AIM movers: Shuka Minerals drawdown delayed and i3 Energy bid

Andrew Hore
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AIM movers: Shuka Minerals drawdown delayed and i3 Energy bid

Oil and gas producer i3 Energy (LON: I3E) is recommending a 13.92p/share bid from Gran Tierra Energy. The market price is 27.2% ahead at 12.25p. The offer is one Gran Tierra Energy share for every 207 i3 Energy shares and 10.43p in cash for each i3 Energy shares. Shareholders will also receive a dividend of 0.2565p/share. The bid, based on a Gran Tierra Energy share price of $8.66, values i3 Energy at £174.1m. Gran Tierra wants to diversify its current Canadian resources.

Pharma delivery system developer N4 Pharma (LON: N4P) has shown that the Nuvec delivery system is capable of targeting specific cells through the addition of a relevant ligand. The findings will be presented to major pharma and biotech companies. The share price improved 9.09% to 0.6p.

Womenswear retailer Sosandar (LON: SOS) has announced a third store site in Gateshead. The store will be in the Platinum Mall in the Metrocentre next to other female-focused brands, such as Jo Malone. This should open in October. The other two stores are in Marlow and Chelmsford. There could be up to eight store openings by next March. This will increase brand awareness for the online business. The share price increased 5.71% to 9.25p.

Beeks Financial Cloud (LON: BKS) has signed a contract extension with the Johannesburg Stock Exchange to use its technology in a second data centre. This is a multi-year contract. The share price rose 7.69% to 280p.

FALLERS

Shuka Minerals (LON: SKA) wants to draw down £500,000 of the £2m unsecured convertible note instrument provided by AUO Commercial Brokerage, but the funds are not yet available. AUO is owned by Shuka Minerals chairman Quinton Van Der Burgh. There is no indication of when the funds will be available. Shuka Minerals has enough cash until the end of October. The share price dived 46.9% to 4.25p.

Kidney disease management technology developer Renalytix (LON: RENX) says it does not believe there will be a realistic offer from the potential bidder. The formal sales process has ended. There is enough cash until the fourth quarter of 2024 and management has the backing of its main stakeholders. Operating costs will be reduced, and funding options are being assessed. The share price slipped back 22.4% to 11.25p.

MobilityOne (LON: MBO) shares returned from suspension down 16.7% to 2.25p following the publication of the annual report for 2023. Revenues were 3% higher at £241.7m, but MobilityOne went from a profit to a £1.37m loss because of higher costs. The mobile payments company intends to expand its operations by joining the SWIFT network for money transfer.

Corporate finance adviser Marechale Capital (LON: MAC) reported a reduced loss, although that was mainly down to an unrealised gain of £250,000. In the year to April 2024, revenues improved from £376,000 to £669,000 as Marechale Capital undertook more fundraisings for clients. The loss fell from £426,000 to £183,000 after bad debts of £109,000. NAV is £3.35m, which is more than twice the market capitalisation. The share price fell 9.68% to 1.4p.

Antofagasta revenue ticks higher in first half as copper prices rise

UK Investor Magazine
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Antofagasta revenue ticks higher in first half as copper prices rise

Antofagasta shares rose on Tuesday after the mining giant announced rising revenue and EBITDA during the first half of 2024.

It’s a copper pure play targeting between 670k and 710k tonnes of production for 2024, making it one of the world’s foremost producers. A mining company with the scale of Antofagasta has inevitably encountered other minerals in its search for copper and produces gold and molybdenum, but these are a sideshow to copper production.

In the first half of 2024, Antofagasta generated $2,955m in revenue, an increase of $2,890m in the same period a year ago. 

Stronger copper prices, on average 10% better than the comparable period last year, drove higher revenue. However, lower production offset the increase by 4%.

“Antofagasta has reported a five percent increase in half-year profits this morning as higher copper prices drove performance in the first half of the year,” said Mark Crouch, Market Analyst at investment platform eToro.

“However, after reaching a record high in May, the price of copper has since retraced nearly 20 percent. Not surprisingly, Antofagasta’s share price has moved in near identical fashion.”

The key to future profit appreciation will be dictated by the wider macro picture, most notably how well China can navigate shifting undercurrents in its economy.

“Antofagasta shareholders might be asking themselves: is the bull run in copper over or is this just the end of the beginning?” Crouch questions.

“A leading economic indicator, Dr Copper, as the industrial metal is often referred to, could be diagnosing a period of queasiness ahead for markets following copper’s recent sell off. In June, the world’s largest consumer of the industrial metal, China, reported copper stockpiles at a four-year high.

“However, with cooling inflation giving way to Central Banks around the world cutting interest rates, a bump in economic activity could likely follow, at which point demand for copper is sure to ramp up again.” 

Antofagasta will pay a 7.9 cent dividend for the half-year period. 

Costain Group – Creating A Sustainable Future Is Good Business For £245m Valued Group With £169m Cash In The Bank 

Mark Watson-Mitchell
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Costain Group – Creating A Sustainable Future Is Good Business For £245m Valued Group With £169m Cash In The Bank 

The £245m capitalised Costain Group (LON:COST) is due to announce its Interim Results tomorrow morning. 

With some £700bn of infrastructure investment expected over next decade the group will continue its role as a major player in the sector. 

It looks to shape, create and deliver pioneering solutions that transform the performance of the infrastructure ecosystem across the UK’s energy, water, transportation and defence markets. 

Employing over 3,200 people across its business, the group engineers and delivers sustainable, efficient and practical solutions, utilising its unique mix of construction, consulting and digital experts.  

Management Targets 

Last year it reported a 10.5% increase in adjusted operating profits and strong net free cash flow. 

Looking to its revenue and operating profit growth, it aims at an adjusted operating profit margin run rate of 3.5% during 2024, rising to 4.5% during 2025, and in excess of 5.0% thereafter. 

Chair Kate Rock stated that: 

“We are delivering well on our strategic objectives with an increase in our adjusted operating profit and margin. 

 We continue to build a pipeline of future opportunities for 2025 and beyond.”  

Group Divisions 

Transportation delivered a resilient performance in 2023 with rephasing and rescoping of contracts during the year – £943m sales. 

Natural Resources saw revenue growth in the year together with positive margin improvement – £389m sales. 

Recent Trading Update 

In its mid-May AGM Trading Update the group noted that from the start of the year its trading for the period was in line with Board expectations and that the group continued to have a high-quality forward work position that aligns with its strategic plans for both the Transportation and Natural Resources divisions. 

The average weekly net cash position from 1st January to 30th April 2024 was £168.8m (of which £60.4m was held in joint ventures).  

The average weekly net cash position for the same period last year was £122.9m (of which £57.2m was held in joint ventures). 

While the Board is mindful of the macro-economic backdrop, the group stated that it remained confident in its strategy and medium-to-long-term prospects. 

Recent Contract Win 

Late last week the group announced that its CMDP+ joint venture with MWH Treatment has been selected by Southern Water to shape and deliver its next strategic asset upgrade programme. 

The award is for an initial seven-year term worth at least £500m to Costain, with an option to extend by up to five years. 

The framework will deliver upgrades to water and wastewater assets, including treatment sites, pumping stations and reservoirs,  

CEO Alex Vaughan stated that: 

“This AMP8 announcement builds on our growing positions with the leading water companies as they prepare for a nationally important period of record investment. 

This framework marks three decades of delivering industry leading essential solutions for Southern Water.  

Through our successful joint venture with MWH Treatment, we will upgrade water and wastewater services for Southern Water and its customers, safeguarding the environment, and securing water supplies across the region; as well as creating new jobs and added social value.” 

This contract extension adds to Costain’s growing positions with leading water companies, which include Anglian Water, Northumbrian Water Group, Severn Trent Water, Thames Water, United Utilities and Yorkshire Water. 

The Equity 

There are some 278.5m shares in issue. 

The larger holders include ASGC Construction (14.96%), JO Hambro Capital Management (9.79%), Ennismore Fund Management (6.69%), Gresham House Asset Management (5.39%), Hargreaves Lansdown Asset Management (3.37%), Artemis Investment Management (3.04%), FIL Investment Advisors (UK) (2.85%), KBI Global Investors (2.61%), and Amundi Asset Management SA (2.03%). 

Analyst View 

There are four analysts following the company, rating the shares as a Buy, with an average consensus Price Objective of 95p, the highest view being 104p, and 80p for the lowest. 

At Panmure Liberum, analyst Joe Brent, with colleagues Alex O’Hanlon and Sanjay Vidyarthi, rates the shares as a Buy looking for 100p a share as the Price Objective. 

Their current year estimates to end-December are for £1,219m (£1,332m) sales, with pre-tax profits of £46.5m (£44.2m), generating earnings of 12.3p (11.9p) and maintaining its 1.2p dividend per share. 

For 2025 the broker looks for £1,216m sales, £52.1m profits, 13.8p earnings and a 1.4p dividend. 

Going forward into 2026 estimates are for sales of £1,243m, £56.7m profits, 14.9p earnings and a 1.5p dividend. 

In My View 

Costain Group shares, at 89p, are far too cheap considering that they are on just 7.24 times current year price-to-earnings, while the group should end the year with around £164m of cash on its balance sheet, compared to its current £245m capitalisation. 

i3 Energy snapped up after poor share price performance

UK Investor Magazine
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i3 Energy snapped up after poor share price performance

i3 Energy looks set to be one of the latest companies to leave London’s markets after agreeing on a takeover deal with Gran Tierra Energy Inc.

Gran Tierra Energy has agreed to acquire i3 Energy plc in a cash and share offer valued at approximately £174.1 million ($225.4 million). The deal will see i3 Energy shareholders receive one new Gran Tierra share for every 207 i3 Energy shares held, plus 10.43p cash per share.

i3 Energy shareholders will also receive a cash dividend of 0.256p per share. This acquisition dividend replaces the ordinary dividend for the quarter ending September 30, 2024. Upon completion, i3 Energy shareholders will own up to 16.5% of Gran Tierra.

The offer represents a fairly healthy premium for i3 Energy shareholders based on very recent prices, but the price is still a long way below where the stock has been in recent years. Based on Gran Tierra’s closing price on August 16, 2024, the deal values i3 Energy at 13.92p per share – a 49% premium to its closing price on the same date.

i3 Energy shares were trading as high as 32p in 2022. The deal is clearly another example of overseas players seeing greater value in the operations of London-listed companies than the valuation the UK’s equity investors are willing or able to give them. Unfortunately, i3 Energy will not be the last UK-listed company to be taken over at knockdown prices while London’s market struggles to value quality companies properly.

To provide flexibility for shareholder in this deal, a Mix and Match Facility will allow shareholders to adjust the proportion of cash and shares they receive, subject to offsetting elections and certain limitations.

Gran Tierra’s strategic move aims to diversify its portfolio and create a larger, more diversified energy company in the Americas. i3 Energy’s Canadian assets are expected to contribute 18,000 to 19,000 barrels of oil equivalent per day (BOEPD) in 2024, complementing Gran Tierra’s guidance of 32,000 to 35,000 barrels of oil per day.

FTSE 100 flat ahead of the Jackson Hole Symposium

UK Investor Magazine
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FTSE 100 flat ahead of the Jackson Hole Symposium

The FTSE 100 again offered little in the way of fluctuations on Monday, with almost exactly half of London’s leading stocks trading positively and half negatively at the time of writing.

After a bumper rally in US stocks and a more measured recovery in the FTSE 100, the balance of risks provided little impetus for investors to make major adjustments to their portfolios.

“Stocks look set to struggle for a sense of direction at the start of a week dominated by ongoing conflicts and US domestic politics, while China’s economic difficulties come into focus again,” explained Hargreaves Lansdown’s Susannah Streeter.

“The precariousness of the latest talks in the Middle East amid high tensions between Russia and Ukraine may also be weighing on sentiment.”

Some investors may choose to sit out the quiet August trade, opting to wait for fresh catalysts to fire up equities. That could come later this week with the Jackson Hole Symposium.

“Later in the week attention is likely to turn to the Jackson Hole Symposium in Wyoming, with Federal Reserve chair Jerome Powell scheduled to speak on Friday,” said AJ Bell investment director Russ Mould.

“Investors will be looking for hints on the trajectory of rate cuts, with a cut in September more or less a racing certainty in the minds of most observers.

“Powell’s words and tone could help determine whether the market’s bounce since the short, sharp shock in early August is sustained.”

Although traders will be fixated on Powell’s every word later this week, the Jackson Hole Symposium has a history of resulting in an anticlimax for equities.

As investors awaited events later in the week, 85 of the FTSE 100’s constituents were up or down less than 1% at the time of writing.

Despite questions about China, there was a distinct bid in mining names, including Glencore, Rio Tinto, and Anglo American. JD Sports was the top riser with a gain of 2%.

Pershing Square Holdings, down 2%, was the top faller.

BATM focuses on growth

Andrew Hore
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BATM focuses on growth

BATM Advanced Communications (LON: BVC) reported flat interim revenues due to lower revenues from networking technology, but the outlook is more positive.
Cyber and diagnostics revenues grew, while networking revenues fell from $11.6m to $6m. New orders are being won in the networking division and there should be an improved second half. A new deal with Amazon should boost next year’s revenues.
In the six months to June 2024, revenues dipped from $60.2m to $60m, while pre-tax profit improved from $726,000 to $788,000. This was helped by the revaluation of a liability that reduced the total cos...

AIM movers: Hummingbird Resources refinancing and Landore Resources reschedules sale payments

Andrew Hore
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AIM movers: Hummingbird Resources refinancing and Landore Resources reschedules sale payments

Hummingbird Resources (LON: HUM) has completed a strategic refinancing of part of its existing loan facilities with Coris Bank International, which is controlled by the company’s largest shareholder. The $25m refinancing has an annual interest rate of 12% and lasts 24 months. This will repay existing lending. This will help Hummingbird Resources ramp-up commercial gold production in Mali and Guinea. The share price increased 19.1% to 8.1p.

Intercede Group (LON: IGP) has secured a strategic partnership with Microsoft. Intercede’s Credential Management Systems technology will be combined with Microsoft’s Entra ID, which is cloud and identity and access management technology. This will enable administrators to create and register FIDO passkeys on devices. The share price improved 10.4% to 191.5p.

Pharma data services provider Diaceutics (LON: DXRX) has launched PMx, a suite of services for the promotion and commercialisation of precision medicines. A leading biotech will be the primary promotional partner for the Launch of a cancer medicine. Fees will be based on patient recruitment and the deal is worth an initial £2.4m with additional milestone fees of £1.9m based on successful recruitment. The share price is 7.26% higher at 133p.

Neometals (LON: NMT) has raised $3m at 4.5 cents/share from William Robert Richmond. Net cash will be $9.3m and this will finance the company’s lithium-ion battery recycling business to the industrial validation stage. The share price is 7.14% ahead at 3.75p.

Maritime Invest Scandinavia has sold its 5.73% stake in Windward (LON: WNWD) ahead of the maritime AI technology developer’s interims on Tuesday. The share price recovered 6.64% to 112.5p.

FALLERS

Last week, shareholders in semiconductors designer Sondrel (LON: SND) voted to cancel the admission to AIM on 21 August. The share price fell a further 10.2% to 1.325p.

Landore Resources (LON: LND) has agreed a rescheduling of the remaining payments for the disposal of Miminiska Lake and Keezhik Lake to Storm Exploration. There will be a cash payment of $262,500, plus a cash or shares payment of $250,000 on 20 September. This will be followed by a $275,000 payment in March 2025 and $1.31m in March 2026. The share price dipped 9.09% to 3.5p.

Global Petroleum (LON: GBP) has raised a further £250,000 via a retail offer at 0.065p/share on top of the £600,000 in the placing. Global Petroleum is setting up a joint venture with Callum Baxter, former chief technical officer of Greatland Gold (LON: GGP), to diversify into mineral exploration in Western Australia. Global Petroleum will pay £200,000 for 70% of the joint venture and Callum Baxter will retain the other 30%, although this can be increased to 80% for an additional £50,000. Global Petroleum will spend a minimum of £750,000 over 12 months and fund 100% of spending until a decision to mine. Under a consultancy agreement Callum Baxter will receive 200 million Global Petroleum shares and 10% of the total number of new shares issued in the fundraising. The share price declined 6.25% to 0.075p.

EnergyPathways (LON: EPP) has submitted a gas storage licence application to the North Sea Transition Authority for the planned Marram Energy Storage Hub (MESH). This development could supply gas and green hydrogen to the UK for at least two decades. The share price fell 4% to 2.4p.

H&T Group – Significantly Undervalued On 6.9 Times Earnings – It Is Almost Like Giving Money Away! 

Mark Watson-Mitchell
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H&T Group – Significantly Undervalued On 6.9 Times Earnings – It Is Almost Like Giving Money Away! 

Tomorrow morning will see the UK’s largest pawnbroking company, the H&T Group (LON:HAT), declare its Interim Results to end-June. 

As far I can see it this group’s shares are massively undervalued and are overdue for a re-rating. 

The Business 

The principal activities of the £175m capitalised group include pawnbroking, gold purchasing, retail of new and pre-owned jewellery and watches, foreign currency and other related services operated through Harvey & Thompson Limited. 

Its segments include pawnbroking, gold purchasing, retail, pawnbroking scrap, personal loans, foreign exchange and other services. 

Apart from being the UK’s largest pawnbroker, it is also a leading retailer of high quality new and pre-owned jewellery and watches and provides a range of financial products tailored for a customer base which has limited access to or is excluded from the traditional banking sector.  

Its store estate of some 280 stores across the UK provide customers with small-sum short-term non-recourse pawnbroking loans secured by pledged personal property, that consists primarily of gold, jewellery items and watches.  

H&T also buy and sell new and pre-owned gold, jewellery items and watches along with providing foreign currency exchange, international money transfer, third-party cheque encashment and watch repair services to its customers.    

Sales By Activity In 2023 

Pawnbroking – £90.41m – 40.9% of group sales.  

The pawnbroking segment is engaged in providing secured loans against collateral (the pledge). 

Gold Purchasing – £42.81m – 19.5%.  

Its gold purchasing segment is engaged in buying jewellery directly from customers through its stores. 

Retail – £48.58m – 22.1%. 

The retail segment is engaged in retail sales of primarily gold, jewellery and watches, and the retail sales are forfeited items from the pawnbroking pledge book or refurbished items from its gold purchasing operations. 

Pawnbroking Scrap – £27.91m – 12.7%. 

Its pawnbroking scrap segment consists of gold scrap sales of its inventory assets other than those reported within gold purchasing. 

Unallocated Foreign Exchange – £7.14m – 3.2%. 

Other Services – £3.68m – 1.6%. 

Latest Trading Update 

On Tuesday 23rd July the group announced its Interim Trading Update. 

In that statement the company noted that the six-month period to 30th June saw trading in line with expectations. 

It stated that the availability of small sum credit continued to be constrained generally for consumers and demand for the company’s pawnbroking offer had been robust.  

Redemptions have taken a little longer to moderate than anticipated, following the pickup of redemptions in Spring but they have moderated through June and into July.   

The capital value of the pledge book (excluding accrued interest and provisions) at 30th June was £105m (30th June 2023: £95m; 31st December 2023: £101m).  

The company noted that all key pledge book metrics had remained in line with expectations. 

Retail sales, through the demand for the group’s high quality new and pre-owned jewellery and watches, and foreign currency revenues continued to perform in line with forecasts, while its scrap margins are improving as expected. 

CEO Chris Gillespie stated that: 

“I am pleased to report that overall, trading performance in the first six months of the financial year has been in line with our expectations.  

I look forward to updating the market fully when we announce the Group’s Interim Results on 20th August.” 

The Equity 

There are some 43.99m shares in issue. 

The larger holders include FIL Investment Advisors (UK) (9.92%), Close Asset Management (8.62%), Hargreaves Lansdown Asset Management (5.12%), Artemis Investment Management (5.01%), Fidelity Management & Research (4.49%), Premier Fund Managers (3.23%), Camelot Capital Partners (2.71%), Janus Henderson Investors UK (2.45%), Octopus Investments (2.17%) and Abrdn Investment Management (1.89%). 

Analyst Views 

Analyst Gary Greenwood at Shore Capital has a 530p a share valuation on the group’s equity. 

For the current year to end-December he estimates that the company will lift its adjusted pre-tax profits to £33.5m (£226.4m), generating 57.2p (48.7p) in earnings and paying a dividend of 18.5p (17.0p) per share. 

For the coming year he sees £36.7m profits, 62.7p of earnings and a 20.0p dividend per share. 

Over at Hardman & Co, analyst Mark Thomas is looking for 2024 sales of £248.4m (£220.7m), with profits of £31.9m and 55.1p of earnings, with a dividend of 18.5p. 

For 2025 his estimates show £267.2m sales, £34.6m profits, 59.8p earnings and a dividend of 19.5p per share. 

Thomas has a 528p indicative value on the shares. 

In My View 

I have followed this company in its various forms for nearly four decades – even holding 15% of its equity at one stage – I love its business model, and it continues to fascinate me. 

It remains an ongoing profit-growth story that is worthy of any investor’s portfolio. 

Its shares, which were up to 502p early last October and are now just 397p, are significantly undervalued trading on a mere 6.9 times current year price-to-earnings. 

It is almost like giving money away! 

Cornish Metals shares gain on South Crofty tin mine drill results

UK Investor Magazine
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Cornish Metals shares gain on South Crofty tin mine drill results

Cornish Metals has reported promising results from its recently completed drilling program at the Wide Formation target near its South Crofty tin project in Cornwall.

The company successfully completed a 14-hole, 8,993-meter drilling program, testing tin mineralisation over a substantial area of 2,500m by 800m. The program confirmed the Wide Formation structure over a strike length exceeding 2,500m and a downdip extent of at least 800m, with true thicknesses ranging from 2m to 10m.

Investors may also be interested to learn the campaign encountered notable copper intercepts.

High-grade tin intercepts were encountered in several areas of interest. Within the Wide Formation, a significant intercept of 10.55m grading 0.19% Sn was found, including a high-grade zone of 1.49m grading 0.72% Sn in hole CB23_012.

The drilling also identified steeply-dipping, high-grade ‘Dropper’ zones between the Great Flat Lode and the Wide Formation, with impressive results such as 1.56m grading 0.76% Sn in CB23_010, 2.07m grading 0.85% Sn in CB23_012, and 1.97m grading 0.66% Sn also in CB23_012.

The program also intersected tin mineralisation associated with the Great Flat Lode and the Great Flat Lode Splay, as well as a new structure interpreted as the eastern extension of the Great Condurrow Mine’s Main Lode.

“This drilling programme has validated the Wide Formation as a new, large-scale, tin-bearing exploration target that is potentially accessible from the underground workings at South Crofty,” said Ken Armstrong, Interim CEO and Director of Cornish Metals.

“Mineralisation has been traced over a 2,500m extent, up to 800m down dip, and remains open along strike and to depth. Furthermore, in addition to the earlier discovery of the Great Flat Lode Splay and new ‘Dropper’ zones of high-grade tin mineralisation, the discovery of polymetallic tin and copper mineralisation within the interpreted extension of the Great Condurrow Mine’s Main Lode further demonstrates the exploration potential of the South Crofty area.”

Barratt Developments and Redrow merger set to complete this week

UK Investor Magazine
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Barratt Developments and Redrow merger set to complete this week

Barratt Developments and Redrow are set to complete their merger this week despite ongoing scrutiny from the Competition and Markets Authority (CMA).

The CMA’s Phase 1 investigation, which concluded on August 8, 2024, found no UK-wide competition issues but raised concerns about the supply of newly built private residential housing in one local area out of over 400 where the companies overlap. The one sticking point is an area in Shropshire relating to just ten plots.

In response, Barratt has waived the CMA clearance condition, allowing the merger to proceed. However, the CMA is expected to impose an initial enforcement order (IEO) following completion, preventing the integration of the two businesses until proposed undertakings are agreed upon. This move is in line with the CMA’s standard practice to prevent actions that might prejudice their process.

On Monday, Barratt announced strategic plans for the combined group, including key appointments and branding decisions. The new company will be called Barratt Redrow plc.

The company intends to begin full integration as soon as permissible, aiming to complete the process within 18 months of completion.

Redrow shares were 2.9% higher at the time of writing, while Barratt’s rose 1.2%.

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