From PDN to CNR: ASX resources penny stocks with 50% discount

Highlights

• Penny stocks continue to attract investors despite high risks.
• In Australia, small-cap stocks under AU$1 are termed penny stocks.
• Rising inflation, war crisis, increasing crude prices, and other factors have jolted sentiments for equity markets.

In Australia, if a particular stock is available at a market price lower than AU$1, it is termed penny stock. Extensive research and due diligence of the business must be performed before investing in penny stocks as they have a higher risk-to-reward ratio.

From the resources industry, several small to mid-cap companies are engaged in the exploration and development of marginal fields.

Related read: 92E, RMI, FTZ: ASX penny stocks that gained over 100% on a yearly basis

Exploration is a risky business. It involves significant investment and time to delineate resources from the earth’s crust. Some of these explorers end up unlocking substantial resources, while many have to abandon their projects or licences if they fail to hit a commercial grade.

The companies operating such marginal fields or licences often have low market cap and limited funds to burn on exploration and development.

The ongoing turmoil in the equity market due to inflation has eaten up a significant capital of investors. Multiple stocks are currently trading at their multi-year low price. Some market analysts believe this is the appropriate time to make an entry in a particular stock as they are available at relatively lower prices, while many believe the market hasn’t bottomed yet, and investors should wait for a little longer before making any decision.

Few things investors need to ask themselves before deciding to invest their hard-earned income:

1. How much risk are they willing to take if their investment plan does not work out?
2. How much money could they invest in a penny stock to limit downside risks?
3. At what point to make entry and exit?
4. Should they invest in low-risk blue chip companies and earn moderate returns or take risks and earn multi-fold returns?
5. Which commodity to target if investing in the resources industry?

There are no right or wrong answers to all these questions. It entirely depends on investors’ risk-taking capacity and market trends.

There is a famous saying by Voltaire, ‘history does not repeat itself, man always does’. So, if you have invested in penny stocks and made some profits, it’s quite certain that you will invest in them again.

In this article, the next section will list five penny stocks from the resources industry that are trading at a discount of more than 50% from their 52-week highs.   

MinRex Resources Limited (ASX:MRR)

MinRex Resources is a diversified mineral explorer focused on battery metals, gold, silver, and copper.

The company operates lithium-tin-tantalum projects in the Pilbara region. Its strategy is to hold substantial exploration grounds in the Tier-1 mining jurisdiction with multi-commodities type deposit.

MinRex currently holds 352,213 ounces of gold resources at its Sofala Gold Project in New South Wales.

Paladin Energy Ltd (ASX:PDN)

Paladin Energy is an ASX-listed uranium player with its operations in Namibia. The company holds a 75% interest in the Langer Heinrich mine, which has produced over 43Mlb of U₃O₈ to date.

The company recently executed a fully underwritten AU$200 million institutional placement and completed a share purchase plan to raise up to AU$15 million. The funding will support the company in developing and restarting its Namibian mine, which was suspended in 2018 due to lower uranium prices.

Castle Minerals Limited (ASX:CDT)

Castle Minerals is another diversified ASX-listed explorer. The company operates battery metals, base metals and gold projects in Australia and Ghana. its asset portfolio includes graphite, lithium, gold, lead and zinc.

The company recently launched a drilling campaign at its flagship Kambale graphite project in Ghana.

Dateline Resources Limited (ASX:DTR)

Dateline is gold-focused mineral explorer with operations in the United States. The company has signed an offtake agreement for 100% gold concentrate produced from its Gold Links Mine in Colorado.

Dateline has produced 40 tonnes of saleable gold concentrate that can contain gold and silver valued at AU$1.5 million.

Canon Resources Limited (ASX:CNR)

Canon Resources is engaged in nickel exploration and development operations. The company has two nickel projects in Western Australia, the Fisher East and Collurabbie nickel projects.

The Fisher East Nickel Project currently has mineral resources of 116.3kt of contained nickel. One of the prospects on the project, Muskel, has shown potential for platinum group elements (PGEs).