Battery Minerals Limited

BAT Details

Battery Minerals Ltd (ASX: BAT) is a diversified mining development and minerals exploration company and is engaged in the business of exploration and development of mineral deposits in Mozambique. It is focused on developing two graphite projects at Montepuez and Balama in Mozambique.

FY20 Results Performance (For the Period Ended 31 December 2020)

• Reduced Losses: The company reported decreased losses to $6.55 million in FY20 compared to a loss of $36.77 million in FY19 that comprised of impairment of mine development and exploration expense of $4.14 million against $34.93 million in FY19.
• Raised Funds: The company has successfully raised $5.5 million in November 2020. Further, it has raised $0.744 million from a share purchase plan in December 2020.
• Increased Net Assets: The company’s net assets increased to $20.79 million as of 31 December 2020 from $10.90 million as of 31 December 2019 driven by the acquisition of the Stavely-Stawell Project in Victoria and an improved cash balance at reporting date.

Consolidated Income Statement (Source: Company Reports) 

Quarterly Activity Update (For the Quarter Ended June 2021)

• Completed 80 Holes: In the press release dated 30 July 2021, the company declared that it has completed 80 holes for 3,526 metres at fully-owned Stavely-Stawell Project in Victoria during the quarter. Besides, pilot plant study was started at its Montepuez Graphite Project during the quarter.
• Received Grant: The company has received a $500,000 TARGET grant from the Victorian Government to back exploration activities expenses over the 28 months ending 30 September 2023.
• Acquired Russell Copper Project: The company has acquired the highly prospective Russell Copper Project during the quarter. As part of the agreement, the company paid $100,000 in cash and issued $1 million value of ordinary shares. It will also pay an additional $1.5 million in cash and shares after 12 months post the grant of all the tenements and transferred to the company.

Recent Update

Decided to Sell Mozambique Graphite Projects: The company, on 17 August 2021, declared that the company along with its subsidiary Rovuma Resources Limited have entered into agreements to sell its Mozambique graphite assets to Tirupati Graphite plc for an overall consideration of $12.5 million in cash and shares. It will be done through the sale of all the shares in its subsidiary Suni Resources SA. The total consideration includes cash of $1.5 million and ordinary shares of Tirupati Graphite valued at $11 million.

Key Risks

The company operations are exposed to the risk of significant environmental regulation with regards to mineral exploration activities. Further, its activities are susceptible to various financial risks including foreign exchange risk, interest rate risk, credit risk and liquidity risk.

Outlook

The company highlighted that it will sustain its focus on its Australian mineral exploration properties in the WA Kimberley region and Western Victoria as part of its expanded exploration programmes. Besides, the commencement of pilot study at its Montepuez Graphite Project to build a pilot plant that could produce anode quality graphite concentrate for selected potential customers and offtake partners is a notable achievement in building customer confidence in the product from Montepuez.

Technical Overview

Chart:

Source: REFINITIV

Note: Purple color line reflects Relative Strength Index (14-Period)

Stock Recommendation

The stock has delivered 6-months and 1-year returns of ~-62.5% and ~+33.3%, respectively. The stock is trading lower than the average of the 52-week high price of $0.04 and the 52-week low price of $0.009, which indicates a good opportunity for accumulation.

Considering the aforementioned factors along with its sustained focus on cost reductions along with its current trading levels, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.012 per share on 20^th August 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.

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

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