Base Resources Limited

This report is an updated version of the report published on the 21 February 2023 at 3:55 (GMT+11).

Section 1: Company Overview and Fundamentals

1.1 Company Overview:

Base Resources Limited (ASX: BSE) is an Australian company that is engaged in the production and development of mineral sands. The company's assets include the Kwale Mineral Sands Operation in Kenya and the development of the Toliara Project in Madagascar.

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

1.3 Top 10 Shareholders: The top 10 shareholders together form ~75.29% of the total shareholding. Pacific Road Capital Management and Sustainable Capital Ltd. hold a maximum stake in the company at ~26.52% and ~23.53%, respectively.

1.4 Key Metrics: The company has reported a high Gross margin of 52.8% in FY22 compared to the industry median of 48.0%. Further, it follows the nil debt-to-equity ratio trend since FY21. Below captured are the other key metrics of the company:

Section 2: Business Updates, Financial and Operational Highlights

2.1 Recent Updates:

2.2 Quarterly Insights (for the period ended 31 December 2022): The company witnessed a growing demand for rutile, which was supported by further price gains. Below mentioned are the December quarterly highlights and pcp details:

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary

4.1 Price Performance and Technical Summary:

The stock has witnessed a rise of ~4.54% in 3 months and over the last 6 months, it has decreased by ~30.30%. The stock has a 52-week low and 52-week high of AUD 0.195 and AUD 0.365, respectively and is currently trading slightly below the average of 52-week high-low average.

4.2 Fundamental Valuation

Valuation Methodology: EV/Sales 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 February 21, 2023. 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.

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