Resolution Minerals Limited

RML Details

Tranche 1 Issued as Consideration for the Project Acquisition: Resolution Minerals Limited (ASX: RML) is an explorer, miner, and producer of battery metals such as gold, cobalt, copper, and vanadium. On 7 February 2022, RML issued ~2.0 million ordinary shares under the Corporations Act 2001 without disclosure to investors. This is the first tranche of securities issued in relation to the purchase of the Carrara Range battery metal project. 

• RML will issue another tranche of ~7.0 million as the remaining consideration for the project post the Ministerial approval for the transfer of tenements purchased.
• The estimated consideration for these shares is ~$153,000. The securities will be subject to a voluntary escrow period of 12 months from the date of issue of each tranche.

Acquisition of Carrara Range Project Tenements: On 4 February 2022, RML entered a binding term sheet with Cientifica Pty Ltd (Vendor) to acquire complete interest in six (6) exploration tenements (3 in application and 3 granted) spanning ~1,271 km in the Northern Territory (NT). The tenements are highly prospective of containing battery metals sediment such as copper (Cu) - silver (Ag) - manganese (Mn) - zinc (Zn) – copper (Co), lead (Pb), and iron-ore. The share-based consideration will help conserve cash for exploration activities.

December 2021 Quarter (Q2FY22) Highlights:

• 64North Project Status: The company completed a trenching program at the Tourmaline Ridge Prospect. It has earned ~42% interest in the 64North project in Alaska after completing the II-year earn-in requirements.
• Exploration on the Benmara Project: RML undertook drilling of 15 holes at the project in NT. The drilling returned assay results of elevated zinc, silver, lead, (Zn-Ag- Pb) in holes 21BM006, 21BM007, 21BM013, 21BM009. The proof-of-concept drilling was successful and exhibited thick packages of prospective shale units.
• Wollogorang Project Update: RML and OZL are planning for a significant drilling program in the coming dry season in FY22.
• Funds’ Raise: In October 2021, RML raised ~$1.74 million via a share purchase placement (SPP) at ~$0.02 per share. The SPP participants were offered options in the ratio of a 1:2 at $0.03 per share and expiry of 2 years from the date of issue. The funds will be deployed to conduct drilling and exploration at the projects and meet working capital needs.
• RML exited the quarter with $2.7 million cash at bank as of 31 December 2021.

Comparative Assets & Liabilities Position, Highlights; (Analysis by Kalkine Group)

Key Risks: The company faces the risk of identifying exploration targets, adverse climatic conditions, raise of adequate funds. Regulatory delays and shortage of skilled labour availability also pose risk to the business.

Outlook:

• The position of the Carrara Range project is complementary to the location of the Benmara & Wollogorang projects in the vicinity.
• The company plans to focus and conduct exploration on its three (3) battery metal projects in the coming dry season. It plans to declare the review results and exploration plans in March 2022 across NT projects.
• RML is undertaking exploration planning at the 64North project in Alaska and awaiting assay results from the trenching program completed on the project.

Stock Recommendation: The stock of RML gave a negative return of ~5.55% in the past three months and a negative return of ~19.04% in the past six months. The stock is currently trading below its 52-weeks’ average price level band of $0.015 - $0.034. On a TTM basis, the stock of RML is trading at a price to book value multiple of 0.5x lower than the industry (Metals & Mining) median of 2.6x, thus seems undervalued. Considering the low trading levels, nil debt-to-equity levels, portfolio expansion with the addition of Carrara Range battery metal project, increase in total assets, plans to advance exploration progress on all NT projects, valuation on a TTM basis, and associated key business risks, we give a ‘Speculative Buy’ rating on the stock at the closing market price of $0.017, up by ~6.250%, as of 11 February 2022.

RML Daily Technical Chart, Data Source: REFINITIV  

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decision 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 Valuation has been achieved and subject to the factors discussed above.

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.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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 unless those persons comply with certain safeguards, procedures, and disclosures.

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.