Northcliff Resources Ltd. (TSX: NCF) is a Canadian-based company. It is engaged in the acquisition and development of mineral properties. The company holds an interest in the Sisson Tungsten and Molybdenum Project, located in New Brunswick, Canada.

Key Highlights:

• Missing revenues: The company is still in the exploration stage and has yet to start generating operating revenues. Without any operating revenues, it is very hard for any business to survive on external financing, which will again increase the overall expenses in form of interest and debt repayment.

• Increased net losses: The loss from operations has been widened to CAD 0.40 million in Q1FY22 vs CAD 0.36 million in Q1FY21. Additionally, the company reported an increase in the net loss to CAD 0.44 million in Q1FY22 as compared to the net loss of CAD 0.37 million in Q1FY21.

• Technical overview: The stock opened and touched the lifetime high of CAD 1.50 in June 2011, and since then the prices are in a declining trend. The prices are in a continuous downtrend forming lower lows and lower highs since the stock was listed. Currently, the prices are in a narrow range of CAD 0.03 and CAD 0.06. The Relative strength index is pointing at the reading of 47.01, which is again in the middle of the range, showing the indecisive movement of the prices in the near term. For the stock to move towards the north on a sustainable basis, the prices should be able to float above CAD 0.06 on a weekly closing.

Stock Recommendation:

The company has reported an increase in its net losses to CAD 0.44 million in Q1FY22 against the net loss of CAD 0.36 million in Q1FY21. The lack of revenues and the capital requirement in the mining sector can probably push the group to go for external sources of funds such as equity dilution or debt financing, and any debt financing in the rising interest rate scenario will further be a burden on the company’s financials.

Therefore, based on the above rationale and technical analysis, we recommend an “Avoid” rating on the stock of NCF at the last closing price of CAD 0.04 on May 20, 2022.

One-Year Technical Price Chart (as of May 20, 2022). Analysis by Kalkine Group

Note: The reference data has been partly sourced from REFINITV

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