Arizona Lithium Limited (ASX: AZL)

Incorporated in 1969, AZL is engaged in mineral exploration and development mainly in Gold, Copper and Lithium. Its projects include Lone Pine Gold Project, Big Sandy Lithium Project, Western Desert Gold / Copper Project, and Lordsburg Lithium Project, located in USA. Its market capitalization stood at AUD 217.49 million as of 17^th January 2022.

Financial and Operational Updates: On 20^th December 2021, AZL changed its registry address in Perth. According to Macquarie, the demand arising from EV (Electric Vehicles) and Energy Storage Systems will be more than offset by the new entrants in the Lithium Market and thereby reducing the Lithium Deficit in 2024. Higher Lithium prices from market deficit will counter act on the reduction in Battery Packs’ cost, which will be balanced by additional supply. AZL reported testwork results from the Big Sandy Lithium project and witnessed a significant reduction in acid consumption and had seen major advancement in upgrading treatable material. A total of 87% lithium was found from the metallurgical testing program at Hazen Research. On 23^rd November 2021, AZL received a clean notice from Supreme Government Western Australia to resume trading from 24^th November 2021, which was on a halt since 18^th November 2021. As per its quarterly report on 29^th October 2021, it recorded its sales receipts for 1QFY22 as nil and closed 1QFY22 at the end of 30^th September 2021 with a cash balance of ~AUD 4.99 million versus ~AUD 4.95 million at the end of 30^th June 2021.

Technical Analysis: After hitting 52-week high at AUD 0.155 on 3rd November 2021, the stock went into consolidation. On a daily chart, currently the stock is trading above the upward sloping trendline and both 50-period SMA and 21-period SMA. Price trading at higher levels, its momentum oscillator RSI (14-period) is trading at ~72.526 level is moving towards overbought zone and forming a negative divergence, indicating a bearish momentum for short-term.

Stock Recommendation: Over the past six months, the stock has provided a positive return of ~364.28% and is trading above than the average 52-week price level band of AUD 0.021 and AUD 0.155. Since the stock is facing a stiff resistance and after considering the return it has provided to the shareholders, it is prudent to ‘Sell’ the stock and book profit at the current market price of AUD 0.1375 per share, as of 17^th January 2022, 04:00 PM (GMT+10), Sydney, Eastern Australia.

Daily Technical Chart – AZL

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 analysis has been achieved and is subject to the factors discussed above alongside support levels provided.

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