Hastings Technology Metals Ltd

HAS Details

Hastings Technology Metals Ltd (ASX: HAS) is a rare earths company. The company has a market capitalisation of ~$330.30 million as on 30^th July 2021.

H1FY21 Results Performance (For the Period Ended December 2020)

Increase in Other Income: The group’s other income increased to $100,062 from $96,576 in the PCP and the company received $58,188 for COVID-19 government grants. However, the interest income reduced to $41,874 compared to $96,576 in the PCP.

Posted Comprehensive Loss of $2.59 million: It has reported an increase in its comprehensive loss after providing for income tax to $2,599,289 as compared to $2,571,915 in the PCP.

Key Data (Source: Company Reports)

Quarterly Activities Report (For the Three-Month Period Ended 30 June 2021)

Bagged Major Contract: Hastings has bagged a major offtake contract that entails the supply of 70,000 tonnes of Mixed Rare Earth Carbonate (MREC) to thyssenkrupp Materials Trading GmbH over a time frame of 10 years.

Increase in Resources: The re-estimation process of the Yangibana Mineral Resource has resulted in an increase of 54% in Measured and Indicated Resource tonnes to 16.3Mt for deposits drilled during 2020. Notably, Yangibana’s total Mineral Resources Estimate witnessed a significant increase to 27.42Mt @ 0.97% total rare earth oxides (TREO) for 266kt of rare earth oxides.

Operating Cash Flow Statement (Source: Company Reports)

Recent Update

Increase in the Ore Reserve Estimate at Yangibana Rare Earths Project: The company, on 27 July 2021, declared that Yangibana Rare Earths Project total Ore Reserve witnessed an increase of 37% to 16.7Mt at 0.95% TREO. As per the release, TREO tonnes rose 15% to 158,400t, and contained Neodymium + Praseodymium (NdPr) - the main component in the electric vehicle permanent magnets – increased 18% to (58,300t).

Outlook

During the quarter ended 30 June 2021, the company has completed the Tranche Two ($43.5 million before costs) of the two-tranche equity placement. HAS manged to garner total of $100.7 million (before costs). HAS will utilise the funds to advance development of the Yangibana Rare Earths Project (Yangibana).

The company highlighted that the global NdPr prices have witnessed a robust recovery as well as post-quarter end reached the new record high of RMB601/kg or USD92.91/kg NdPr oxide EXW China.

Key Risks

The company is exposed to the exploration and developments risks. Further, it is prone to the risk of movement in the price of key commodities.

Technical Overview:

Chart:

Source: REFINITIV

Note: Purple Color Line Reflects RSI (14-Period)

HAS prices witnessed strong upside rally in the past two weeks and have completed ABC corrective pattern on a weekly chart. However, the prices are now facing resistance of the downward sloping trend line on a weekly chart that further suggests profit booking might occur from resistance levels. RSI (14-period) is trading in an overbought region at ~71 on daily chart and ~59.45 on a weekly chart. Immediate support levels are $0.180 and $0.165 while immediate resistance levels are $0.210 and $0.240.

Stock Recommendation

The stock price of the company rose by ~53.84% in 9 months. However, it has declined by ~6.97% in 6 months. The stock has made a 52-week low and high of $0.115 and $0.270, respectively.

Considering the aforementioned factors, negative returns, as well as the associated business risks, we advise the investors to liquidate the stock.

Hence, we give a “Sell” rating on the stock at the current market price of $0.200 per share, up by 5.263% on 30^th July 2021.

Bowen Coking Coal Ltd

BCB Details

Bowen Coking Coal Ltd (ASX: BCB) is a coking coal exploration company and is engaged in the advanced exploration and development of assets. BCB holds the Broadmeadow East (100%), Isaac River (100%), Cooroorah (100%), Hillalong (90%) and Comet Ridge (100%) coking coal projects situated in the Bowen Basin in Queensland, Australia.

H1FY21 Results Performance (For the Period Ended 31 December 2020)

BCH has generated other income of $396 in H1FY21 compared to $12,902 in H1FY20. It posted a loss after tax of $1.72 million for the period compared to the loss of $0.98 million  in the PCP. The company has cash and cash equivalents of $3.76 million at the end of 31 December 2021.

Key Data (Source: Company Reports)

Bagged Preferred Bidder Status

The company, on 30 July 2021, declared that it has received a preferred bidder status in the sale process for the Bluff PCI Mine. The proceeding was conducted by FTI Consulting as receivers and managers and controllers on behalf of Australian mining contractor MACA Ltd.

Production Targets for Broadmeadow East and Isaac River Projects

Initial Scoping Studies Completed: BCB, on 28 July 2021, informed the completion of the initial scoping studies for its Broadmeadow East and Isaac River open-cut coking coal projects. This has been done after the recent exploration results and production permit applications. 

Production Target: For its Broadmeadow East project, the initial scoping studies showed a run of mine (ROM) production target of 0.8 million tonnes per annum (Mtpa) to 1.1Mtpa over a duration of five to seven years, while that for Isaac River project was 0.4Mtpa to 0.6Mtpa over a duration of four to five years.

Broadmeadow East Project Update

The completion of its coal quality exploration drilling program confirmed the potential for high- quality coking coal at its Broadmeadow East Project situated in Queensland’s prolific Bowen Basin. The results further showed that the resource has the flexibility to generate a primary coking coal product of either high quality (7.5% ash, CSN 7.5) or high yield (9.2% ash, CSN 4.5).

Outlook

The company highlighted that the first stage production target results for its Broadmeadow East and Isaac River open-cut coking coal projects provided a strong lift in confidence, and it creates a path to fulfill its aim to become a low-cost independent producer of high-quality coking coal.

Both the projects have the potential to produce substantial cash flow given the recent rebound in price as well as comparatively low capital needs. This may assist the company to advance its larger projects. It will further optimise these studies in order to prepare a final investment decision.

Risks

The outcome of the exploration process may reveal that estimated resources are insufficient to validate the financial viability of the projects. Further, its operations are subject to environmental regulations, pursuant to various state and municipal laws and regulations. Other key risks include variance in commodity price and labour costs.

Technical Overview:

Chart:

Source: REFINITIV

Note: Purple Color Line Reflects RSI (14-Period)

BCB prices have witnessed significant upside rally and tested its 52-week high levels of ~$0.088. Prices are now facing resistance of the previous 52-week high level and from an upward sloping trend line. RSI (14-period) is trading in an overbought territory at ~74.59 on a weekly chart that further signalling that the prices are likely to get downward correction from higher levels. Immediate support levels for the stock are $0.079 while immediate resistance level is $0.100.

Stock Recommendation

It has been generating negative returns as well as negative margins over the quarters. It has generated ROE of -13.3% in H1FY21 significantly lower than the Industry Median of 5.2%.

Considering the aforementioned factors, along with the increase in accumulated losses, the associated business risks, and the current trading levels, we advise the investors to liquidate the stock.

Hence, we give a “Sell” rating on the stock at the current market price of $0.085 per share, up by 14.864% on 30^th July 2021.

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 on 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.

Technical Indicators Defined:-

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

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 do not hold interests in any of the securities or other financial products covered on the Kalkine website.