Stocks’ Details

Magnis Energy Technologies Ltd

Update on Big Battery Pilot Project: Magnis Energy Technologies Ltd (ASX: MNS) is engaged in the development of graphite and battery. As on 1 December 2020, the market capitalization of the company stood at ~$127.27 million. The company has recently announced that it has executed a Triparite MoU with The University of Newcastle and Fletcher international exports, to integrate big battery into the flagship Dubbo processing facility. The project is likely to start in mid-2021 and may include the phased incorporation of renewable energy inputs. The company has also announced an execution of Quad party MoU between Binghamton University, The University of Newcastle, Charge CCCV, and Magnis to collaborate new energy technologies. The agreement is setting the path for specific pilot projects adopting innovations without compromising on production and market supply imperatives. 

Quarterly Highlights (For the Period Ended 30 September 2020): During the quarter ended 30 September 2020, the company raised $7.65 million by issuing 45 million shares at 17 cents. These funds are to be used for working capital purposes and to advance projects. During the quarter, the company used $1.29 million of cash from operating activities.

Cash Flows from Operating Activities (Source: Company Reports)

Stock Recommendation: As per ASX, the stock of MNS is trading close to its 52-week high of $0.280 but retains potential for further growth. The stock of MNS gave a negative return of 5.26% in the past three months but a positive return of 133.76% in the last six months. On a technical front, the stock of MNS has a support level of ~$0.121 and a resistance level of ~$0.215. Considering the current trading levels, integration of big battery to flagship Dubbo processing facility, and key investment risks, we recommend a ‘Hold’ rating on the stock at the current market price of $0.180 on 1 December 2020.

EcoGraf Limited

EcoGraf Appointed to FBI Ministerial Taskforce: EcoGraf Limited (ASX: EGR) is engaged in building a vertically integrated business to produce high purity graphite for the lithium-ion battery markets. As on 1 December 2020, the market capitalization of the company stood at ~$63.69 million. The company has been recently appointed to the Western Australian Future Battery Industry Ministerial Taskforce to drive Western Australia’s critical minerals industry.

Positive Results from Recycled Lithium-ion Battery Material: The company has also reported encouraging results with its battery recycling business, wherein it achieved up to 99.8% carbon while testing on the recovery of high purity carbon anode material from battery black mass with potential European customers. The recycling of anode material is likely to combine its battery spherical graphite from planned manufacturing facility with the recovered anode material and will provide a distinctive recycled product.

Quarterly Highlights (For the Period Ended 30 September 2020): During the quarter ended 30 September 2020, EGR executed a non-binding agreement with thyssenkrupp Materials Trading GmbH and continued its product qualification program to advance offtake, co-operation, and strategic partnerships. During the quarter, the company continued to progress the senior debt financing of the new Epanko graphite mine and reduced all non-essential project development expenditure. At the end of the same period, the company used $434k from its operating activities and reported a cash balance of $2.33 million.

Cash Flows from Operating Activities (Source: Company Reports)

Stock Recommendation: As per ASX, the stock of EGR is trading above the average of its52-weeks’ levels. The stock of EGR gave a return of 98.86% in the past three months and a return of 16.67% in the past one month. On a technical front, the stock of EGR has a support level of ~$0.12 and a resistance level of ~$0.21. On a TTM basis, the stock of EGR is trading at a P/BV multiple of 2.5x, higher than the industry median (Industrials) of 2.1x and thus seems overvalued. Considering the current trading levels, price uptake in the past three months, higher P/BV multiple, and volatile market conditions, we suggest investors to wait for a better entry level and give an ‘Expensive’ rating on the stock at the current market price of $0.170, down by 2.858% on 1 December 2020.

Walkabout Resources Ltd

Advancing Lindi Jumbo Debt Approvals: Walkabout Resources Ltd (ASX: WKT) is engaged in the exploration and acquisition of mineral and energy related assets in Africa. As on 1 December 2020, the market capitalization of the company stood at ~$57.60 million. The company has recently executed a 7-year non-binding, conditional term sheet of US$25 million in favor of Lindi Jumbo Limited from the African Export-Import Bank. However, the loan has an 18-month grace period before the repayments. The debt facility is to be secured by the Lindi Jumbo assets and will be accompanied by suitable credit insurance.

Quarterly Highlights (For the Period Ended 30 September 2020): During the quarter ended 30 September 2020, the company progressed on several permit applications in the UK and accessed agreements for drilling over the Blackcraig poly-metallic lead zinc project. At the end of the same period, the company’s in-country exploration team started the tenement scale reconnaissance mapping for its Amani Gold Project and is expecting results of the samples by the last quarter.

During FY20, income of the company went up to $66.5k from $44.46k in FY19. However, it reported an increase in loss to $4.44 million in FY20, reflecting an increase from $2.73 million. At the end of the year, the company reported a cash balance of $2.88 million.

FY20 Financial Highlights (Source: Company Reports)

Stock Recommendation: As per ASX, the stock of WKT is inclined towards its 52-week low of $0.110. The stock of WKT gave a negative return of 26.19% in the past three months but a positive return of 10.71% in the last one month. On a technical front, the stock of WKT has a support level of ~$0.125 and resistance level of ~$0.174. On a TTM basis, the stock of WKT is trading at a P/BV multiple of 2.9x, slightly higher than the industry median (Metals & Mining) of 2.7x. Considering the current trading levels, rising losses, volatility in returns and uncertain market conditions, we suggest investors to keep an eye on the business activities and give an ‘Avoid’ rating on the stock at the current market price of $0.155, down by 6.061% on 1 December 2020.

Daily Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

Disclosure: EcoGraf 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 related insights 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.

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