Flick Through Three ASX Listed Resource Stocks: AMI, LYC, and COE

The global equity market is showing some recovery and S&P/ASX 200 seems to be rising on steadfast measures adopted to deal with the COVID-19 impact, such as cutting-cost, prioritising work, and most importantly cash management.

To Know More, Do Read: Resource Stocks Moving Up; Due to Companies’ Steadfast Measure on COVID-19 or Short Covering?

The S&P/ASX 200 is showing a slight pullback after a brief sell-off, other indices such as S&P/ASX 200 Resource Index are following in suite with prices of the index recovering from its recent low of $3,105.50 (intraday low on 23 March 2020) to the present high of 3,719.70 (intraday high on 27 March 2020), which marked a price appreciation of ~ 19.77 per cent.

The investing community is dealing with the dilemma of whether the rise in resource stocks a market reaction to the latest development of the resource companies or the downtrend is entering into the second phase of the primary downtrend.

Prima facie, the resource stocks on the exchange are showing some recovery, and more and more companies are out with latest announcements to root the shareholders’ confidence further in the business.

On 31 March 2020Aurelia Metals Limited (ASX:AMI), Lynas Corporation Limited (ASX:LYC), and Cooper Energy Limited (ASX:COE) are joining that vast list of resource stocks with latest developments to further strengthen the investors’ relation.

While these companies are out with some news for investors and other stakeholders, let us try to find out if these developments would act as a harpoon against the shark.

• Aurelia Metals Limited (ASX:AMI)

AMI recommences Peak Shaft Ore Hoisting

The Company took down its shaft hoisting operations at the Peak Mine over the weekend of 21/22 March 2020 to further investigate a fault detected in the conveyance guide system.

• AMI carried out some remedial works on the guide rope system and recommended normal ore hoisting while investigating the fault in the conveyance guide system.
• However, the Company keeps the man-riding operations suspended until further investigation, potential remedial works, and re-commissioning.
• AMI further suggested that by the time man-riding remains suspended, the Peak Mine surface decline is being used to transport mineworkers underground.

Looking at the stock price actions, it seems that the market is not impressed with the development and is discounting the stock to reflect the difficulties in the operation posed by the COVID-19 outbreak, and by the measures adopted by the federal government, which restricts interstate travels.

However, the Company mentioned earlier that it is actively pursuing measures to minimise the impact on its rosters from the travel restrictions. On 26 March the Company announced a withdrawal of all forward looking guidance on back of the COVID-19 impact.

The stock of the Company has slightly recovered from its recent low of $0.210 (intraday low on 23 March 2020) to mark a high of $0.270 (as on 25 March 2020), up by ~ 29 per cent; however, is yet coming down to presently trade at $0.240 (as on 31 March 2020), down by 4.0 per cent against its previous close on ASX.

Lynas Corporation Limited (ASX:LYC)

Malaysia plant extends temporary suspension

The Company reiterated over the temporary suspension of its Malaysia plant in compliance with the Malaysian government’s Movement Control Order, which has now been extended to 14 April 2020.

LYC is further assessing the effects of the shutdown on the essential supply chains to which it contributes, which would further assess the impact on the supply of its Malaysia’s products in permanent magnets used in medical devices including ventilators, and in lanthanum products used in oil refineries for petroleum production.

Currently, the Malaysian plant is in care and maintenance, and the Company mentioned that post the recommencement of the operation at the unit, it would take the health and safety of people and local communities, on priority.

LYC also suggested that post it made the announcement of the temporary suspension on 23 March 2020, the Company started planning for the possibility of a longer shutdown.

The Mount Weld facility of the Company is operational, which is following the health and hygiene precautions in line with government guidelines, to take care of the essential staff on-site.

LYC is currently trading in the green zone with a pullback from its recent low of $1.080 (intraday low on 17 March 2020) to the present high of $1.475 (as on 31 March 2020), which marked a price appreciation of ~ 36 per cent. In its previous announcement on 23 March, the Company emphasised on its tactical measures and strong financial position, which surely seems to have paidoff, and investing community seems to be welcoming the announcement.

However, it would be worth noticing aheadif the implemented measure would further cover for the operational challenges and any opportunity cost.

LYC last traded at $1.4450, up by 10.7 per cent against its previous close on ASX (as on 31 Match 2020).

• Cooper Energy Limited (ASX:COE)

Sole gas field supplies gas to the Eastern Gas Pipeline

COE suggested that the second phase commissioning of the Orbost Gas Processing Plant, operated by APA Group (APA), is currently underway and has demonstrated its capability to produce sales gas to specification from the Sole gas field while supplying gas into the Eastern Gas Pipeline.

The sales, which is initially expected to remain slow, stood at 21 terajoules (as on 29 March 2020) with a production rate of up to 50 terajoules per day.

The Company also suggested that the production rates would continue to be variable as commissioning proceeds to the plant production test, which requires a sustained rate of 68 terajoules per day, and the starting of firm gas supply from Sole gas field to term gas sales would commence post the completion of the planned production test.

COE further mentioned that majority of its revenue is derived from the production of gas for supply to the southeast Australian energy market, under, take-or-pay contracts without any link to the oil price, which places the Company in a strategic position amidst the oil bloodbath.

Also Read: Cost-Cutting, Cash Preservation, Revenue Hedge- New Drilling Tools of Woodside and Senex

The market seems to havepicked a liking for the stock of the Company amidst such developments with the stock rising from its recent low of $0.360 (intraday low on 23 March 2020) to the present high of $0.465 (as on 31 March 2020), which marked a recovery of ~29 per cent, after a brief sell-off, which started from the level of $0.642 (intraday high on 19 December 2019).

The stock of the Company last traded at $0.432, up by 0.46 per cent against its previous close on ASX.