Venus Metals Corporation Limited

VMC Details

Update on Metallurgical Testworks: Venus Metals Corporation Limited (ASX: VMC) is engaged in the exploration of base metals, diamond, gold and others. Recently, the company’s joint venture partner, Rox Resources Limited, updated the market on metallurgical test work conducted on the Youanmi Deeps Resource, wherein it witnessed substantial improvement in gold extraction to 95.6%. In addition, VMC also found highly anomalous concentrations at the north of the West Yilgarn Ni-Cu-PGE Province.

FY21 Financial Summary:

• Fall in Revenue: For the year ended 30^th June 2021, the company recorded revenue amounting to ~$137k against ~$250k in FY20.
• Losses in Business: VMC posted a loss of ~$3.0 million in FY21 as compared to a profit of ~$465k in FY20.
• Rising Cash Outflows: During FY21, the company recorded net cash outflows from operating activities of ~$2.9 million against ~1.9 million in FY20.

Cash & Cash Equivalents (Source: Analysis by Kalkine Group)

Key Risks:

• Climate Risk: The company’s performance could be impacted by the change in climate as it could impact in exploration programs.
• Gold Price Risk: Any unfavorable movement in gold prices may leave an adverse impact on the company’s operational and financial performance.

Outlook:

• The company is planning to advance its exploration programs in the near future. In addition, it is likely to conduct a reverse circulation (RC) drilling at the Henderson Au-Ni Project in order to test the continuation of gold mineralisation in fresh rock.
• The company has scheduled to conduct the 2021 Annual General Meeting on 24^th November 2021.
  

Technical Analysis: On the weekly chart, VMC stock prices are trading below the horizontal trendline resistance zone and continuously facing the resistance of the same at AUD 0.214 level. However, prices are trading above 21-period SMA. Moreover, the momentum oscillator RSI (14-period) is trading at 51.71 level. An important support level for the stock, is placed at AUD 0.16 while the key resistance level is placed at AUD 0.214.

Stock Recommendation: As on 30th June 2021, the cash and cash equivalents of the company stood at ~$4.7 million against ~2.9 million as on 30th June 2020. In the past one month, the stock of VMC has provided returns of ~8.57%. Considering the solid rally in the past months, technical levels mentioned above, and key risks associated with the business, we suggest investors to book profit and give a ‘Sell’ rating on the stock at the market price of $0.20 as on 08 October 2021, 12.18 PM (GMT+10), Sydney, Eastern Australia.

VMC Weekly Technical Chart, Data 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 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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