This report is an updated version of the report published on 30 September 2024 at 3:08 PM AEST. 

Vault Minerals Limited (ASX: VAU)

VAU is engaged in gold mining and mineral exploration activities. Its operations are located in Western Australia’s Eastern Goldfields Region. In June 2024, the company merged with Silver Lake Resources.

Recommendation Rationale – SELL at AUD 0.345 

• Transition Risks: Changes in company name and ASX code can cause confusion in the market, potentially affecting liquidity and trading volumes during the transition period.
• Financial Highlights: The group reported a loss of AUD 5.4mn in FY24, due to increased exploration expenses and exceptional expenses of acquisition and stamp duty during the period. No dividend was paid or proposed for the year ending 30 June 2024. The company’s total liabilities rose to AUD 546.80mn as of 30 June 2024, up from AUD 340.41mn as of 30 June 2023.
• Trading Near the Resistance: VAU’s share price has surpassed its R1 level recommended on 3 September 2024. Therefore, share price can face resistance at the current levels.
• Overvalued Multiples: On a forward 12-month basis – key trading multiples (EV/EBITDA, Price/Cash Flow, Price/Earnings) are higher than the median of Basic Materials sector.
• Market Risk: Challenges in mining operations, such as equipment failures or labour disputes, can disrupt production. Additionally, changes in mining regulations or environmental laws can impact operations and increase compliance costs.

VAU’s Daily Price Chart

 (Source: REFINITIV; Analysis by Kalkine Group) 

Valuation Methodology: EV/Sales Approach (FY June'25E) (Illustrative)

VAU is expected to trade at premium based on revenue growth in FY24, merger with Silver Lake, and increased production capacity. For conducting the valuation, the following peers have been considered: Westgold Resources Ltd (ASX: WGX), Catalyst Metals Ltd (ASX: CYL), Regis Resources Ltd (ASX: RRL), and other have been considered.

Considering that the stock has surpassed its R1 level, market uncertainties, and risks associated, the share price can witness resistance at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 0.345, as of 30 September 2024, at 10:28 AM AEST.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. 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 30 September 2024. 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 downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.