Battery Minerals Ltd

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.

H1FY21 Result Performance (For the Period Ended 30 June 2021)

• The group has generated other income of $182 in H1FY21 against $50,000 in H1FY20. It has reported a net foreign exchange gain of $19,324 in H1FY21 compared to the net foreign exchange loss of $11,876 in H1FY20.
• The group has recorded an increase in loss to $2.92 million during the period compared to a loss of $2.00 million in H1FY20.
• The group has cash and cash equivalents of $4.62 million as of 30 June 2021.

Consolidated Income Statement (Source: Company Reports)

Decided to Sell Mozambique Graphite Projects

BAT has advised that it has entered into agreements, together with the subsidiary Rovuma Resources Limited, to sell the Mozambique graphite assets, via the sale of all the shares in the subsidiary Suni Resources SA, to Tirupati Graphite plc. The total aggregate consideration stood at $12.5 Mn in cash and shares.

The company has stated that Wallis Drilling started aircore drilling at the Nine Mile Prospect at Stavely-Stawell Project in Victoria on 18^th September 2021. Nine Mile Prospect happens to be the first target of five to be tested identified on the accessible ground as part of the estimated 15,000 metre aircore drilling programme.

Quarterly Activity Update (For the Quarter Ended June 2021)

• The company has completed 80 holes for 3,526 metres at the fully-owned Stavely-Stawell Project in Victoria during the quarter.
• It has received a $500,000 TARGET grant from the Victorian Government.
• The company has acquired the highly prospective Russell Copper Project during the quarter.

Key Risks

The company operations are exposed to the risk of significant environmental regulation with regard 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

To effectively utilise the available funding, BAT sustained to prudently manage the operating cost base. The Group has been managing the challenges of the COVID 19 pandemic as well as the related impacts on the business, while prudently managing its expenditure.

Stock Recommendation

The company’s overall cash position of the company was reduced to $4.62 million at the end of 30 June 2021 from cash and cash equivalents of $7.30 million as of 31 December 2020. Further, the cash conversion cycle of the company remained high as it stood at 513.9 days in H1FY21 compared to the industry median at 35.8 days.

Considering the aforementioned factors, we advise the investors to liquidate the stock.

Thus, we give a “Sell” rating on the stock at the current market price of A$0.015 per share (Time:   10:24 AM (GMT +10), Sydney Australia) on 29^th September 2021.

Technical Overview:

Chart:

Source: REFINITIV

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

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.

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