Strandline Resources Limited (ASX: STA)

STA was incorporated in 1999, it is a mineral mining, exploration and development company having operations in Australia and Tanzania. Its projects include Coburn Zircon Project, Fungoni Zircon Project, and Fowlers Bay Nickel Project. As on 25^th November 2021, the market capitalization of the company stood at AUD 252.08 million.

Financial & Operational Updates – On 22^nd November 2021, it signed a storage and transportation contract with the leading logistics firm Qube Bulk for its Coburn Project. As per the Quarterly Update on 27^th October 2021, STA completed 28% of construction at its Coburn Project. While keeping the budget intact, it is expected to produce its first heavy mineral concentrate (HMC) in the December quarter of 2022. Its sales receipts for 1QFY22 were reported as Nil and closed the quarter with a cash balance of ~AUD 71.22 million at the end of 30^th September 2021 versus ~AUD 110.60 million at the end of 30^th June 2021. On 26^th October 2021, Regal Funds Management Pty Ltd became substantial shareholder by having voting power of ~5.31% As per the Annual Year Report released on 23^rd September 2021, other income was reported as ~AUD 0.10 million in FY21 versus ~AUD 0.05 million in FY20. It reported huge increase in its Net Losses after Taxes from ~AUD 7.99 million in FY20 to ~AUD 11.98 million for FY21.

Technical Analysis: After giving a ~25.64% return in the last three months, STA price has surpassed both the trend-following indicators 21-period SMA and 50-period SMA and currently trading in a higher range on a daily chart. Moreover, the momentum oscillator RSI (14-period) has entered an overbought zone and placed at ~77.07 levels, supporting a possible downside correction in near term. However, the average daily trading volumes are showing an increasing trend.

Considering its price trading in an overbought zone and its huge incremental net losses in FY21, we suggest investors to “Sell” this stock at the current market price of AUD 0.248 per share as of 25^th November 2021, 2:20 PM (GMT+10), Sydney, Eastern Australia.

Daily Technical Chart – STA

Source: REFINITIV

Note, purple color line at the bottom of the chart depicts RSI (14-day 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.

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