A cliche but the market is a popularity contest. Traders chase gossip, news and volume. When there are gaps in gossip and news, share price moves sideways. We’re also in the situation where a placement and rights issue has just occurred. It was first announced 4 weeks ago and the only significant news we've had was the presentation. The rights issue and placement wraps up next week. When new shares are issued they will have been bought at 3.2c in placement so we are unlikely to see much selling volume from those shares.
Also whilst the placement has been playing out we've had the tax-loss selling season. Lots of stocks with good fundamentals were getting hammered by people exiting their positions.
It's also a stock that doesn't have trader hype. The resource is in Canada. The Hard Rock Lithium focus has largely been in Australia (particularly PLS,KDR,AJM,PLS). AVZ is getting much of the attention because of the hype and hence volumes it is attracting. SYA (also in Canada) has been a quiet achiever but recent news flow is giving it more attention from traders.
The main risk is probably the general one that many junior companies face - execution / delivery in getting the project through critical steps of feasibility, marketing/offtakes and funding. We've almost ticked the important initial step of a Maiden Resource. It will be at a scale that makes it less risky to scope and fund and deliver ( look at TAW as an example of this ). You don't need a mega resource to be successful and that comes with greater complexity and CAPEX. Effective planning, financing and project delivery is the end-game. The project characteristics (location and size) will make this more straighforward from a risk management perspective (stable economy, low geo-political risk ). These characteristics ( particularly location ) might make it more attractive to North American capital.
On the planning / finance / delivery front they are doing the right things though to progress the project:
- they have a Manitoba local running the exploration activities in Canada ( is a professional Geo and has previous expertise working in the competent person role under the Canadian NI 43-101 standard )
- early engagement with a commodities / finance adviser for marketing / offtakes / partnerships
- exploration / drilling to prove up and extend historic exploration results ( they actually used volumes of historic drill assay data to guide their exploration efforts by conducting drilling in the same locations, however have also done extension drilling to extend the resource )
- technical testwork to prove the quality of the material in the deposit
- early work on feasibility studies ( including concepts for transport via a slurry pipeline and planning an activity for bulk sampling for ore sorter test work )
Meanwhile, we’re anywhere from 2 weeks to 7 weeks from the Maiden Resource if we go by the timetable the company has announced.
View attachment 1193793
The exploration target was communicated (in some detail) to the market back in April. That is much more detail than is usually seen in ASX announcements of exploration targets:
https://wcsecure.weblink.com.au/pdf/NVA/01970520.pdf
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Taking the figures from the chart above, I tallied them up to look at the range of values. There's only a different of 1 mt between totals for the lower and upper bounds ( 10.45mt and 11.43mt ).
The exploration target they specifically announce ( see link above ), was 9mt to 13mt and I previously calculated that this appears to be a 15% estimating tolerance either side of the bounds I calculated below.
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I'm reasonably confident they'll get a result within the 9mt to 13mt target. The estimating tolerances they have used have given them some wriggle room.
The primary targets above likely relate to the historic 4.3mt resource, except from the new drilling it looks like they are expecting about 6mt against the primary targets and 5mt from the extensions.
Meanwhile, I'm patiently waiting and not worried about the sideways movement. Traders are off at other parties at the moment. They will come back when newsflow brings back the volume.
(20min delay)