Premier African Minerals Share Price Forecast July 2021 – Time to Buy PREM?
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Shares of Togo-based Premier African Minerals Limited (LSE: PREM) is up by 0.0215 points on the back of stellar performance over the past year where its share price increased by 184%. However, certain concerns over how this loss-making company on the whole burns through cash so quickly has been grabbing the attention of its investors.
Premier African Minerals Limited – Technical Analysis
Premier African Minerals Limited’s financial statement indicates the company’s market cap of £35.363 million and total assets worth £6.728 million. The company’s total liabilities equals £684.00 with a debt to assets ratio of 10.17%. At the time of writing, PREM shares are trading at £ 0.2125 with an uptrend of 10.73%.
Moving over to the technical side, oscillators for Premier African Minerals Limited such as Stochastic RSI Fast (3, 3, 14, 14)(24.3562), Williams Percent Range (14)(−46.1157), Bull Bear Power(−0.0053) and Ultimate Oscillator (7, 14, 28)(45.0053) are pointing towards neutral. Moving averages such as Exponential Moving Average (100)(0.1762), Simple Moving Average (100)(0.1927), Exponential Moving Average (200)(0.1442) and Simple Moving Average (200)(0.1203) are pointing towards buying.
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Recent Developments
Premier African Minerals Limited recently announced the commencement of its Zulu Lithium Project in Zimbabwe, with a second drilling rig in the work. Despite the hurdles presented by the pandemic which has restricted access to the Southern African Development Community region, the company has made progress in its drilling program.
The company has burned almost $802,000 over the past 12 months, possessing a cash streak of about 11 months as of December 2020. This indicates that the company either replenish their funds or reduce the annual burning of cash.
Should You Buy PREM Shares?
Premier African Minerals Limited can be considered as an early-stage business as it’s not currently generating the desired levels of revenue. So investors should look at the cash burn to understand how the company’s expenditure is trending over time instead of looking at sales. Many analysts consider the company’s 11% reduction in cash burn over the last year as proof that the management is taking action on depleting cash reserves. The company’s $802,000 cash burn is about 1.5% of its market share. Hence it can easily raise the cash by issuing shares or borrow some funds to facilitate another year’s worth of growth.
Even though Premier African Minerals Limited’s cash runway is a cause for concern for investors, its cash burn relative to its market cap looks promising. Companies that employ cash-burning are generally a risky investment. However, considering all of the positive points this company has to offer, the company’s cash burn isn’t of consideration. So investors can look to add PREM shares to their portfolios for the time being.
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