Latin Resources Limited

LRS was incorporated in 2008, which deals into mineral exploration and holds various projects in Latin America and Australia. Its projects are Cloud Nine Halloysite Project, Lachlan Fold Gold Projects, the Big Grey Project, some lithium projects in Brazil and a JV agreement with the Argentinian company Integra Capital. Its market capitalization stood at AUD 49.79 million as of 13^th January 2022.

Financial and Operational Update: As per the 20^th December 2021 update, the consecutive 14 holes from the geostatistical cross-drilling program at the Cloud Nine Mineral Resource area revealed outstanding continuity of high-grade halloysite which bears kaolinised granite. Solis Minerals Limited, where LRS is the largest shareholder, after its successful IPO of ~AUD 5.5 million, Solis has left with exces of cash ~AUD 7 million at bank. The said amount will be utilised to commence its maiden drilling program at Mostazal Copper project in Chile (one of the largest copper production nations in the world) covering ~2,900 metres in mid-January till mid-March of 2022. The company reported a net loss of ~AUD 3.99 million for the six months ended 30 June 2021 compared to the net loss of ~AUD 1.01 million in the prior period.

Technical Analysis: After the prices witnessed a small recovery, LRS prices are now finding resistance of the downward sloping trend line as well as its 21-period SMA on a monthly chart. RSI (14-period) is hovering at ~60.836 level that further indicates that the stock is trading in a bearish momentum.

Stock Recommendation: Over the past one month, the stock has provided a positive return of ~13.33% and is trading below than the average 52-week price level band of AUD 0.027 and AUD 0.100. Since the stock is facing a stiff resistance and after considering the subdued financial performance for FY21, we suggest investors to ‘Sell’ on the stock at the current market price of AUD 0.037 per share, as of 13^th January 2022, 12:00 PM (GMT+10), Sydney, Eastern Australia.

Daily Technical Chart – LRS

Source: REFINITIV

Immuron Limited (ASX: IMC)

IMC is a bio-pharmaceutical company incorporated in 199. The company is involved in technology platform which focusses on development and commercialisation of polyclonal antibodies which treats unmet medical needs. The company has two flagship products: Travelan & Protectyn. Its market capitalization stood at AUD 27.33 million as of 13^th January 2022.

Operational Updates: As announced on 13^th January 2022, European Patent “3159357” was allotted to IMC on 5^th January 2022 for its “composition and method for the treatment and prevention of enteric bacterial infections to treat travellers’ diarrhoea”. On the same day, the Bank of New York Mellon Corporation (BNYMC) and others in the entity changed their substantial shareholding from ~38.19% to ~37.14%. On 12^th January 2022, the company received a funding of ~AUD 4.8 million (USD 3.43 million) for its one of its flagship products “Travelan”, by U.S. Department of Defence.

Financial Top & Bottom Line: Its overall revenue from contracts with customers got hindered because of COVID-19 and reported as ~AUD 145.77k in FY21 versus ~AUD 2.52 million last year. The company reported an increase in total losses and reported as ~AUD 8.38 million in FY21 versus ~AUD 2.92 million in FY20. The company closed its accounts with a cash balance of ~AUD 25.05 million in FY21 versus ~AUD 3.25 million in FY20.

Technical Analysis:  After witnessing an upside movement of ~72.04% in the past couple of sessions, IMC's prices are now facing the resistance of AUD 0.160 level, indicating the possibility of a downside correction in the stock prices. The prices are also struggling to surpass the 50-period SMA, thereby supporting a downward trend for the short-term. The RSI (14-period) is hovering at ~69.514 level and reaching towards the overbought zone.

Stock Recommendation: Over the past one month, the stock has provided a positive return of ~27.27% and is trading below than the average 52-week price level band of AUD 0.093 and AUD 0.280. After considering the subdued financial performance for FY21, price fluctuations, current trading levels, we suggest investors to ‘Sell’ on the stock at the current market price of AUD 0.145 per share, as of 13^th January 2022, 01:00 PM (GMT+10), Sydney, Eastern Australia.

Daily Technical Chart – IMC

Source: REFINITIV

Core Lithium Ltd (ASX: CXO)

Incorporated in 2010, CXO deals into mineral exploration including zinc, silver, gold, uranium, copper and lead projects. Its projects are Finniss Lithium Project and others in the Northern Territory and South Australia. Its market capitalization stood at AUD 1.32 billion as of 13^th January 2022.

Financial & Operational Updates – On 17^th December 2021, the company moved to a new corporate headquarters to the Central Business District (CBD) in Adelaide, Australia. As per the update on 13^th December 2021, high grade of spodumene mineralisation were intersected in multiple holes drilling exploration at its Finniss Lithium Project. Various assays at Ah Hoy, Far West and regional targets were also received at the same project. The company executed mining leases agreement to acquire six Mineral Licenses (MLs) including 30 historic pegmatite mines adjacent to the Finnis Lithium Project. The fully funded Finnis Lithium Project (~AUD 150 million by Ganfeng New Energy Technology Development (Suzhou) Co. Ltd. (Gangfeng)) is expected to proceed with its first production of lithium concentrate in 4QFY22.

Financial Top & Bottom Line: Its quarterly report (1QFY22) released on 22^nd October 2021, the company reported sales receipts as Nil for 1QFY22, with closing cash balance of ~AUD 136.67 million at the end of 30^th September 2021 as compared to ~AUD 38.19 million at the end of 30^th June 2021. With a total revenue from other income as ~AUD 0.315 million in FY21, the company reported a total loss of ~AUD 2.91 million, as compared to a total loss of ~AUD 4.39 million for the FY20.

Technical Analysis: CXO's prices witnessed a sharp upside movement in the past couple of sessions and gained ~38.65%. The prices also broke a crucial resistance level of AUD 0.650 during this rally and now facing the resistance of AUD 0.835 level, indicating the possibility of a downside correction in the stock prices. The leading indicator RSI (14-period) is trading in an overbought zone at ~79.540 levels, further supporting a downside movement in coming sessions.

Valuation Methodology: P/B Multiple Based Relative Valuation (Illustrative)

*% Premium/(Discount) is based on our assessment of the company’s NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

Stock Recommendation: CXO has provided ~198.14% of return in past nine months and is trading above the average 52-week price level band of AUD 0.175 and AUD 0.825. The stock has been valued using P/B multiple based illustrative relative valuation method and arrived at a target price with a downside of low double-digit (in % terms). For the purpose of valuation, peers like Arizona Lithium Ltd (ASX: AZL), Piedmont Lithium Inc (ASX: PLL), Lake Resources NL (ASX: LKE), and others have been considered. The company can trade at a slight premium to its peers, considering its recent positive updates and expected production at the Finniss Lithium Project. After considering the current high trading levels, downside potential as indicated by the valuation, we suggest investors to ‘Sell’ and book profit on the stock at the current market price of AUD 0.815 per share, as of 13^th January 2022, 11:56 AM (GMT+10), Sydney, Eastern Australia.

Daily Technical Chart – CXO

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 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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