forward, the company would continue to carry out other potential investment opportunities to improve shareholder value.

Stock Recommendation: As on 30^th September 2020, the cash balance of the company stood at $8.96 million. Current ratio of the company stood at 7.64x in FY20 as compared to the industry median of 1.74x. This indicates that the company is well-positioned to settle its short-term obligations against the broader industry. In addition, the stock is trading at a price to book value multiple of 1.4x as compared to the industry median (Basic Materials) of 2.8x on TTM basis. On a technical analysis front, the stock has a support level of ~$0.009 and a resistance level of ~$0.015. Therefore, considering the decent liquidity position, signing of MOU and key risks with the business, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.014 per share as on 30^th December 2020.

AVL Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Disclaimer  

The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation. Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product. The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as personalised advice.