Anson Resources Limited

ASN Details

Acceleration on Project Paradox Brine, Utah: Anson Resources Limited (ASX: ASN) is engaged in the exploration, development, and acquisition of natural resources such as graphite, gold and lithium in Western Australia and US. As on 28^th January 2021, the market capitalisation of the company stood at ~$108.68 million. Paradox Brine project (PBP) in the USA is the company’s flagship project. ASN has made considerable progress on the undergoing engineering studies on the project and held a strategic review of dynamic market conditions for lithium. Based on the review, the company has decided to speed up the production of lithium chemicals to Stage 1 of the project. Based on the current Pre-Feasibility Studies, a 15,000tpa sodium bromide (NaBr) plant is required to be incorporated, following which the company has started negotiations with equipment, utility, and material suppliers and working on operational costs. The company has a robust focus on its Project ‘The Bull’ (nickel-copper-PGE) as well. It is currently identifying more exploration targets, testing the samples received from the current exploration and in the phase I of the project. The company raised $2.4 million from investors via issue of 86 million new fully paid ordinary shares in November 2020 and has sufficient funds to progress well on these projects.

September 2020 Quarter Results: During Q1FY21, the company commenced PFS work program on Paradox Brine Project and identified drilling targets at project ‘The Bull’. The company has completed an initial exploration program on its Yellow Cat Vanadium/Uranium Project, USA and completed the review of historical and recent exploration data on Ajana Project, Western Australia. During the quarter, the company incurred exploration and evaluation costs $629k mostly on the Paradox Brine and Yellow Cat Projects. The company held cash and cash equivalents of ~$1.42 million as on 30 September 2020.

Cash Flows from Operating Activities, Q1FY21 (Source: Company Reports)

Outlook: The development of the PBP in Utah, USA is an important milestone and foundation for ASN’s multiple revenue stream strategy. Hence, ASN plans to update the previous preliminary economic assessment (PEA) and complete pre-feasibility study (PFS) on the project till Q1/early Q2FY21 to progress towards project financing discussions.

Stock Recommendation: The stock of ASN gave a positive return of 257.14% in the past three months and a positive return of 400% in the past six months. The stock is currently inclined towards its 52-weeks’ high level of $0.150. On the technical front, the stock of ASN has a support level of ~$0.09 and a resistance level of ~$0.117.  On a TTM basis, the stock is trading at a price to book value multiple of ~64.5x as compared to industry (Metals & Mining) average of ~30.7x and is thus overvalued. Considering the high trading levels, significant returns for the past 3 month and 6 months, and TTM valuation, we are of the view that the stock might have factored in most of the positives of the company. Hence, we give an ‘Expensive’ rating on the stock at the current market price of $0.100, down by 20% on 29^th January 2021.

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

Ardiden Limited 

ADV Details

A Look at the December 2020 Quarter Results: Ardiden Limited (ASX: ADV) is an explore and developer of mineral resources. It is operating Pickle Lake Gold Project (PLGP) and three hard-rock Lithium Projects in northwest Ontario, Canada. As on 28^th January 2021, the market capitalisation of the company stood at ~$53.57 million. During the December 2020 quarter, the company carried out exploration work on its 3 identified gold prospects: Kasagiminnis, South Limb and New Patricia gold prospects. The exploration field operations at the PLGP extended with the drill programme and geochemical sampling of the Kasagiminnis gold deposit. It conducted an airborne mag survey at South Limb prospect further to the winter drilling campaign with Major Drilling contractor. The 3 fully owned lithium projects at Seymour Lake, Root Lake and Wisa Lake, are maintained and in good standing.

During the quarter, the company held its AGM on 26^th November 2020 and passed all the resolutions presented during the meeting. During the quarter, ADV raised $321k and $250k through the exercise of unlisted options. It also issued 10 million fully paid ordinary shares following the exercise of 10 million unquoted options for nil consideration to the MD & CEO. The company used $192k cash in operating activities and held cash & cash equivalents of ~$3.25 million as on 31 December 2020. 

Cash Flows from Operating Activities, Q2FY21 (Source: Company Reports)

FY20 Results: The company registered a revenue (interest income) of $18,317 in FY20 vs $79,860 in FY19. It registered a net loss of $978k for FY20 and held $1.50 million cash and cash equivalents as on 30 June 2020.

Outlook: The company has finished gold mineralisation at Kasagiminnis and will examine the initial results of the drilling programme to evaluate for regional geochemical programmes across PLGP’s landholding. While drilling on the South Limb prospect, ADV discovered minimum of 22 gold deposits which it plans to systematically explore. The company is actively considering quite a few positive options on how to advance on its 3 fully owned Lithium assets in Canada to maximise return to shareholders.

Stock Recommendation: The stock of ADV gave a negative return of 42.49% in the past three months and a positive return of 64.28% in the past six months. The stock is trading slightly lower than the average 52-weeks' price level band of $0.002-$0.049. On the technical front, the stock of ADV has a support level of ~$0.021 and a resistance level of ~$0.026.  On a TTM basis, the stock is trading at price to book value multiple of ~4.4x as compared to industry (Metals & Mining) median of ~3.2x and is thus overvalued. Considering negative ROE, nil gross margin, fall in revenue (interest income) and net loss for FY20, and TTM valuation, we give an ‘Avoid’ rating on the stock at the current market price of $0.023 down by 8.001% on 29^th January 2021.

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

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