Is this the right time to exit from Lykos Metals Ltd.?

Company Overview

Lykos Metals Limited is an Australian company incorporated on May 06, 2021, with the sole purpose of acquiring the entire issued shares capital of Lykos Balkan Metals under the acquisition agreement. Lykos Balkan Metals is battery metals exploration and development company. Its projects include exploration and extraction of nickel, copper, cobalt, precious metals, and lithium and REE.

Initial Public Offering

The company had launched its IPO on the ASX under the ticker LYK and has sold approximately 60 million shares at AU$0.20 each. Even though the prospectus mentioned the expected date for quotation on ASX as 9th November 2021, Lykos Metals got listed on 21st October 2021. We had covered this IPO in our ‘Kalkine IPO Report’ on October 06, 2021 and had concluded that this IPO looked “Attractive” given its presence in the EV battery space, debt free balance sheet and aggressive growth outlook.

5-Minute Price Chart (as on October 29, 2021). Analysis by Kalkine Group 

Conclusion

Investors who have invested into this IPO can consider ‘Exiting’ from their position at the closing price of AU$0.345 as on October 29, 2021, given:

• Decent gains: The stock has moved up 72.5% from its IPO price of AU$0.20/share. Taking out profit amidst a challenging business environment could be a good strategy.
• Heightened Uncertainties: Given the recent rally in the CPI inflation across the board, companies are witnessing stiff inflationary pressure, which could significantly impact the margin profile regardless of growth in topline numbers.
• Increase in raw material cost: Lithium carbonate prices in China has risen to above 190,00 yuan per tonne, the highest on record due to growing demand and tight supply. As automakers and battery manufacturers race to secure supplies, prices for this silvery-white metal, a key ingredient to power electric vehicles, skyrocketed over the past year. As a result, Lykos is exposed to the risk of a surge in Lithium prices.

*The reference data in this report has been partly sourced from Refinitiv.

Disclaimer

Kalkine New Zealand Limited is authorised to provide general advice only. The information on this website does not take into account any of your investment objectives, financial situation or needs. Before you make a decision about whether to acquire a financial product, you should obtain the Product Disclosure Statement from the product issuer. You should consider the appropriateness of advice taking into account your own objectives, financial situation and needs and seek independent financial advice before making any financial decisions.