Aeon Metals Limited

AML Details

Appointment of Financial Adviser: Aeon Metals Limited (ASX: AML) is engaged in the exploration of copper and cobalt. As announced on 7 December 2021, the company has appointed Bacchus Capital Advisers (BCA) to the role of a strategic financial adviser. BCA has extensive experience in resource capital markets in Australia and the northern hemisphere.

Q1FY22 Financial and Operational Highlights:

• During the September 2021 quarter, the company has raised over $10 million via a placement to sophisticated and institutional investors and a share purchase plan for existing shareholders.
• The metallurgical optimisation testwork results for bulk sulphide flotation and leaching were consistent with the outcomes of scoping study.
• At the end of the quarter, the company had a cash balance of $6.57 million.

Cash Balance (Source: Analysis by Kalkine Group)

Key Risks:

• Stiff Competition: The company operates in a very competitive environment; rising market share of the peers in the industry could impact its business performance.
• Price Disruption: AML’s operational and financial performance could be affected by major volatility in the prices of the commodities in which the company deals.

Outlook:  Looking forward, AML’s priorities revolve around to advance Walford Creek towards the development of a world class base metals mine and to continue the exploration on priority exploration tenements.

Stock Recommendation: The stock of AML is trading near to its 52-week low level of $0.036, offering a decent opportunity for accumulation. The stock has been corrected by ~28.07% in the past three months. In addition, the stock is trading at a P/BV multiple of 0.6x as compared to the industry median (Basic Materials) of 2.5x on a TTM basis. Thus, it can be said that the stock is undervalued at the current trading levels. Considering valuation on a TTM basis, recent capital raising, optimistic outlook, current trading level and key risks associated with the business, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $0.040, as on 05 January 2022, 10:45 AM (GMT+10), Sydney, Eastern Australia.

AML Daily Technical Chart, Data Source: REFINITIV  

Note: The purple line reflects the RSI (14-day period)

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. 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 uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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