Apollo Consolidated Limited

AOP Details

Exploration Update: Apollo Consolidated Limited (ASX: AOP) is a gold exploration company with a portfolio of tenements led by the Lake Rebecca Gold project in Western Australia. In a recent exploration update, the company confirmed that the drill hole - MET004, the first of six diamond drill holes drilled, has delivered an exceptional gold hit of 75.8m @ 4.64g/t Au.

Q4FY21 Performance Highlights:

• During the June 2021 quarter, the company made significant progress in the development of Lake Rebecca Gold Project and stepped-up exploration drilling in parallel with progressing project technical study works.
• The net cash used in operating activities stood at $585k in Q4FY21, taking the total FY21 operating cash outflow to $1.45 million.
• The company is well funded, with a cash balance of $36.7 million as of 30 June 2021.

Financial Metrics (Source: Analysis by Kalkine Group)

Key Risks:

• Geological Risk- The company is exposed to geological risk where it needs to have a regular quality and quantity check from a geologist. Any negative report could impact its operations.
• COVID-19 Uncertainties: The restrictions and the lockdowns associated with COVID-19 pandemic could disrupt the company’s operations.

Outlook: Looking ahead, the company is focused on MRE expansion through multiple pathways via an aggressive drilling campaign. The company is estimating conservative MRE to report optimised pit shells at A$2,250/oz price.

Stock Recommendation:

The stock of AOP is trading above its average 52-weeks' levels of $0.267-$0.395. The stock of AOP gave a positive return of ~22.58% in the past nine months and a positive return of ~20.63% in the past three months. On a TTM basis, the stock of AOP is trading at a Price/Book multiple of 3.6x, higher than the industry median (Basic Materials) of 2.7x, implying overvaluation. Considering the current trading levels, technical levels as mentioned below, valuation on a TTM basis, the recent rally in the stock price, uncertainty surrounding the impact of COVID-19 pandemic, we suggest investors to book profit and give a 'Sell' rating on the stock at the current market price of $0.380, as on 18 August 2021.

Technical Note: On the daily chart, AOP stock price witnessed a sharp rally from the low of $0.27 and recently made of high of $0.395 level on 13 August 2021. Prices are currently hovering near horizontal trend line resistance zone at $0.392 and continuously sustaining below the trend line resistance level. Moreover, the momentum oscillator RSI (14) is trading at ~66.20 level and formed a negative divergence indicating a possibility of the downside correction from the current level. An important support level for the stock, is placed at $0.345, while the key resistance level is placed at $0.392.

AOP Daily Technical Chart, Data Source: REFINITIV

Note: The purple color line in the chart shows RSI (14-period)

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 subject to the factors discussed above alongside support levels provided.

Disclaimer - This report has been issued by Kalkine Pty Limited (ABN 34 154 808 312) (Australian financial services licence number 425376) (“Kalkine”) and prepared by Kalkine and its related bodies corporate authorised to provide general financial product advice. Kalkine.com.au and associated pages are published by Kalkine.

Any advice provided in this report is general advice only and does not take into account your objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your objectives, financial situation and needs before acting upon it.

There may be a Product Disclosure Statement, Information Statement or other offer document for the securities or other financial products referred to in Kalkine reports. You should obtain a copy of the relevant Product Disclosure Statement, Information Statement or offer document and consider the statement or document before making any decision about whether to acquire the security or product.

You should also seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice in this report or on the Kalkine website. Not all investments are appropriate for all people.

The information in this report and on the Kalkine website has been prepared from a wide variety of sources, which Kalkine, to the best of its knowledge and belief, considers accurate. Kalkine has made every effort to ensure the reliability of information contained in its reports, newsletters and websites. All information represents our views at the date of publication and may change without notice.

Kalkine does not guarantee the performance of, or returns on, any investment. To the extent permitted by law, Kalkine excludes all liability for any loss or damage arising from the use of this report, the Kalkine website and any information published on the Kalkine website (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine hereby limits its liability, to the extent permitted by law, to the resupply of services.

Please also read our Terms & Conditions and Financial Services Guide for further information.

On the date of publishing this report (referred to on the Kalkine website), employees and/or associates of Kalkine and its related entities do not hold interests in any of the securities or other financial products covered on the Kalkine website.

Kalkine Media Pty Ltd, an affiliate of Kalkine Pty Ltd, may have received, or be entitled to receive, financial consideration in connection with providing information about certain entity(s) covered on its website.