Resolution Minerals Limited

RML Details

Resolution Minerals Ltd. (ASX: RML) is a mining company and was incorporated in 2017 and headquartered in Adelaide, Australia. The company is engaged in acquisitions and explorations for the development of precious and battery metal products. The critical target minerals are Copper, Cobalt, Vanadium, Iron, Gold and Uranium deposits.  

Recent Announcements- Resolution Minerals Ltd. recently made announcements related to mining and explorations :

• VTEM Survey: the survey from VTEM geophysics identified the existence of copper in the form of 40 conductors of the Wollogorang project, NT. Similar exploration previously exhibits the presence of copper and cobalt in the system from such tests.
• Competition of Drilling project- RML announced the successful drilling project on one of its projects on the East Pogo Gold Prospect in Alaska. The East Pogo is on the Pogo Trend and positioned between 11 Million Oz of Pogo Gold Mine and the Tibbs Discovery.
• Sunrise Prospect Assay Results- The assay results acknowledge the thick intervals of Fort Knox Style mineralisation as a 280m wide gold mineralised corridor spread nearby.

Financial Highlights for 31^st March 2021-  The key focus for the 3Q FY21 are -

• Fund Raise - The company raised $3.35 million from the issue of equity securities excluding convertible debt securities for carrying out the mining and exploration operations smoothly. The fundraising have increased the cash and cash equivalents for 31^st March 2021 to $3.05 million.
• Exploration and evaluation investment expenses- The company reduced its exploration and evaluation expenses to $0.93 million in 3Q FY21 as compared to the $3.28 million in 2Q FY21.

Financial Performance (Source: Company Report)

Key Risks:

The mining operations involving evaluation and drilling takes a long time for any particular site, which involves the key risk of unfavourable changes in environmental conditions and government policies. The volatile prices of the minerals in the global markets impact the profits from the output of these sites excavated, which could suppress the bottom line at the time of declining commodity prices.

Outlook:

Resolution Minerals Limited Ltd. is very optimistic about the various projects in the pipeline where the assessment of the underlying is about to be initiated, anticipating the presence of the minerals underneath. The capital raised will help the company to carry out the projects smoothly and meet its operating expenses.

Stock Recommendation:

The stock of RML gave a return of -3.70% in the last three months and a return of -31.57% in the last six months. The stock is trading below the average of the 52-week low price of $0.021 and the 52-week high price of $0.094, giving a scope of stock accumulation. On a TTM basis, the stock of RML is trading at a Price/ Book Value multiple of 0.7x compared to the Industry Median of 2.9x (Metals & Mining), indicating undervaluation. Considering the recent discovery from various tests, healthy cash balance, the current trading levels, we recommend a “Speculative Buy” on the stock at the price of $0.026 as of 16^th July 2021 at 10.30 AM Sydney Time, Australia (GMT +10).   

RML Daily Technical Chart, Data Source: REFINITIV

Note: The purple color line represents RSI (14-period).

Acumentis Group Limited

ACU Details

Acumentis Group Limited (ASX: ACU) was incorporated in 1982 and headquartered in Sydney, Australia. The company is engaged in the valuations, research, and advisory services related to property and businesses in Australia. Its client base is varied across private owners and investors, professional, SME, corporate, government, banking, finance, REIT and development industries.

Recent Acquisitions-  Acumentis Group Ltd. recently made announcements related to the various acquisitions:

• Western Australian Associate: The Acumentis announced the 100% acquisition of the remaining 57.8% of its Western Australian associate Acumentis (WA) Holdings Pty Ltd., enhancing the valuations and property advisory business. The total cost of acquisition is estimated between $2.6 million to $3.9 million.
• Saunders & PITT- The Acumentis announced the successful acquisition of the business and assets of Saunders &Pitt, helping the Acumentis to expand globally across Tasmania and will improve the EPS by approximately 5%.

Financial Highlights for 31^st March 2021-  The key focus for the 3Q FY21 are -

• Improving Revenues- The company recorded an increase in revenue to 21% YTD, recording $10.5 million for the 3Q FY21 ending on 31^st March 2021.
• Debt repayment- The company reduced its debt by repaying $0.65 million in December 2020 and another $0.65 million in April 2021.
• Cash Balance- After paying cash of $0.10 million for the acquisition of Saunders & Pitt, Tasmania, the cash balance with the company was $2.7 million and an unused overdraft facility of $1.2 million for 3Q FY21.

Financial Performance (Source: Company Report)

Key Risks:

The company is involved in valuations of real estate properties, ranging from residential to commercial, and post COVID 19; the real estate market took the slump from the curtailment of office renting in due course of work from home policies and other restrictions such as public gatherings.

Outlook:

Acumentis recently made two acquisitions and expanded globally, incorporating the synergies from other businesses complementing to its current services and valuation practices. The opportunity to cross-sell its current services will improve the bottom line of the company's financials. The company expanded mortgage panels in metro cities in NSW and VIC in addition to regional areas.

Stock Recommendation:

The stock of ACU gave a return of ~-3.99% in the last three months and a return of ~-7.69% in the last six months. The stock is trading at the average of the 52-week low price of $0.08 and the 52-week high price of $0.16. On a TTM basis, the stock of ACU is trading at an EV/EBITDA multiple of 12.4x compared to the Industry Median of 10.1x (Professional & Commercial Services), indicating overvaluation. Considering the recent acquisitions, which will increase the administrative costs, TTM based valuation, the current trading levels, we recommend a “Sell” on the stock at the price of $0.130 as of 16^th July 2021 at 11.48 AM Sydney Time, Australia (GMT +10).   

Technical Overview:

ACU prices are continuously getting resistance from the key levels i.e. $0.13 and $0.135 on the daily chart. RSI (14-period) is hovering near to overbought region i.e. 64 on a daily chart further indicates profit booking might occur from key resistance levels. Immediate support levels are $0.115 and $0.100 while, immediate resistance levels are $0.135 and $0.145.

ACU Daily Technical Chart, Data Source: REFINITIV

Note: The purple color line represents RSI (14-period). The green color line indicates 50-period SMA.

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.

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