ViaGold Rare Earths is up 2,500% in 45 days — so what is it?
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ViaGold Rare Earths Resources (ASX:VIA) — a name that would be familiar to regular readers of Stockhead’s Hot Money Monday column.
For each of the last three weeks, the stock has posted a red-hot 14-day RSI above 90, as the price marched higher on very little news flow.
From a low of 4.2c on August 27, ViaGold shares closed last Friday at 72c.
To start the week yesterday, the stock ramped by another 40% — finishing at an even $1 on Commsec.
We know rare earths is a strong thematic. But we didn’t know it was ‘mooning by 2,281% in 45 days’ strong.
Here’s a provisional look at the hottest stock on the ASX (by far) over the last month of trade.
For investors, rare earths are on the radar because the sector is expected to see a long-term structural supply shortfall over the next decade.
For rare earths (both digging them out of the ground, and processing them) China is viewed as the market leader — to the point that it’s been cited by other major economies as a matter of strategic concern.
Data indicates that around 95% of the world’s heavy rare earths come from China and its neighbour, Myanmar.
Here’s Stockhead’s Reuben Adams:
“Commodity research group Roskill says production at both the mining and refined stages in China – and hence the world — is controlled by quotas assigned to six state-owned enterprises, highly integrated throughout the rare earth supply chain”.
One of those state-owned enterprises is Guangdong Rare Earths Industry Group, which specialises in ion-adsorption rare earths.
According to ViaGold’s website, Guangdong Rare Earths is a “major shareholder” in the company.
For a stock that’s ramped by over 2,000% in little more than a month, ViaGold has had notably little news flow.
Over that time (Aug-27 to Oct-11), VIA’s only market announcement was a brief AGM update (September 14) and a response to an ASX speeding ticket on September 29 (answer; nothing to see here).
In July, the company released its annual report for the financial year ended March 31.
Of its $19.22m in revenues, 97% came from “sales of minerals and rare earth refining and separation”.
Annual rare earths processing revenues of $18,793,000 were down slightly from the previous year ($20,517,000).
ViaGold attributed that to disruptions from the COVID-19 pandemic in mainland China, including one month — July 2020 — where it generated “zero revenue”.
However, activity picked up in the March quarter of 2021 and VIA posted a small annual profit of $739,000.
ViaGold still releases 4C filings — compulsory for ASX companies that haven’t strung together four straight quarters of net positive operating cashflows.
But its 4C filing for the June quarter showed positive net operating cashflows of $976,000, on cash receipts of $14.6m.
It finished the quarter with only $577,000 in the bank, due in part to more than $2m of outflows from investing activities.
That included over $5m of outflows in connection with loans to other entities.
In addition, the company’s trading history on Commsec is notably low-volume for such a heady rise in the stock price.
Recent trading history shows VIA didn’t even trade on Commsec between March and August.
In the 45-day period between August 27 and October 11, there were also days where it didn’t trade.
The largest daily volume on Commsec occured on September 8, when 69,050 VIA shares changed hands and the stock mooned by 126%.
Some days, less than 100 shares change hands. But the buy-sell ladder continues to match at higher prices — every day.
Of the 18 days the stock traded since August 27, it has risen on 17 of them.
Looking ahead, ViaGold’s annual report said it will “continue to focus on its rare earths and related businesses”.
While noting that vaccination rates have increased globally, VIA said in its 4C filing that the COVID-19 situation remains “intense and uncertainties and risks still remain”.
As such, ViaGold has “started to develop new factory premises with advanced machinery and equipment to deliver rare earth products more efficiently to the satisfaction of the domestic government rules and the environmental protection requirements”, the company said.