Sentiment: ⬆️ | Speculative Stock

Sector: Basic Materials | Industry: Other Industrial Metals & Mining

Mrg Metals Ltd is engaged in the exploration and development of gold, base metals, and other commodities within Australia and overseas. The projects of the company include Norriliden, Heavy Mineral Sands Projects, HMS – Corridor, HMS – Linhuane Exploration, HMS – Marao, and Marruca Exploration Projects.

The Company’s Loongana Project is located on the Nullarbor Plain, approximately 500 kilometers east of Kalgoorlie. Its Xanadu Project is located close to the northern margin of the Ashburton Basin. The Queensland Iron Oxide Copper Gold (IOCG) projects include Squirrel Hill Project, which is located approximately 125 kilometers South-Southeast of Cloncurry and over 15 kilometers West-North-West of the Cannington mine; Pulchera project, which is situated in the Simpson Desert near the Northern Territory border in western Queensland, and Davenport Downs Project, which lies over 120 kilometers south east of Boulia. The Kalgoorlie East Project is located approximately eight kilometers east of Kalgoorlie in the Eastern Goldfields of Western Australia and consists of over 15 prospecting licenses. The Company also has interest in Yardilla Project. (https://themarketherald.com.au/asx-mrq/)

The mineral sands industry involves mining heavy mineral sands (HMS) identified in fossil beach and river environments. These deposits are primarily exploited for their titanium and zircon content.

Titanium minerals are commonly referred to as titanium feedstocks. Key titanium feedstocks include: ilmenite, rutile and leucoxene. Ilemenite can also be refined to produce feedstocks with higher titanium dioxide (TiO2) content such as high titania slag and synthetic rutile.

Zircon is generally a smaller part of the HM suite, and attracts a higher price than titanium feedstocks. As a result, zircon provides a significant financial contribution to mineral sands operations.

Titanium feedstocks are characterised by two primary product chains: TiO2 pigment and the titanium metals sector. TiO2 pigment production accounts for almost 90% of global titanium feedstock consumption. Titanium metal manufacture is the second primary feedstock consumer, while the balance of supply is used to produce welding electrode fluxes and titanium-based chemicals.

Regarding the usage of TiO2, it is considered a ‘quality of life’ product – its consumption increases as disposable income rises. It is predominantly added to high-quality surface finishes for opacity, brightness and whiteness. When incorporated in applications such as paint and coatings, TiO2 pigment extends the product life by absorbing and reflecting ultraviolet radiation that generally accelerates decomposition. It is non-toxic and inert to most chemical reagents. 

You can see more details of each of the company’s exploration projects by clicking here.

Our key thoughts on this company.

✅ The global titanium dioxide market size was valued at USD 15.76 billion in 2018 and is expected to witness a CAGR of 8.7% from 2019 to 2025. Escalating demand for lightweight vehicles owing to strict emission policies is expected to fuel the market growth over the coming years. Thus, rising usage of lightweight materials for enhanced safety and fuel-efficiency is expected to have a positive impact on the industry over the forecast period. These lightweight materials, when coated with titanium dioxide, increase durability, stability, persistence, and scratch resistance.

World titanium demand is more than 6 million tonnes in TiO2-units per year. Despite, Titanium demand is tied to macroeconomic factors and, accordingly, tracks global gross domestic product, avoiding the deep cyclical price volatility of many industrial commodities; it appears that demand is continue to increase. Take a look on Global and US demand for TiO2.

✅ The SP of this company has been trading very within an ascendent channel over the last 12 months, offering what could clearly be potential entry and exit points in the stock.

✅ SP swings into a range of 50-100% per cycle as the company announces exploration results.

🚩 Very low liquidity and low trading volume makes this stock extremely volatile as it can be seen in the chart, hence making this stock extremely risky to hold. should not be considered for as investment, or traders that cannot tolerate volatility.

🚩 Some of the projects such as HMS – Marao and Marruca; HMS – Linhuane Exploration are based in Mozambique, Africa. These country’s government are generally very corrupt and not very stable offering a great risk of political interference over the long term.

Entry Details:

Entries could be considered to be done every time the stock touches the bottom line, in this case under or at 1c. Attention to SMA must be taken at all times in order to ensure not be buying into a FOMO area. We also suggest anyone that is trading this stock to ensure having sell order already set as the stock tends to reach intraday highs and pull back. By not having sell order already setup, investors/traders normally miss the opportunity.

In addition to that, there is a range of 50% potential profit to be taken between the bottom and the top of the channel, that has been confirmed over the last 12 months with multiples high highs and higher lows (a bullish pattern).

Buying area: under or around 1c

Selling area: around or above 1.4c

Potential profit per cycle: 40-50%

Cycle lead time: 3-4 months.

Strategy: Speculative trade using support and resistance ascendent channel.

Stop loss: 0.008 (-20%)

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