Vital Metals Limited (ASX: VML)

VMT is based out of Australia, engaged in the exploration and development of rare-earth metals. It owns and operates mines in Australia, Canada, and Burkina Faso. Its notable projects include Nechalacho Rare Earth, Wigu Hill, Nahouri Gold and Aue Projects. VMT was listed on ASX in October 2005.  It holds a market capitalization of AUD 274.92 million as of 16^th November 2021.

Financial and Operational Updates: As per the recent quarterly activities update, VML agreed to acquire Quebec Precious Metals Corporation’s 68% stake in Kipawa and 100% interest in Zeus heavy rare earth projects in Quebec, Canada for a total consideration of CAD 8 million paid in the next four years. The acquisition will strengthen VML’s position in light and heavy rare earth in North America. VML is on track to construct an extraction plant in Saskatchewan, Canada, which will process ore from its Nechalacho Rare Earth mine with first feed into the plant is expected to achieve in December 2021. During the quarter period ending September 2021, VML executed MOU to supply 500t REO per annum to UCore Rare Metals. Nil receipts were realized during the quarter period, and VML closed the quarter with a cash balance of AUD $28.65 million as of 30^th September 2021.

The stock delivered 1-year gains of ~120.69% and is trading higher than the average of the 52-week low price of $0.028 and the 52-week high price of $0.090. Further, on a TTM basis, VML is trading higher than its industry with 5.4x on price-to-book value multiple as compared to the Metals & Mining Industry median of 2.6x, implying overvaluation. Considering the synergies in the acquisition of Kipawa and Zeus heavy rare earth projects, rally in the stock price in recent periods, TTM-based valuation, we suggest investors to book profit and “Sell” this stock at the current price of AUD 0. 067 per share as of 16^th November 2021, 4:00 PM (GMT+10), Sydney, Eastern Australia.

Daily Technical Chart – VML

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.

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