Nevada Zinc Corporation (TSXV: NZN) is a Canada-based mineral exploration company with its key operations in Nevada, United States.

Key highlights

• Operational update: On March 8, 2022, the company announced that it started a bulk operation as a part of its multiphase pilot plant program to produce zinc sulfate monohydrates. The total output from this operation is estimated at around 150 lbs of a commercial grade zinc sulfate monohydrate. The rising zinc prices and demand will give a boost towards its Average realized sales price in near future.

• Debt settlement: On February 22, 2022, the company announced its debt settlement arrangements with its creditors for CAD 0.38 million by issuing 5,197,813 common shares at CAD 0.075 per share. This will help the company to reduce the interest expenses, giving a boost to its cash flows to be efficiently utilized for various growth opportunities.

• Funds raised: On February 14, 2022, the company stated its plan to raise additional funds of CAD 0.75 million by issuing 10,00,000 Units each priced at CAD 0.075. The proceeds from the issuance will be used for funding its multiphase pilot plant program, corporate expenses, and meeting its working capital requirements. The fundraising implies the company saved itself from taking a debt burden and committed to meeting its strategic plans.

• Technical analysis: The stock was in a downward path till it sustained at the crucial levels of CAD 0.030 and consolidated there for some time before taking off towards the recent highs of CAD 0.175 in May 2021. From there the prices did sell off gradually but were still above the crucial levels of CAD 0.030. The Relative Strength Index (RSI) is currently showing a reading of 33.31 which is around the oversold zone of 30 mark. The 50 DMA is currently pondering close to the prices and a slight uptick in the stock can breach the 50 DMA, which can further pave the way for the stock towards the North.
  

Stock recommendation 

The company is currently in the initial phase of the extractions and mining process, which is dampening the financials as of now. With the rise in the commodity prices along with the demand for construction and other industrial activities are the macro winds which are in support for the company to carry out mining operations. Technically the stock should sustain above the support levels of CAD 0.030 and head towards the 50 DMA, which will further confirm the stock prices to rise in the near term.

Therefore, based on the above rationale and chart pattern, we recommend a “Watch” rating at the closing market price of CAD 0.055 on March 7, 2022.  Additionally, the markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

One-Year Technical Price Chart (as on March 7, 2022). Source: REFINITIV, Analysis by Kalkine Group 

X-Terra Resources Inc. (TSXV: XTT) is a Canada-based company, engaged in the business of acquiring, exploring, and developing mining and oil and gas properties.

Key highlights

• Fundraise: On December 29, 2021, the company announced that raised funds of CAD 0.38 million by issuing 6,181,782 Quebec flow-through units at CAD 0.055 per unit and 1,000,000 Federal flow-through units for CAD 0.05 per unit for CAD 50,000. The proceeds from the issue will be used for its mining and exploration expenses across Quebec and New Brunswick.

• 9MFY20 Cash position: For the 9MFY21 ending in September, the company reported its Cash balance of CAD 0.74 million as compared to CAD 1.05 million in pcp.

• Increase in Accounts Payable: To further support its operation, the group added its current liabilities to CAD 0.15 million in 9MFY21 vs CAD 0.12 million in pcp. This additional liablitly is a negative implication under the company’s balance sheet.

• Narrowing down operating losses: for Q3FY21 the company narrowed its operating losses to CAD 0.20 million from the losses of CAD 0.48 million in pcp. Though the company witnessed a rise in its professional and Consulting fees to CAD 0.13 million as compared to CAD 0.089 million in pcp. The narrowing down of operating losses is good for the company's financials which can transition into positive operating income, once the company sets into revenue generation mode.

• Technical analysis: The stock shows a steep rally from the lows of CAD 0.030 and printed the highs of CAD 0.245 on August 20 and sold off from there. The stock is currently in a downward trend, forming lower lows and lower highs and consolidating at the lows around CAD 0.03 to CAD 0.040. The Relative Strength Index (RSI) is currently showing a reading of 59.83 which is heading showing a slight positive bias and on crossing the reading of 65, the stock can further gain traction. 
  

Stock recommendation 

The company is currently in the initial phase of the extractions and mining process, which is dampening the financials as of now. In the recent quarter, the company narrowed its operating losses, which is a positive factor for the company in the near term. The improving global macros and construction activities with the rise in commodity prices will be supportive for the company to carry out mining operations. Technically the stock should sustain above the support levels of CAD 0.035 and be able to sustain the 50 DMA of 0.033, which will further add on fuel to the stocks rally in the near term.

Therefore, based on the above rationale and chart pattern, we recommend a “Watch” rating at the closing market price of CAD 0.040 on March 7, 2022.  Additionally, the markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

One-Year Technical Price Chart (as on March 7, 2022). Source: REFINITIV, Analysis by Kalkine Group

Disclaimer

The advice given by Kalkine Canada Advisory Services Inc. and provided on this website is general information only and it does not take into account your investment objectives, financial situation and the particular needs of any particular person. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. The website www.kalkine.ca is published by Kalkine Canada Advisory Services Inc. The link to our Terms & Conditions has been provided please go through them. On the date of publishing this report (mentioned on the website), employees and/or associates of Kalkine do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations later.