Resources & Energy Group Limited (ASX: REZ)

REZ was incorporated in 2004, it is involved in mining, exploration and development of mineral deposits: gold and silver. Its projects include East Menzies Gold Project and Mount Mackenzie Gold/Silver Project. The company’s market capitalization stood at AUD 30.98 million as of 19^th January 2022.

Financial and Operational Updates: On 18^th January 2022, after completion of reverse circulation holes in December 2021, shallow high grade lode gold system intersected at Maranoa-Peak Assay 0f [email protected] gt from 37m. On 11^th January 2022, magmatic nickel was confirmed as an outcome of a petrological and lithogeochemical study at East Menzies Springfield Project. As per the announcement on 11^th January 2022, Mitchell Atkins and the entities changed their substantial shareholding from ~9.21% to ~10.22%.

As per the update released on 4^th January 2022, a total of 24,344 tonnes were milled at Golden Mile Milling’s (GMM) Lakewood Plant as the Granny Venn T2 million campaigns got completed in December 2021. As per its quarterly report, with the nil sales receipts in 1QFY22, it closed the quarter with a cash balance of ~AUD 128k at the end of 30^th September 2021 versus ~AUD 1.02 million at the end of 30^th June 2021. As per its Annual Report, it reported a decrease in its net losses from ~AUD 3.13 million in FY20 to ~AUD 1.47 million in FY21.

Technical Analysis: REZ prices are facing stiff resistance of AUD 0.068 level, indicating the possibility of a downside correction in the stock prices. However, on the weekly chart, the prices are placed above the 21-period SMA, 50-period SMA, and an upward sloping trendline, supporting an upside direction. The leading indicator RSI (14-period) is placed at ~59.675 and reversing from higher levels, supporting the negative stance. The immediate support level for the stock appears at AUD 0.050 while the resistance is at AUD 0.068.

Due to subdued financials, current price levels, and drop in cash balance in the first quarter of 2022, investing in this stock at such uncertain levels should be taken with calculated approach, hence a ‘Watch’ stance is suggested. The stock was analyzed as per the closing price of AUD 0.058 per share, down by ~6.452%, as of 19^th January 2022.

Weekly Technical Chart – REZ

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.

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 the uptrend may take a pause due to profit booking or selling interest. 

The Green colour line reflects the 21-period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period, then it shows prices are currently trading in a bullish trend, (Vice – Versa).

The Blue colour line reflects the 50-period moving average. SMA helps to identify existing price trend. If the prices are trading above the 50-period, then it shows prices are currently trading in a bullish trend, (Vice – Versa).

The Yellow colour line represents the Trendline.

The Purple colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

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