Stocks’ Details

Legend Mining Limited

Commencement of Drilling at Mawson: Legend Mining Limited (ASX: LEG) is engaged in the exploration of nickel and copper deposits. The market capitalisation of the company as on 18 March 2021 stood at ~$344.39 million. As per a recent update, the company has announced that diamond drilling has commenced at Mawson. According to a signed water agreement with the station owner, multiple diamond rigs can be deployed at Mawson.

December 2020 Quarter Update: During the quarter, the company drilled its best hole to date at Mawson with RKDD034 giving 31.1m @2.8% Ni, 2.04% Cu, 0.15% Co from 200.7 m. The expenditure related to exploration was at $4 million during the period. The net cash from operating activities stood at $200,000.

Operating Cash Flow Performance (Source: Company Reports)

Outlook: The company has a cash position of $27.2 million as on 31 December 2020 with no debt on the balance sheet. Its location of ~3000 sq.km. of under-explored nickel terrain provides a significant opportunity for discovery and growth in the region.

Stock Recommendation: On 11 February 2021, the company has announced that the initial metallurgical test work has led to positive results on the samples from diamond drill hole RKDD034 at the Mawson prospect. As per ASX, the stock of LEG is trading below its average 52-weeks’ levels of $0.053-$0.215. The stock of LEG gave a positive return of ~25% in the past three months and a negative return of ~19.35% in the past six months. On a technical analysis front, the stock of LEG has a support level of ~$0.11 and a resistance level of ~$0.135. On a TTM basis, the stock of LEG is trading at a P/BV multiple of 7.8x, higher than the industry median (Metals & Mining) of 2.8x. Considering the valuation on a TTM basis, absence of revenue visibility and the key risks associated with the business, we are of the view that most of the positive factors have been discounted at current trading levels. Hence, we suggest investors to wait for a better entry-level and give an ‘Expensive’ rating on the stock at the current market price of $0.125 as on March 18, 2021.

Renascor Resources Limited

Positive Developments in the Siviour Project: Renascor Resources Limited (ASX: RNU) is engaged in mineral exploration, development and evaluation. The market capitalisation of the company as on 18 March 2021 stood at ~$233.19 million. In a recent update, the company has said that it is on track to operate as an in-country mine and purified spherical graphite operation outside of China in its 100%-owned Siviour Battery Anode Material Project. There have been on-going development activities on the project and recent flotation optimisation test work shows improved graphite purities and recovery.

H1FY21 Performance Update: The Group reported a loss of $400,598 during the period, compared to a loss of $775,830 in H1FY20. It raised a capital of $3,217,683 via placements to sophisticated investors during the period. There was an improvement in the cash position of the company to $4.55 million as on 31 December 2020, from a level of $1.85 million on 30 June 2020.

H1FY21 Financial Performance (Source: Company Reports)

Outlook: The company is developing a vertically integrated Battery Anode Material Manufacturing Operation in South Australia. The geology and location of the Siviour Graphite Deposit put it in an advantageous position to produce graphite concentrate at a low-cost. Moreover, the EV demand is driving the need for purified spherical graphite, whose application is exclusively found in the lithium-ion battery.

Stock Recommendation:  As per the company, its eco-friendly graphite purification technology, which has been independently validated in Germany, has produced positive results up to 99.98% C. As per ASX, the stock of RNU is trading above its average 52-weeks’ levels of $0.004-$0.160. The stock of RNU gave a positive return of ~1,344.44% in the past nine months and a positive return of ~80.55% in the past one week. On a technical analysis front, the stock of RNU has a support level of ~$0.115 and a resistance level of ~$0.155. On a TTM basis, the stock of RNU is trading at a P/BV multiple of 11x, higher than the industry median (Metals & Mining) of 2.8x. Considering the current trading levels and valuation on a TTM basis, steep price movements in the past few months and the key risks associated with the business, we are of the view that most of the positive factors of the company have been discounted at current trading levels. Hence, we suggest investors to wait for a better entry-level and give an ‘Expensive’ rating on the stock at the current market price of $0.135, down by 3.572% as on March 18, 2021.

King Island Scheelite Limited

Business Update: King Island Scheelite Limited (ASX: KIS) is engaged in the review and development of the Dolphin Project on King Island. The market capitalisation of the company as on 18 March 2021, stood at ~$104.79 million. The company has recently raised an amount of $5.6 million through a placement of 28 million shares at $0.20 per share. It plans to use the proceeds to pay a debt of $4.7 million, which it had previously incurred in acquiring fixed property, as well as for working capital requirements.

H1FY21 Results Update: During the period, the net loss increased by 29.2% to $1.29 million when compared to the previous corresponding period. As per the Revised Feasibility Study released on 16 December 2020, there has been an increase in the NPV of the Dolphin Tungsten Project from $146 million to $241 million at a discount rate of 8%. It ended the period with a cash position of $1.76 million as on 31 December 2020.

H1FY21 Financial Performance (Source: Company Reports)

Outlook: The company is focused on bringing the high-grade Dolphin tungsten deposit into production and secure debt funding for the purpose. It also plans to commence and finalise legal documentation on the Tasmanian Government Loan.

Stock Recommendation: On 2 February 2021, KIS has secured $10 million in loan funding from the Tasmanian Government for the redevelopment activities in the Dolphin Tungsten Project. As per ASX, the stock of KIS is trading above its average 52-weeks’ levels of $0.033-$0.325. The stock of KIS gave a positive return of ~391.93% in the past nine months and a positive return of ~35.55% in the past one week. On a technical analysis front, the stock of KIS has a support level of ~$0.29 and a resistance level of ~$0.314. Considering the current trading levels, volatile price movements in the past few months and widening of losses, we give an ‘Avoid’ rating on the stock at the current market price of $0.305, down by 4.688% as on March 18, 2021.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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