DevEx Resources Limited

DEV Details

DevEx Resources Limited (ASX: DEV) is an Australia-based exploration company. It holds a diversified portfolio of high-quality projects spread across Australia’s most proven mining regions.

FY21 Results Performance (For the Year Ended 30 June 2021)

• The net loss before tax increased to $6.58 million in FY21 from $3.47 million in FY20.
• The net losses in FY20 and FY21 were mainly associated with exploration and evaluation expenditure expensing under the Group’s accounting policy.
• The cash and cash equivalents as of 30 June 2021 stood at $16.58 million versus $2.22 million in 2020.
• Net assets increased to $16.79 million from net assets of $2.47 million in 2020. Further, it has a working capital surplus of $15.62 million as of 30 June 2021 (2020: $1.74million). An improvement in cash mainly drove the increase in net assets due to the capital raisings during the year.

Source: Company Reports, Analysis by Kalkine Group

Recent Update

In the press release dated 10 November 2021, the company declared the completion of the first two stratigraphic diamond drill-holes at the Sovereign Nickel-Copper-PGE Project in Western Australia’s Julimar Province. The results of these initial framework reconnaissance holes have surpassed its expectations, with the drilling encountering a thick intrusive sequence of metamorphosed gabbronorite, norite and ultramafic (including pyroxenite and serpentinite) rocks.

Activities Report for the Quarter Ended 30th September 2021

As per the press release dated 28 October 2021, the company updated that the preparations are proceeding well to drill the Nangus Road copper-gold (Cu-Au) prospect at the Junee Copper-Gold Project. Further, it intends to undertake an extensive exploration program, including drilling in the coming 12 months over multiple prospects at the Nabarlek Uranium Project.

Outlook

The company has started the follow-up mapping and surface sampling of uranium, copper, gold prospects surrounding Nabarlek Uranium Mine. The drilling of priority targets to start at the beginning of the top-end dry season 2022. Besides, the company is well-funded to sustain its multi-pronged exploration programs in WA, NSW and the NT. It has cash of $13.98 million at the end of the quarter ended 30^th September 2021.

Key Risks

Changes in equity prices and interest rates will affect the Group’s income or the value of its holdings of financial instruments. It is exposed to the risk of price changes that affect the fair value of investments held by the consolidated entity. Changes in bank deposit rates affect the consolidated entity’s income and future cash flow from interest income.

Stock Recommendation

The company has delivered a 9-month and one-year return of ~+120.83% and ~+140.91%, respectively. The stock is trading higher than the average of the 52-week high price of $0.58 and the 52-week low price of $0.18.

Considering the factors above, along with higher net losses in FY21, the current trading levels, and the associated business risks, we advise the investors to book profits. We give a “Sell” rating on the stock at the current market price of $0.56 per share as of 16^th November 2021 (Time: 10:17 AM (GMT+10), Sydney, Australia).

Technical Overview

Daily Price Chart

Source: REFINITIV, Note: Purple color line reflects Relative Strength Index (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.

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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