Mothercare shares jumped on Friday after the retailer began trading on AIM after a temporary suspension.

Mothercare shares were suspended after delaying the publication of their audited results pending the finalisation of financing for their Middle East operations.

With the funding announced yesterday, Mothercare released results this morning revealing EBITDA of £6.9m – better than analysts expectations. Revenue was down sharply but investors preferred to focus on earnings and the renewed optimism around the troubled Middle East unit.

The combination of certainty around funding and upbeat earnings culminated in a Mothercare share price rising over 30% in early trade on Friday.

“Today’s agreements with Reliance and Gordon Brothers strengthen our operations in South Asia and support a material reduction in our bank facilities and leverage,” Clive Whiley, Chairman of Mothercare, said yesterday following the funding announcement.

“We have worked closely with Gordon Brothers for over five years now and value its ongoing support for Mothercare.  The revised facility agreement and related arrangements reflect the strength of that ongoing relationship and trust alongside recognising the accretive nature of the joint-venture to our equity valuation. For Mothercare, the reduction in the required facility size, funded by the formation of the joint venture, and the resulting significantly reduced cash interest cost, greatly improves our flexibility for FY25 and beyond.

“Taking today’s developments together with the inherent strength of the business’s brand, we believe Mothercare can approach 2025 and beyond with a renewed and growing sense of confidence at the opportunities ahead, notwithstanding our ongoing cautious shorter term outlook, given the continuing challenges facing our Middle East operations.”

Geophysical data collected by Botswana Diamonds (LON:BOD) covers some 375,000 kms, as well as the logs of some 32,000 drill holes – so it is a fair bet that diamonds will be found in due course.

As BOD Chairman John Teeling states:

“Our mineral database in Botswana is simply vast. Too big for timely analysis by humans.

Think of it, over 375,000 kms of geophysical data, and 32,000 drill holes logs.

Massive databases are suited to analysis by computer-based large Data Models and Artificial Intelligence techniques which can analyse substantial amounts of data in a short time.

We feed in the data and create the models from our existing knowledge both theoretical and factual.

The techniques then produce results.

Where it finds inconsistencies or gaps it adapts. It is early stages in both our work and the use of the technique in mineral exploration, but the future potential is huge.

An added exciting bonus for BOD and for Botswana is that the technique will analyse a number of different minerals.

We have always believed that there are more diamond deposits to be found under the sand.

Now there is the possibility of other deposits being identified.”

Massive Database

In fact, the company’s database consists of:

·    around 95,000 sq km of data.

·    about 375,000 km airborne geophysical data.

·    606 ground geophysical surveys.

·    some 228,000 soil sample results.

·    and more than 32,000 drill hole logs.

The company holds around 380 gigabytes of data and some 260,000 files – essential fodder of information for enterprising diamond explorers like BOD.

Now Using AI

The company, which raised £250,000 of extra funds in early August, is looking to identify further exploration prospects in Botswana and also in South Africa.

It is now using Artificial Intelligence techniques to scan through its database, which is believed to be the second largest diamond exploration database in Botswana, as it seeks to identify new diamond deposits and potentially other minerals.

The company will utilise Planetary AI Ltd Xplore mineral prospectivity technology which was developed in collaboration with International Geoscience Services Limited. 

It enables computers to comprehend, interpret, and reason with data in a manner similar to human understanding, enhancing the effectiveness of information retrieval, integration, and analysis.

This allows computers to understand the meaning and context of geological data in much the same way a geologist would, in order to identify zones of prospective mineralisation based on specific mineral deposit models.

The system acts much like a geologist but can function quicker and more efficiently, with vast data-sets processed through AI that finds logical gaps in the data and learns to correct them.

This exercise is expected to yield fresh insights that will offer drillable targets previously unseen.

Adding To Its Prospects

In the meantime, the group is steadily amassing more licences in some highly prospective areas – like the four Prospecting Licenses in the Kalahari in late May this year.

At that time Teeling stated that:

“I am pleased that we have been awarded these Prospecting Licenses in the Kalahari of Botswana, which we believe will be the next major diamond producing area in the country.

Exploration is a long game, particularly diamond exploration, and we believe the industry is going through a structural change which will see the natural product, particularly from Botswana find its premium niche in world markets.”

Yesterday the group announced that it had obtained a prospecting permit in the Marsfontein region of South Africa, covering five kimberlites known to contain diamonds, over 900.67 hectares.

Teeling commented that:

“Obtaining this permit is very good news – five kimberlites around the mined out and hugely successful Marsfontein mine.

We are particularly interested in the M3 kimberlite which has never been mined.

Our work indicates it is very prospective and we believe it enhances our adjacent Thorny River properties – easy to mine with good potential grades and quality.

The diamond industry overall is currently in a depressed state with a cyclical downturn in demand and a structural change down to the growth of lab grown diamonds.

We believe demand will recover for mined diamonds and lab grown diamonds will take a certain percentage of the cheaper end of the jewellery market.

M3 is almost ready to mine and we will confirm what is there and be ready to mine when prices recover.”

Analyst’s View

Jason Robertson, at First Equity, put out a Buy note on the group’s shares with a Price Objective range of 4.2p to 6.0p.

That aim is several multiples of last night’s closing price of just 0.28p per share, up 5% after a day showing more than tripled daily average volume, at some 4.6m shares traded, valuing the company at just £3.4m.

Robertson considered that it is a very wise move by BOD to position itself for a future market upturn by acquiring new highly prospective diamond ground, which would likely be difficult or expensive to obtain when diamond prices are at cyclical highs.

In My View

The shares of Botswana Diamonds could prove to be an excellent gamble on any success derived from the group’s AI programme.

At the current price it is certainly cheaper than ‘option money’ on what could happen in due course – but strictly for ‘risk-tolerant’ investors.

Perhaps the writing was beginning to show up faintly on the wall when Zytronic (LON:ZYT) earlier this year signalled lower year-on-year sales.

In mid-May, when announcing its Interim Results to end-March, the Blaydon-upon-Tyne based group, which is a leading specialist manufacturer of touch sensors, reported sales down from £4.7m to just £3.3m at half-way.

The Business

The group’s operating subsidiary, Zytronic Display, is a world-renowned developer and manufacturer of a unique range of internationally award-winning optically transparent interactive touch sensor overlay products for use with electronic displays in industrial, self-service and public access equipment.

ZDL’s products employ a sensing solution that is readily configurable and is embedded in a laminate core which offers significant durability, environmental stability, and optical enhancement benefits to meet system-specific design requirements.

The ZDL service is relatively unique in the touch eco-system as it offers a complete one-stop solution including processing internally of the form and factor of glass and film substrates, the assembly of the associated touch overlay products, in environmentally controlled cleanrooms to customers’ specific requirements and the development of the bespoke firmware, software and electronic hardware which links the manufactured touch interactive overlays to customer’s integrated systems and product.

Yesterday’s Pre-Close Trading Update

The group guided that it expects to report unaudited revenues for the year to the end of September of £7.2m (£8.6m), and that is despite a 22% increase in revenues in the second half.

It noted that trading conditions remained challenging and based on current order intake, that the Board does not anticipate a material recovery in volumes over the short to medium term.

Strategic Review

As an extension to the Update the group announced its intention to undertake a strategic review, in conjunction with shareholders, to assess the future options for the company.

The group’s Management considers that those options are:

1.     the implementation of a new strategic business plan;

2.     an orderly solvent liquidation of the group’s assets;

3.     the potential sale of the company;

4.     de-listing and continuing as a private company, either continuing with the business as currently undertaken but without the considerable costs associated with maintaining the company’s admission to trading on AIM, or through implementing its Transformation Plan; or

5.     selling the company’s assets and continuing as a ‘cash shell’.

Solvent Liquidation

As at the end of March, the company’s notified statement of financial position, stated that it had net assets of £12.9m, of which £8.4m comprised property, plant and equipment and cash.

The company’s cash balance as at end-September was £3.7m (H1 FY24: £3.7m).

The Potential Sale Of the Company

The company noted that it is not in discussions with, nor in receipt of any approach from, any potential offeror.

In My View

Yesterday the group’s shares collapsed to a 40p low at one stage, down 25% in reaction to the news.

However, by the close of trading they had picked up to 46.75p, valuing the company at just £4.75m.

At that price I would suggest that Zytronic shares could well prove to be an exciting gamble on any of its options coming to a successful conclusion.

Protected by its solvent position, its quoted status, with some 45% of its 10.16m shares in ‘professional’ hands, I would consider that it is now coming up on corporate screens as a potential play, most likely as a very usable vehicle for a technology entrepreneur looking for a quick quote.

N Brown Group is to leave AIM after agreeing to a takeover by a group controlled by an existing shareholder and pursue its ambitious growth plans as a private company.

Falcon 24 Topco Limited, controlled by Joshua Alliance, has agreed to acquire N Brown Group plc in a recommended cash offer. The deal values N Brown at approximately £191 million, with shareholders receiving 40p in cash per share.

N Brown owns and operates outlets and websites including Jacamo, JD Williams and Simply Be.

The price represents a significant premium of 111.0% to the 12-month average closing price.

The acquisition will be implemented through a Court-sanctioned scheme of arrangement. Joshua Alliance currently owns 6.6% of N Brown’s shares, with other Alliance family members holding an additional 53.4%.

Falcon 24 Topco cites several reasons for the acquisition, including N Brown’s limited benefits from its AIM listing due to low trading liquidity and the costs associated with being public.

N Brown sees an opportunity to acquire well-established fashion brands and an innovative financial services platform. It appears they feel AIM can no longer support such ambitions.

The company asserts that N Brown can better achieve its growth potential as a private entity, considering market dynamics and the competitive landscape in the UK clothing and footwear market.

Helium One shares were higher on Thursday after the company provided an update on its Colorado operation and approval from authorities to begin exploration activities.

The Colorado Energy and Carbon Management Commission (ECMC) has approved five new helium development well locations at the Galactica-Pegasus project in Las Animas County, Colorado.

The newly approved wells, located south and southwest of the successful State-16 well, are expected to contribute to the initial gas gathering for the jointly developed Galactica helium production facility. This development satisfies a crucial condition precedent to the farm-in agreement between Helium One Global and Blue Star Helium covering Galactica facility.

Drilling at the Galactica Project is anticipated to commence in Q4 2024, subject to final drilling permit approvals. The project builds on Blue Star’s previous successful exploration campaign, which included the State-16 well capable of producing up to 441 Mscf/d of gas with 1.9% helium content.

Investors will be pleased the approvals further strengthen the diversification of Helium One’s asset base, expanding its portfolio beyond its primary Tanzanian projects. Both companies are currently finalising the definitive governing agreements for the farm-in, with further announcements expected in the near future.

“This is a positive advancement for the Galactica-Pegasus project and we’re very much looking forward to working with the Blue Star team and commencing the drilling phase for this development,” said Lorna Blaisse, Chief Executive Officer.

“We look forward to providing further updates on this and our operations in Rukwa in due course.”