Victory Mines Limited

VIC Details

VIC Rides on Acquisition Synergies: Victory Mines Limited (ASX: VIC) is engaged in the new project acquisition and exploration activities. The market capitalisation of the company stood at ~$17.13 Mn as on 9^th September 2020. Recently, the company provided an update on the acquisition of Carmichael Prospecting Company Pty Ltd (CPC), which was approved by shareholders at the shareholder meeting on 14 August 2020. The company added that the settlement of the acquisition is conditional on completing the transfer of a tenement to a third party and final financial due diligence by Carmichael Prospecting Company Pty Ltd.

Previously, the company has also wrapped up the acquisition of Serena Mineral Limited’s rights with respect to the Farm-in and Joint Venture Agreement to earn an 80% joint venture interest in three stages by incurring an amount of $2,100,000 on exploration. During June 2020 quarter, the net cash outflow from the operating activities stood at $133k after spending staff costs and administration and corporate costs of $49k and $85k, respectively.

Cash Flow from Operating Activities (Source: Company Reports)

Capital Raising:  The company successfully raised $100,000 via a placement to Serena’s nominees of 100 million fully paid shares at $0.001 and 100 million attaching unlisted options exercisable at $0.003 per share on or before 31 December 2024. In addition, the company also issued 500 million unlisted option exercisable at $0.003 per share on or before 31 December 2024 to shareholders who participated in the placement undertaken by Shaw & Partners and 50 million fully paid shares and 50 million attaching options to Roger and Erica Blake

Key Risks: The company’ business activities are exposed to a variety of financial risks, such as market risk, credit risk and liquidity risk. 

Stock Recommendation: During June 2020 quarter, the company paid $49,000 paid to related parties for Directors fees. The stock of VIC has moved up by 166.67% and 300% in the past one and six months, respectively. The 52-week low-high range for the stock stands at $0.001-$0.005, respectively. In addition, the stock is trading at a price to book value multiple of 13.7x as compared to the industry median (Basic Materials) of 2.4 on TTM basis. On the technical analysis front, the stock of the company has a support level of ~A$0.001 and a resistance level of ~A$0.012. Therefore, considering the upside movement in the stock and valuation on TTM basis, we suggest investors to avoid the stock at the current market price of $0.004 per share on 9^th September 2020.

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

Metals Australia Ltd

MLS Details

A Quick Look at FY20 Results: Metals Australia Ltd (ASX: MLS) is engaged in the mineral exploration with a market capitalisation of the company stood at ~$7.3 Mn as on 9^th September 2020. During FY20, MLS continued the exploration activities at Lac Rainy Graphite Project and the Eade-Pontois-Felicie Gold Projects. At Lac Rainy Graphite Project, the company finished metallurgical testwork on representative composite samples collected from split drill core, which include sample preparation, sample characterization, comminution testing, flotation testing and static environmental testing. For FY20, the company reported revenue amounting to $1,650 as compared to $12,213 in the year-ago period. The company recorded a loss from continuing operations of $1,515,663 against a loss of $732,434 in FY19.

Key Financials (Source: Company Reports) 

Completion of Tranche 1 Placement: On 28^th August 2020, the company wrapped up a capital raising of $824,670 (before associated costs) via Tranche 1 issue of 440,999,999 fully paid ordinary shares at $0.00187 per share. The company would primarily use the funds for further advanced gold exploration programs at the Eade-Pontois-Felicie Gold Projects, downstream product specification test work on Lac Rainy graphite concentrate and general working capital including the review of complementary project acquisition and farm-in opportunities.

Key Risks: The company’s business activities are exposed to economic, social, and environmental risks, which may impact the financial and operational performance of the business. MLS is also sensitive to securities price risk on investments held for trading or for medium to longer terms.

Stock Recommendation: During the past period, the company experienced a major decline in its key margins. The stock of MLS has moved up by 100% in the past six months but went down 20% in the last one-month period. In addition, the stock of MLS is trading at par with its 52-week low and high level of $0.001 and $0.003, respectively. On the technical analysis front, the stock of the company has a support level of ~A$0.0010 and a resistance level of ~A$0.0030.  Therefore, considering the low market capitalisation, upside movement in the stock in the last three months, decline in revenue and rise in losses, we suggest investors to avoid the stock at the current market price of $0.002 per share on 9^th September 2020.

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