Northern Minerals Limited (ASX: NTU)

Northern Minerals Limited is an Australia-based mineral exploration company with an interest in rare earth minerals. Its projects include Browns Range Project, John Galt Project and Boulder Ridge. NTU holds a market capitalization of AUD 335.29 million as of 24^th November 2021.

Financial and Operational Updates: In the recent update, Nicholas Curtis has been appointed as Board of Directors. Nick has over 30 years of experience particularly in the rare earth industry. As per the recent quarterly report, NTU has completed 8,700 meters of drilling at its Browns Range Project. During the September 2021 quarter, it had sold 39 tonnes of heavy rare earth carbonate to thyseenkrupp Materials Trading GmbH. It had realized cash receipts of AUD 971k during the quarter and closed the period with a cash balance of AUD 14.31 million, down from AUD 19.90 million in the preceding quarter, mainly attributed to increasing production expenses and exploration and evaluation spend. The company’s resources estimate at the Browns Range project is expected to increase given the favourable sorting test results. It is expected to claim AUD 4.3 million from the federal government towards R&D tax offset.

The stock of the company had generated returns of ~+69.23% in the past three months and ~+94.11% in the past six months. On TTM valuation, the company is trading at a price-to-book value multiple of 11.6x over the industry median of 2.5x (Metals & Mining). This implies the stock is overvalued at current trading levels. Considering the recent rally in stock price, valuation based on TTM, exploration updates at its Browns Range Project, we suggest investors to book profit and give a ‘Sell’ recommendation based on the current market price of AUD 0.068 per share, as of 24^th November 2021, 10:38 AM (GMT+10), Sydney, Eastern Australia.

Daily Technical Chart – NTU

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.

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