Why Should Investors Exit the Stock?

• Uncertainty regarding revenue generation: The company is in the initial stage of its operations and is yet to report a meaningful mineral discovery. Hence, we are uncertain regarding the future prospects of the organization as its is yet to report its income.

• Rising input costs pose a threat to the overall performance: In 9MFY21, the company registered a higher general and administrative costs. Continuation of the above trend is likely to dampen the overall performance of the group, which remains a key concern.

• Steep decline in cash balance: Cash and cash equivalents stood at CAD 53.041 million in Q3FY21, as compared to CAD 85.049 million in Q4FY20. This is likely to drag the overall liquidity of the company, which might hinder its ongoing surface drilling activities.

Stock Recommendation:

The stock of WM has formed a bearish pattern, and is going through a downtrend since August 2021, which indicates lower investors interest in the stock. Moreover, the stock also failed to close above its 50-days and 100-days simple moving averages (SMA), which implies a weak technical chart. Moreover, due to the absence of a stable cash flow, majority of the funds are financed mostly through equity component, which is a greater concern as it indicates increasing risk profile. Considering the aforesaid facts, we recommend a ‘Sell’ rating on the stock at the closing price of CAD 0.39 on January 19, 2022.

One-Year Technical Price Chart (as on January 19, 2022). Source: REFINITIV, Analysis by Kalkine Group

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

Disclaimer

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