Horizonte Minerals PLC

Horizonte Minerals PLC (LON: HZM) is an FTSE AIM All-Share index-listed nickel development entity focused in Brazil.

Investment Rationale for Valuation – Watch at GBX 8.60

• Fundraising: On 31 March 2022, HZM announced the completion of both the US$65 million Convertible Notes issuance and the sale of the Vermelho Royalty. The proceeds shall help in ramping up the construction activities in Araguaia ferronickel project.
• Weak Financials: In FY21, HZM generated no revenue, while its net losses worsened significantly against FY20.
• Technical Indicator: The momentum oscillator 14-day RSI (84.51) is in the overbought zone, while the share price has gone above the upper Bollinger Band.
• Macroeconomic Risk: British CPI jumped 30-year high of 7% in March 2022, and therefore, an aggressive interest hike can be expected. Moreover, global growth optimism is quite subdued currently as the world economy is heading into a stagflation scenario.
• Sudden Spike: HZM has given a sudden surge of over 17% in the past five days, and now trading in the overbought zone, which can face retracement in the short term. Investors can wait and watch the stock for some correction before taking a fresh position.

One Year Share Price Chart

 (Source: REFINITIV; Analysis done by Kalkine Group)

Conclusion

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.

Based on the aggravated losses, overstretched price position, and macroeconomic risk, we have given a “WATCH” recommendation on Horizonte Minerals PLC at the current market price of GBX 8.60 (as of 14 April 2022, at 1:55 PM GMT+1).

Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.

Note 1: The reference data in this report has been partly sourced from REFINITIV.

Note 2: Investment decisions should be made depending on the investors' appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

Note 3: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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