Solstice Minerals Limited engages in the gold and base metal exploration in Australia. It holds interests in the Yarri, Kalgoorlie, Yundamindra, and Ponton projects comprising an area of 2,745 kilometer square located within Kalgoorlie, Western Australia. The company was incorporated in 2011 and is headquartered in Subiaco, Australia.

Australia

Solstice Minerals Limited

Basic Materials

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

SLS.AX reported revenue of AUD 8mn in the last 12 months, down 0% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. 

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). The stock has outperformed this peer group by 8ppts over past six months and grown 2ppts slower in the past month. This is largely true for peers from the same country and sector. With respect to the stock's valuation against its peers, its overall price performance is 'fair'.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 0.0% in the last 12 months, up from -50.6% in FY24. 

Historically, SLS.AX has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 0.0%, down from 55.8% in FY24. 

Solstice Minerals Limited reported a return on equity (RoE) of 0.0% in the last 12 months, down from 26.3% in FY24. 

Another important profitability metric, return on assets (RoA), amounted to 0.0% in the last 12 months, a decrease from 25.1% in FY24. 

In the last 12 months, the return on capital employed (RoCE) declined to 0.0%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -0.5 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

SLS.AX has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity may be unstable and becomes extremely unfavourable on the days with the lowest activity. However, under highly turbulent market conditions, the trading volume tends to improve significantly. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, bleak profitability, poor working capital management, weak debt servicing capacity, and poor cash flow generation. We note low margin volatility and an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, SLS.AX is moderately volatile. In other words, the stock will fall more than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be moderate. 

In normal market circumstances, SLS.AX is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from significant to immense. 

Based on key historical and expected multiples, the stock is fairly valued relative to its peers. In particular, the stock is overpriced on P/E, trading at neutral levels on P/FC. 

Solstice Minerals Limited

A$ 0.19

3

Solstice Minerals Limited

A$ 0.19

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

A$ 0.19

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