Essential Metals Limited (ASX: ESS)

ESS was listed in 2003 and is an Australian company indulged in mining and exploration of lithium and gold with JV in nickel. Its operates Pioneer Dome Lithium Project, Golden Ridge Gold Project, and Juglah Dome Gold Project. As of 4^th February 2022, the company’s market capitalisation stood at AUD 114.25 million.

Operational Updates:

• As per quarterly update on 28^th January 2022, 13-hole drilling programme started in December 2021 and a mineral resource of 11.2 Mt @1.21% Li2O has been found in the North at 100% owned Pioneer Dome Lithium Project.
• A 30-hole/2,320m air-core program is expected to commence later in January 2022 and to be finished by mid-February 2022, which will target near surface (oxide/transition) mineralisation at both the Cade and Davy deposits at Pioneer Dome Lithium Project.
• The divestment of its non-core-early-stage Mavis Lake Exploration asset (51% interest) in Canada to Critical Resources Limited (ASX: CRR) for a consideration of ~AUD 0.75 million in cash and 34 million listed CRR ordinary shares got completed on 5^th January 2022.
• ESS completed a capital raise of ~AUD 0.25 million by issuing 1,546,412 fully paid ordinary shares.

2QFY22 and Annual Financials: With the nil cash receipts, ESS’s net cash outflow from operating activities were ~AUD 422k and closed its second quarter (2QFY22) with a cash balance of ~AUD 8.99 million as of 30^th December 2021 with no debt versus ~AUD 8.98 million in the preceding quarter. As per the Annual Report, the company reported a decrease on Y-o-Y in its revenue from sale of good from ~AUD 9.13 million in FY20 to ~AUD 106k in FY21. Therefore, the net profits of ~AUD 1.36 million in FY20 were converted into net losses of ~AUD 1.38 million in FY21.

Technical Analysis: On a daily chart, ESS stock prices are sustaining above the rising trend line support level at AUD 0.41 and taking the support of the same. The momentum oscillator RSI (14-period) is trading at ~58.41 level, indicating bullish momentum. Moreover, prices are trading above the trend-following indicators 21-period SMA and 50-period SMA, which may act as a support zone. An important support level for the stock, is placed at AUD 0.41 while the key resistance level is placed at AUD 0.54.

On the basis of drilling update on Lithium Project, commencement of its air-core program and technical levels, keeping the support and resistance level as crucial points, investors with a high-risk appetite might consider a ‘Speculative Buy’ position. The stock was analysed as per the closing price of AUD 0.470 as of 4^th February 2022. However, the risk levels are high depending on the timely commencement of the air-core program and future findings saleability.

Daily Technical Chart – ESS

Source: REFINITIV

Aspire Mining Limited (ASX: AKM)

An Australian company, AKM is metallurgical coal and rail company. Covering Australia, Mongolia and Singapore geographically, it holds interest in Ovoot Coking Coal Project (OCCP Project) and the Nuurstei Coking Coal Project. As of 4^th February 2022, it’s market capitalisation stood at AUD 40.10 million.

Operational Updates:

• As per quarterly update on 28^th January 2022, the company has spent ~$0.6 million on the OCCP project over the quarter, which includes the Front End Engineering Design (FEED) and road engineering consultants’ costs.
• OCCP Coal Handling and Preparation Plant (CHPP)’s stage 2 FEED study was progressed during second quarter and is due within March 2022 Quarter, including the CAPEX and OPEX estimates.
• Details designing and Feasibility study for Road Design and Planning were being prepared and expected to be lodged with Ministry of Roads and Transportation (MRT) by early in the June quarter 2022.
• The coking coal prices remained at historical high increased significantly from ~USD 150/tonne at Erlian on the China/Mongolian Border in November 20219 to ~USD 420/tonne on 25^th January 2022. It is anticipated that steel’s steep demand over short-medium term (post COVID-19 economic stimulus) will support coking coal prices.

Financial Highlights:

• 2QFY22: For its second quarter, the company recorded its cash receipts as nil and closed the quarter with a cash balance of ~AUD 32.85 million at the end of 30^th December 2021 versus ~AUD 34.36 million at the end of 30^th September 2021.
• FY21: For FY21, other income was reported as ~AUD 0.17 million versus ~AUD 0.43 million in FY20. The net losses after tax for FY20 of ~AUD 5.48 million were marginally reduced to ~AUD 5.18 million in FY21.

Technical Analysis: AKM’s prices are uplifting from the lower levels of ~AUD 0.074 and on a daily chart it has crossed 50-period SMA; supported by decent volumes. The 21-period SMA may act as a good resistance in near term, while the week ended on a bullish engulfing pattern, indicating a bullish trend for short term. The momentum oscillator RSI (14-period) is moving upwards from the mid-point and is currently at ~49.569 levels. The immediate support level is at AUD 0.072 while the resistance level is at AUD 0.092.

With the recent quarterly updates, various upcoming studies completion in March and June 2022 quarters and expectation of rise in coal prices, keeping the support and resistance level as crucial points, investors with a high-risk appetite might consider a ‘Speculative Buy’ position. The stock was analysed as per the closing price of AUD 0.083, up by ~5.063%, as of 4^th February 2022. However, the risk levels are high depending on the developments and OPEX & CAPEX estimates arising in the coming quarters.

Daily Technical Chart – AKM

Source: REFINITIV

NOTE: Aspire Mining Limited (Company) is a client of Kalkine Media Pty Ltd (Kalkine Media), an affiliate of Kalkine. However, under no circumstances have Kalkine or its related entities been, directly or indirectly influenced in making any recommendation concerning Company as contained in this report, and no form of compensation is or will be received by Kalkine, Kalkine Media or Kalkine’s other related entities for the publication of this report.

PNX Metals Limited (ASX: PNX)

Listed in 2008, PNX is an Australian mineral exploration and development company focusing on Northern Territory and South Australia. Its projects are the Moline Project, Burnside Exploration Project, and Hayes Creek and Fountain Head zinc-gold-silver projects. As of 4^th February 2022, its market capitalisation stood at AUD 20.08 million.

Operational Updates:

• As per its 2QFY22 Quarterly Report released on 31^st January 2022, permitting and approvals, capital cost estimates, and project finance continued, and its Mining Management Plan (MMP) is supposed to be submitted by March 2022 for its Fountain Head Gold Project.
• And a total of ~AUD 4.6 million via issue of ~913 million shares at ~AU 0.5 cents is to be raised (non-renounceable rights issue NRRI) for its Fountain Project’s development by February 2022.
• Ministerial approval for its Glencoe acquisition is due for early 2022 and its Reverse Circulation drilling (RC) of ~1.4 km will expectedly start in January 2022.

2QFY22 Financials Top and Bottom Line: In its second quarterly update, its cash receipts from customers were nil and closed the 2QFY22 with a cash balance of ~AUD 1.69 million at the end of 30^th December 2021 versus ~AUD 2.32 million at the end of 30^th September 2021. The net losses after tax for FY20 were at ~AUD 1.51 million, which marginally reduced to ~AUD 1.26 million in FY21.

Technical Analysis: PNX’s prices are consolidating in a broad range of AUD 0.004 to AUD 0.010 levels. On the weekly chart, prices are trading below the trend-following indicators 50-period SMA and 21-period SMA and which may act as the resistance levels for the stock. The momentum oscillator RSI (14-period) is currently trading in an oversold zone at ~29.39 levels, which might indicate the possibility of rebound from the lower levels. The support level for the stock is placed at AUD 0.0045, while the resistance level is at AUD 0.0055.

Due to stock’s movement and consolidation phase, it might appear unappealing to enter at such price levels, hence a ‘Watch’ stance is suggested. The stock was analyzed as per the closing price of AUD 0.005 per share, down by ~9.091%, as of 4^th February 2022.

Weekly Technical Chart – PNX

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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