Evolution Energy Minerals Limited

EV1 Details

Company Update: Evolution Energy Minerals Limited (ASX: EV1) is a mining and exploration company and its principal asset is the Chilalo Project, located in south-east Tanzania. The project is an advanced, and development-ready project and is believed to be a rich source of flake graphite products. The company is focused on bringing the project into production and has already incurred over $21,000,000 on it. A feasibility study which was completed in January 2020, demonstrated the economic viability of the project with decent returns.

Successful Listing on ASX:

The company made its ASX debut on 16 November 2021, under the ticker “EV1”, following a successful oversubscribed IPO which raised $22 million and offered 110,000,000 new shares at a price of $0.20 per share.

• UK-based ESG investment fund, ARCH Sustainable Resources Fund, has become ~25% shareholder in the company with an investment of $8 million in the IPO.
• The company reflected a market capitalisation of ~$32 million, post the completion of IPO at the IPO price of $0.20.
• The IPO proceeds will be used to further several work streams with the objective of moving Chilalo to the construction design phase including front-end engineering design, advance studies on downstream processing, and continuation of graphite product qualification and marketing.

Top 10 Shareholders as of 09 November 2021 (Source: Analysis by Kalkine Group)

Key Risks: The primary risks associated with the investment are:

• Limited History: The company was incorporated in 15 March 2021 and has limited operating history and financial performance.
• Regulatory Risk: Its line of business makes it prone to risks of approval for its projects from relevant regulatory authorities.
• Geography Risk: The location of the Chilalo Project is in Tanzania and is associated with the risk of operations in a foreign country. Royalty payments to the local Government might also put pressure on the company's profit margin.

Outlook: The investment by ARCH, following a site visit and detailed due diligence reflects the potential of the Chilalo project. The initial investment of $8 million is a part of potential investment of up to US$25,000,000 in the project. The company will host a webinar on 18 November 2021 and will provide a brief summary of the Chilalo Graphite Project and its post listing plans over the next 12 months.

Stock Update: The company made a strong start to trading with shares opening at $0.585 cents and making a high of $0.70 during the day and closed at $0.62 on 16 November 2021. The stock closed at the market price of $0.575, down by 7.259% as of 17 November 2021. The stock has gained a whopping ~2.9x on the subscription price since its listing. We will further evaluate the stock for any action once the correction sets in, since due to limited trading history, technical analysis cannot be performed.

The important support levels for the stock are AUD 0.535 and AUD 0.514, while the key resistance levels are AUD 0.605 and AUD 0.625.

EV1 Hourly Technical Chart, Data Source: REFINITIV 

Note: The orange color line represents the downward sloping trendline.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings.

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