Castile Resources Limited (ASX: CST)

CST is an Australian company focussing on exploration and development of minerals in Northern Territory. Its projects are Rover Project and Warumpi Project. As of 2^nd February 2022, its market capitalisation stood at AUD 37.94 million.

Operational Updates:

• As per its 2^nd February 2022 update, it has announced the due diligence at its Rover 4 Prospect which includes ~2.5km north of Rover 1. A total of 48 diamond holes have been drilled so far, where earlier work in 2000’s was done by Andromeda Metals Limited (ADN).
• As per quarterly update on 31^st January 2022, its 2021 Resource Definition drilling program was completed at 100% owned Rover 1 – Iron Oxide Copper Gold (IOCG) deposit and metallurgical testing confirmed that Rover 1 can produce ~96.6% magnetite product from waste streams.
• Explorer 108 drill resulted strong lead and zinc intercepts with increasing coincident gold.
• On 13^th January 2022, Samarang Ucits - Samarang Asian Prosperity changed its substantial shareholding from ~5.05% to ~6.06%.

Financial Highlights:

• 2QFY22: CST recorded its cash receipts as nil and closed the second quarter with a cash balance of ~AUD 6.69 million at the end of 30^th December 2021 versus ~AUD 8.90 million at the end of 30^th September 2021.
• FY21: For FY21, the revenues were reported as ~AUD 78.74k versus ~AUD 53.89k in FY20. The net losses after tax for FY21 were ~AUD 1.05 million compared to ~AUD 139.96k net losses in FY20.

Technical Analysis: On a weekly chart, CST’s prices are consolidating around a crucial support level AUD 0.160, indicating the possibility of an upside movement. The momentum oscillator RSI (14-period) is hovering around the mid-point and is currently at ~42.59 levels. However, the prices are trading below the trend-following indicators 21-period SMA and 50-period SMA which may as the resistance levels for the stock. Now immediate support level for the stock is placed at AUD 0.160 while the resistance level is at AUD 0.195.

While incorporating the support and resistance in analysing the investment opportunity, the investors with a high-risk appetite might consider a ‘Speculative Buy’ position on this scrip after glancing over its recent quarter activities updates (2QFY22), increasing substantial shareholding of shareholders and technical analysis. The stock was analysed as per the closing price of AUD 0.175, down by ~7.895%, as of 2^nd February 2022. However, the risk levels are extremely high considering the actual results and, future mineral extraction and its saleability.

Weekly Technical Chart – CST

Source: REFINITIV

Inca Minerals Limited (ASX: ICG)

Incorporated in 2008, ICG is a junior resource company in Australia and focuses on exploration and development of gold-copper porphyry deposits, copper and zinc skarn deposits, and iron ore-copper-gold deposits. It projects include the Frewena Group IOCG projects, East Arunta Group IOCG/Orogenic Gold projects, MaCauley Creek Porphyry-Skarn projects, Frewena Regional projects, and East Arunta Regional projects. As of 2^nd February 2022, its market capitalisation stood at AUD 41.86 million.

Operational Updates:

• On 31^st January 2022 the company announced the conclusion of negotiations with the landowner of the key areas at Frewena IOCG-SEDEX Projects in Northern Territory.
• As per its 2QFY22 Quarterly Report released on 19^th January 2022, it received Exploration License Application (ELA) which will cover government drill holes NDIBK01/04 in favour of Inca– ELA, which will lead to granting process.
• 90,000 line-kms of detailed airborne magnetic and radiometric (AMAGRAD) survey at Jean, Elson and Frewena, and Modified Induced Polarisation (IP) survey at MaCauley Creek got completed.

2QFY22 Financial & Top and Bottom Line: In its second quarterly update on 25^th January 2022, ICG recorded its cash receipts from customers as nil and closed the second quarter with a cash balance of ~AUD 9.44 million at the end of 30^th December 2021 versus ~AUD 12.37 million at the end of 30^th September 2021. The total revenues increased from ~AUD 36.02k in FY20 versus ~AUD 2.97 million in FY21. The net losses after tax of FY20 at ~AUD 1.47 million were converted into net profits after tax of ~AUD 1.45 million in FY21.

Technical Analysis: On the weekly chart, ICG stock prices are trading in a symmetrical triangle pattern and prices are now hovering around the lower band of the pattern. Moreover, the momentum oscillator RSI (14-period) is trading at ~40.88 level. However, the prices are trading below the trend-following indicators 21-period and 50- period SMA, which may act as a resistance level for the stock. An important support level for the stock, is placed at AUD 0.080 while the key resistance level is placed at AUD 0.097. 

After considering substantial increase in total revenues and 2QFY22 recent updates of gaining mining licence, the investors with a high-risk appetite might consider a ‘Speculative Buy’ position on this scrip, while keeping the support and resistance levels in consideration. The stock was analysed as per the current market price of AUD 0.088, 01:00 PM (GMT+10), Sydney, Eastern Australia as of 2^nd February 2022. However, the risk levels are extremely high keeping the mining updates, prospective results and their saleability.

Weekly Technical Chart – ICG

Source: REFINITIV

Western Areas Limited (ASX: WSA)

WSA operates into mining, processing and sale of nickel sulphide concentrates. It has Forrestania nickel as its project and also has Cosmos Nickel Operation. The company’s market capitalization stood at AUD 1.10 billion as of 2^nd February 2022.

Operations Updates:

• On 25^th January 2022, MUFG ceased to be the substantial shareholder in the company.
• As per its 2QFY22 Quarterly Report released on 27^th January 2022, after the first ore production in October 2021, development at Odysseus Mine continues with alignment in capital expenditure and schedule.
• First pass mining schedule for AM6 Feasibility Study got completed in November 2021, while on the other hand diamond drilling started at its Mt Goode Project.
• Mill production was reported as 4,025 nickel tonnes in concentrate this quarter versus 3,804 nickel tonnes in last quarter 1QFY22. The nickel sales for 2QFY22 were recorded as 4,511 nickel tonnes in concentrate at an average price of ~AUD 12.48/lb.

2QFY22 Financials & Top and Bottom Line: With an increase in operating cashflow by ~AUD 3.3 million to ~AUD 34.4 million, it closed the second quarter with a cash balance of ~AUD 142.6 million at the end of 30^th December 2021 with no drawn debt. The total revenues decreased by ~16% to ~AUD 257.17 million in FY21. The net profits of ~AUD 31.87 million in FY20 were converted to net losses after tax of ~AUD 7.71 million in FY21.

Technical Analysis: WSA's prices are consolidating on higher levels after making a new 52-week high of AUD 3.570. On the weekly chart, prices are trading above the trend-following indicators 50-period SMA and 21-period SMA, supporting a positive bias. However, the momentum oscillator RSI (14-period) is currently trading at ~60.871 levels and forming a negative divergence with the price action, indicating the possibility of downward movement. The support level for the stock is placed at AUD 3.00 while the resistance level is at AUD 3.750.

Considering its current trading levels and negative divergence formed by RSI indicator and reduction in revenues in FY21, investing in this stock at such price levels become risky and should be taken with a prudent strategy, hence a ‘Watch’ stance is suggested. The stock was analyzed as per the closing market price of AUD 3.42 per share, up by ~0.584%, as of 2^nd February 2022.

Weekly Technical Chart – WSA

Source: REFINITIV

Torian Resources Limited (Torian) (ASX: TNR)

TNR was incorporated in 1981, and is involved in gold mining, exploration and development in Western Australia. It operates through segments: Mining Exploration and Pastoral Lease and projects are situated in the Eastern Goldfields Province of the Yilgarn Craton. The company’s market capitalization stood at AUD 33.42 million as of 2nd February 2022.

Financial and Operational Updates: Operational Update: The Heavy Rare Earth Elements (HREEs) and Yttrium have been confirmed to occur across several regional scale survey lines at Yttria. In Q4FY21, TNR commenced 17,500 meters drilling campaign at Mt Stirling Gold Project. Major gold discovery was witnessed at both the Hydra and Tyrannus prospects. TNR delivered consistent high-grade gold which are expected to expand the Mt Stirling/Viserion gold system. Additionally, the high-grade Estera Lode was discovered at Diorite North expanding growth prospects. The company is on track to deliver Globe MRE during Q1FY22. Over 1 kilometres of rate earth potential rests uncovered at the Mt Stirling Central. Option entitlement issue stood oversubscribed and raised ~AUD 349,419 with additional proceeds from exercise option totalling to ~AUD 3.212 million.

Technical Analysis:  On a daily chart, after witnessing a high at ~AUD 0.036 on 31st January 2022, TNR stock prices have started consolidating and moving downwards to touch its trend-following indicator 21-period SMA. Moreover, the momentum oscillator RSI (14-period) has reversed from the overbought zone and is trading at ~50.005. It is also forming a negative divergence, indicating a possible downturn. The support levels for the stock are placed at AUD 0.024 while resistance level is at AUD 0.029.

Due to current trading levels and consolidating phase of the stock, 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 0.0270 per share, down by ~6.897%, as of 2^nd February 2022.

Daily Technical Chart – TNR

Source: REFINITIV 

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.

The Purple colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

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