Alkane Resources Limited

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Alkane Resources Limited (ASX: ALK) is an Australia based gold producing company that operates projects primarily located in Central Western New South Wales.  

1.2 The Key Positives, Negatives, Investment Highlights, and Risks

1.3 Top 10 Shareholders: The top 10 shareholders together form ~39.74% of the total shareholding. Gandel (Ian Jeffrey) and Van Eck Associates Corporation hold a maximum stake in the company at ~20.69% and ~3.42%, respectively.

1.4 Key Metrics: The company has reported a high EBITDA margin of 53.6% in FY22 compared to the industry median of 40.1%. Further, the return on equity improved in FY22, which was 30.5% compared to 14.6% in FY21. Below is captured the trend of the net margin and current ratio:

Section 2: Business Updates, Financial and Operational Highlights

2.1 Material Business Updates:

2.2 Insights of 1QFY23: During 1QFY22, the company reported ore for immediate milling of around 462,925 tonnes, while only 143,535 tonnes were reported during 1QFY22.

2.3 Strategy to Drive FY23 Growth: The company provides information regarding the forward contracts it holds, which has an average forward price of around AUD 2,744 oz for delivery of 30,000 oz till December 2023. Below highlighted the nutshell of 1QFY23 performance.

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary:

4.2 Fundamental Valuation

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

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is November 8, 2022. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

Disclaimer

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