AIM movers: Joules potential cash injection and ECO Animal Health tax problem

Fashion brand Joules (LON: JOUL) has confirmed media speculation that it is in talks with NEXT (LON: NEXT). The retailer is considering a £15m investment in Joules. This would be at the market price of 33p at the end of last week or higher. The price has jumped 46% to 48.175p. At the previous closing price, a £15m investment in shares would have been equivalent to a more than 30% stake, so it may not be a pure share purchase there could be a convertible loan element. Shareholder approval will be required, so they could be asked to agree to a 30% plus stake without NEXT having to make a mandatory bid. However, a 25% stake has been mentioned in the press, which suggests an investment higher than the current price. Joules also wants to use NEXT’s total platform services. That could improve efficiency and might save money.

Trinidad-focused oil and gas company Touchstone Exploration (LON: TXP) shares are continuing their recent recovery. The price has risen a further 19.8% to 84p. The authorities have accepted the Environmental Impact Assessment for the Cascadura project, where Touchstone Exploration has an 80% stake. A final determination will be made by 15 September. This follows news that the Coho gas facility will start pre-commissioning. Production at Coho is expected to eventually increase to 1,667 barrels of oil equivalent per day. Coho and Cascadura would add total net production of more than 10,000 barrels of oil equivalent per day. finnCap estimates a core value of 110.8p a share with further potential value from contingent and prospective resources.

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Lexington Gold (LON: LEX) says that the updated JORC mineral resource estimate for the Loflin side of the Jones-Keystone-Loflin project in the US has increased by 27% to 82,700 ounces of contained gold at 0.99 g/t. There is potential for a further significant increase in resources through additional drilling. A maiden resource for the Jones-Keystone side is expected shortly and this could be up to 100,000 ounces of gold. The share price is 8.77% ahead at 3.1p.

There were two pieces of news from Hutchmed (China) Ltd (LON: HCM) this morning. A phase 3 FRESCO-2 study for fruquintinib met its primary endpoint of overall survival in metastatic colorectal cancer patients. There are plans for regulatory submissions in the US, Europe and Japan. Preliminary results for the SAVANNAH phase 2 trial show that TAGRISSO plus Savolitinib demonstrated a 49% objective response rate in lung cancer patients. Savolitinib is being jointly developed by Hutchmed and AstraZeneca. The shares roe 5.8% to 232.75p, although the share price has still more than halved this year.

A tax issue and a slow start to the current financial year has hit the ECO Animal Health (LON: EAH) share price, which fell 20.4% to 101.5p. Trading and profit for the year to March 2022 was in line with expectations. The profit includes a £1m foreign exchange gain that helped to offset a similar provision for sales tax on imported products – this has not been previously expensed. This tax liability is still uncertain, and it is going through the courts, but the total provision is likely to be £2.5m. There is also an additional R&D charge of £300,000 for work that did not meet the criteria for capitalisation. Low Chinese hog prices have hampered demand for antibiotics in the first quarter and the subsequent rise in prices will take time to affect demand. Elsewhere, trading has been strong, but revenues are likely to be flat in 2022-23.

Tungsten West (LON: TUN), the operator of the Hemerdon tin mine in south west England, announced a loss of £13m for the year to March 2022. There was still net cash of £28.8m at the end of March 2022, but this has fallen to £22.9m. The project is being redesigned, which has led to delays. Power and materials costs are rising. Financing is being negotiated and production could start in 2023. The share price has fallen 8.2% to 28p.

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