AIM movers: Empire Metals discovery and Woodbois requires cash
Empire Metals (LON: EEE) has confirmed that there is a giant-scale hydrothermal titanium and copper mineral system at its Pitfield project in Western Australia. The share price jumped 60.8% to 2.975p. The maiden drilling programme indicated a metal-rich 40km by 8km system. Titanium mineralisation is between 4% and 10% titanium oxide. There are also anomalous copper values. So far, 2% of the system has been drilled.
Malvern International (LON: MLVN) has confirmed that trading continues to recover. The educational services provider says that there is enhanced visibility from bookings and deposits. WH Ireland is confident Malvern International will reach profitability this year. The share price recovered 18.2% to 19,5p.
Cannabis-based medicines developer Celadon Pharmaceuticals (LON: CEL) has secured a £7m credit facility. The facility lasts for two years and is being provided by a shareholder with a stake below 3%. The interest rate is 10% on the amount drawn down. Celadon Pharmaceuticals has agreed to supply £3m worth of product over three years and has expressions of interest from other potential customers – another customer could be worth more than £7m. The share price is 7.8% higher at 172.5p.
Greatland Gold (LON: GGP) has entered a farm-in agreement with Rio Tinto to accelerate exploration of the Paterson province in Western Australia. This is near to the Havieron project. A letter of support has been sent by the banking syndicate relating to the proposed financing of Havieron. The share price rose 7.34% to 7.75p.
Woodbois (LON: WBI) has called a general meeting on 14 June in order to reduce the nominal value of the shares, which is currently higher than the share price of 0.375p, down 21.9%. This is so it can issue shares to raise funds to help pay a bank facility that has been terminated.
Shore Capital says that interest in the Oxford BioDynamics (LON: OBD) prostate cancer test suggests strong demand. The group’s interim revenues were £220,00. Although there was £3.6m in cash at the end of March 2023, management admits that revenues have to increase significantly or more cash will need to be raised later this year. The share price slumped 18.7% to 13.675p.
Empyrean Energy (LON: EME) is raising £1.5m at 0.8p a share. The share price dived 19% to 0.834p. The cash will fund exploration of the Topaz prospect in China. The executive directors will take one-third of their salaries in shares.
Shareholders have voted to cancel the AIM quotation and dispose of the main asset of Argos Resources (LON: ARG), although the final day of trading will be later than expected. The share price fell 14.3% to 0.45p.
Greatland Gold – Rio Tinto Exploration farm-in could catch out the ‘shorters’
Apart from announcing that it has the support of ANZ Banking, HSBC Bank and ING Bank in an Aus$220m seven-year funding line for its Havieron gold-copper project, the Western Australian gold prospector has declared its latest connection with Rio Tinto Exploration, the wholly owned subsidiary of Rio Tinto.
Greatland Gold (LON:GGP) has entered into a farm-in and joint venture arrangement with Rio Tinto to accelerate exploration across 1,884km² of highly prospective tenure within the Paterson Province of Western Australia, which is located near its world-class Havieron gold-copper project.
The tenements are an outstanding package, which host several underexplored anomalies which Greatland considers to be the closest to a Havieron lookalike within the Paterson Province.
The Aim-quoted company is entitled to earn up to a 75% joint venture interest in the Project Tenements under a two-stage farm-in arrangement.
CEO Shaun Day stated that:
“The Paterson South Project tenement package is an outstanding opportunity with a number of high priority, highly prospective and heritage cleared drill targets. We expect that some of these targets can be incorporated in our 2023 drilling campaign.
These targets include underexplored anomalies which the Company considers to be the closest to a Havieron lookalike within the Paterson Province.
Other opportunities include historical delineation of gold in rock chips and copper intersected with strong correlation to a Telfer style deposit.
This tenure complements the Company’s current ground position to provide a 105km contiguous holding. The addition of the Paterson South Project more than doubles our current footprint with the most prospective targets within 50km of Telfer.
Our farm-in and joint venture with Rio Tinto is consistent with our strategy of continuing to invest in exploration success, and aligns the companies responsible for the discovery of Havieron and Winu, the two biggest and most significant orebodies found within the Paterson Province since Telfer in the 1970s.”
Greatland is a mining development and exploration company focused primarily on precious and base metals. Its flagship asset is the world-class Havieron gold-copper project in the Paterson Province of Western Australia, which was discovered by Greatland and is presently under development in joint venture with ASX gold major, Newcrest Mining Limited (which has recently agreed to a takeover by the Newmont Corporation).
Havieron is located approximately 45km east of Newcrest’s existing Telfer gold mine.
The Greatland Gold share price rose 12% to 8.10p upon the news, before easing back on some profit-taking to be 8% better at the current 7.8p, at which it is capitalised at £390m.
It has been suggested that this morning’s news could well have caused embarrassment to investors holding ‘short positions’ in the stock, which would further encourage a higher price in reaction.
Half price assets at Seraphim Space IT
Seraphim Space Investment Trust (LON: SSIT) has broadly maintained its NAV in the past quarter, but the share price discount to NAV has widened. By the end of the week the share price has fallen to 37.8p. The July 2021 offer price was 100p.
There are still plenty of opportunities in the space technology sector and valuations are holding up. The valuation of the portfolio fell from £181.2m to £180.8m in the quarter to March 2023. That does include £900,000 invested in an existing portfolio company, so the underlying decline in portfolio valuation was £1.3m.
There was cash of £39m at the end of March 2023 and that is 18% of NAV, which is 92p a share. Most of the investee companies have more than 12 months of cash.
Although the investee companies are still relatively immature businesses the top ten investments are growing their revenues. The follow-on investment was in QuadSat, which tests satellite antennas, and it already has customers.
The shares are trading at a 59% discount to NAV. Early-stage technology companies not making profit are out of favour with investors and that is the main reason for the large discount. There does not appear to be any specific negativity about the space sector.
A significant discount is understandable because of the investee companies are unquoted and there is no guarantee that they will be successful. Some will fail, but there are plenty of investments that could become highly valuable over the rest of the decade. Long-term buy.
Aquis weekly movers: Marula Mining moves towards copper ore processing in Tanzania
Asimilar Group (LON: ASLR) cancelled its AIM quotation last Friday. The share price has been increased by one-third to 1p, even though no trades have been announced in the past week.
Marula Mining (LON: MARU) says the 75%-owned Kinusi copper project in Tanzania is moving towards copper ore processing activities in the second half of 2023. Final design work and costings are underway. Marula Mining is establishing a copper and graphite mining subsidiary in Kenya. The share price was 6.58% to 10.125p.
Hydrogen Future Industries (LON: HFI) is buying the 49% it does not already own of HFI IP for an initial 14 million shares, with up to 20 million more shares that could be issued if milestones are achieved. The company is about to start the third phase of testing of an upgraded version of the one metre diameter wind turbine. The data will be used in the design of larger diameter wind turbines. Testing of an electrolyser has also started. Daniel Maling has become executive chairman, while David Ormerod has stepped down to a non-executive role. The share price moved ahead by 4.17% to 6.25p.
Shore Capital has updated its forecasts for Arbuthnot Banking Group (LON: ARBB) following the recent fundraising and AGM trading statement. The benefits of interest rate rises have helped in the first four months of 2023. Loan balances are 1% higher at £2.2bn. The pre-tax profit forecast has been raised from £45m to £48.5m. The share price rose 1.6% to 950p.
Cadence Minerals (LON: KDNC) investee company European Metal Holdings (LON: EMH) has gained EU approval for potential grant funding from the Just Transition Fund of €1.6bn for the 49%-owned Cinovec lithium tin project in the Czech Republic. The maximum grant could be €49m. Metallurgical test work shows lithium recovery of more than 95% from flotation concentrates. Investee company Evergreen Lithium has identified rare earth elements at the Kenny project in Western Australia. Savings of around $28m have been identified on port refurbishment costs for the Amapa iron ore project. A loan facility has been secured for the project. The stake in Amapa will increase to 33%. The Cadence Minerals share price increased 1.54% to 9.9p.
Shareholders passed all the resolutions at the NFT Investments (LON: NFT) including for a proposed tender offer by April 2024. The tender will be for up to 857.1 million shares and the price will be the greater of 3.5p a share or NAV for each share. The share price improved by 1.54% to 1.65p.
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Fallers
Share trading in Oscillate (LON: MUSH) shares restarted after the suspension ended on Monday 22 May. They fell 26.7% to 0.55p. Shareholders will be given the opportunity to vote on whether the company should continue for a further 12 months. If shareholders vote against the proposal, then they will be distributed assets. Currently cash is £1.17m and there are stakes in two Aquis companies Psych Capital (LON: PSY) – down 17.5% to 4.125p – and Igraine (LON: KING) – unchanged at 0.275p.
Wishbone Gold (LON: WSBN) has identified eight priority targets from MobileMT results at the Cottesloe Properties in Paterson Range, Western Australia. All targets are less than 400 metres from surface. SP Angel has been appointed as broker, replacing Peterhouse. The share price slipped 8.51% to 2.15p.
Invinity Energy Systems (LON: IES) is selling four VS3 vanadium flow batteries with a storage capacity of 0.88MWh to the Detroit branch of the International Brotherhood of Electrical Workers. There is potential for sales to other regions. The share price fell 7.79% to 35.5p.
Foresight, through Thames Ventures VCT1, has a 11.7% stake in DXS International (LON: DXSP). This follows the recent fundraising and debt conversion where chairman Bob Sutcliffe raised his stake to 1.33% and chief executive David Immelman took his stake to 10.2%. The share price fell 7.14% to 3.25p, which is below the 4p placing price.
Tap Global Group (LON: TAP) has appointed David Hunter as chairman. He will receive 500,000 options, exercisable at 4.5p, vesting on achievement of revenues of £4.2m by June 2024. A further 500,000 options are exercisable at the nominal share price if revenues reach £8m by June 2024. The share price declined 3.51% to 2.75p.
Valereum (LON: VLRM) has signed an option agreement to purchase Sparta, which provides company services in Gibraltar. The services will be extended to include trust formation. The deal requires approval of the Gibraltar authorities. The consideration is £100,000. The share price fell 2.86% to 5.1p.
AIM weekly movers: Versarien recovers
Graphite technology developer Versarien (LON: VRS) shares have more than recovered the losses following the recent £532,000 fundraising at 1.25p. Last week, the share price jumped 178% to 3.25p, although this is still 58.3% lower than at the start of the year. The cash will pay for commercialisation of products and fund working capital. A new strategic plan will be published in a few weeks and the mature cutting tools business may be sold. More cash will need to be raised later in the year.
Too many shareholders have voted against cancelling the AIM-quotation of Itsarm (LON: ITS) for it to happen. On Friday at the previously adjourned general meeting there was a vote of 64.45% in favour, but the cancellation requires a 75% vote to go ahead. The company will not be wound-up. There is £248,000 in the bank, but there are significant continuing expenses and management does not plan to seek an acquisition. This prompted a 73.8% rise in the share price to 0.565p.
Sir Terence Leahy and Bill Currie have increased their stakes in brand security services provider Brandshield Systems (LON: BRSD). Sir Terence increased his shareholding from 7.9% to 8.65% and Bill Currie his stake from 11.1% to 12.8%. The share price improved 49.5% to 7.25p. This is the highest the share price has been since last October.
Active Energy Group (LON: AEG) says that permission for the construction and operation of a CoalSwitch biomass fuel manufacturing facility at Player Design Inc’s site in Maine. This is conditional on certain data being provided within six months. Production of CoalSwitch pellets could start in the third quarter of 2023. There is further interest in licences from other potential US partners. The share price improved 44.9% to 6.45p.
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Fallers
Lansdowne Oil & Gas (LON: LOGP) and Barryroe Offshore Energy (LON: BEY) shares have fallen because the energy minister in Ireland, who is leader of the Green party, is not willing to grant the Barryroe lease undertaking on the grounds of financial capability. Barryroe Offshore Energy had announced it had secured the required funding and there are plans to go to international arbitration. Barryroe Offshore Energy is currently raising €20m from a placing and one-for-six open offer at €0.015 a share. This had already been delayed. The Barryroe Offshre Energy share price dived 32.4% to 1.25p, so it is below the open offer price. Lansdowne Oil & Gas has already invested $20m in the project and the shares slid 62.4% to 0.16p.
Eneraqua Technologies (LON: ETP) had a successful year to January 2023, helped by higher margin projects being moved to the fourth quarter. However, this year is set to be dominated by lower margin work for the energy and water efficiency business as social housing spending is held back. In 2023, pre-tax profit could fall from £10.1m to £7m, even though revenues are expected to be higher. Margins should subsequently recover. The share price slumped 34.5% to 175p, having previously reached a new low of 155p. The prospective multiple is less than twelve. Chairman Guy Stenhouse bought 20,000 shares at 188p each and 5,000 shares at 160p each, non-exec director Sarah Cope bought 6,171 shares at 160p each and non-exec William Tame acquired 7,142 shares at 210p each.
Watkin Jones (LON: WJG) says that although institutional interest in investment in development projects is recovering the development company is cautious about the outcome for the year. The second half will be better than the first half, where there was a small profit, but full year pre-tax profit forecasts have been cut from £48m to £26m. There are five potential forward-fund deals, but they may not all be signed this year. The funding of the deals is also changing meaning that more of the cash will be paid at a later stage of development. The share price fell 30.3% to 67.6p, which is a new low. Non-exec director Alan Giddins bought 50,500 shares at 77.79017p.
Surging miners help lift FTSE 100
The FTSE 100 recovered some of this week’s losses on Friday as buoyant miners helped lift the index.
The FTSE 100 was 0.3% higher at 7,591 at the time of writing.
The index has suffered this week due to interest rate fears and concerns about global growth. A rally in the highly cyclical mining sector represents some confidence in the health of the global economy and will support sentiment.
A spectacular rally in US chipmaker Nvidia on the back of promising sales from AI innovation also lifted the mood.
“UK stocks made a strong start on Friday after an Nvidia-inspired charge on Wall Street overnight helped move investor attention away from the rumbling US debt ceiling crisis,” says AJ Bell investment director Russ Mould.
“Bumper earnings from chipmaker Nvidia indicated some substance behind the recent hype over AI as big players limber up for a battle for supremacy in this nascent market and get ready to spend on the infrastructure behind it.
“The first cabinet-level talks between the US and China in months provided the backdrop for a rally in UK mining stocks, also supported by positive broker comment, and this helped to power the move higher for the FTSE 100.”
Rio Tinto was the top riser at the time of writing adding over 3%. Antofagasta, Glencore, Anglo American and Endeavour Mining closely followed Rio higher.
AIM movers: High grades for Rockfire Resources and Pan African Resources reduces gold production guidance
Gold and base metals explorer Rockfire Resources (LON: ROCK) has announced the highest zinc grades ever encountered at the Molaoi deposit in Greece. In one case there was 50.8% zinc from a drill hole. This could help to increase the overall grade. The drilling has confirmed the continuity of mineralisation throughout the deposit. The share price jumped 20.9% to 0.26p.
Quantum Blockchain Technologies (LON: QBT) has appointed Vladimir Kusznirczuk as marketing and business development manager. His job is to develop partnerships and joint ventures with Bitcoin mining businesses in North America. He has been issued one million warrants exercisable at 5p each and one million warrants exercisable at 10p each. The share price increased 17.5% to 1.85p.
Cleaner energy technology developer Quadrise (LON: QED) has completed the first phase of engine testing of bioMSAR fuel with biorefinery specialist Vertoro. Quadrise produced blends of bioMSAR including up to 40% of Vertoro’s crude sugar oil. When tested this fuel improved energy efficiency by 7% compared to normal diesel, reducing fuel consumption and emissions. Nitrogen oxides were reduced by up to 16% and carbon monoxide by more than 50%. Further trials are planned. The share price is 9% higher at 1.15p, having reached a new low the day before.
Hutchmed (China) Ltd (LON: HCM) along with Takeda has announced a new drug application for the use of Fruquintinib for treating previously treated metastatic colorectal cancer has been granted priority review by the FDA. It could become the only approved treatment inhibiting three vascular endothelial growth factor receptors for this cancer. The share price rose 4.74% to 215.25p.
Pan African Resources (LON: PAF) has lowered its gold output guidance – due to power availability problems and a slower production ramp up at Barberton Mines – to around 175,000 ounces. The 2022 production was 205,459 ounces. A rise in the gold price and positive currency movements have offset some of this production disappointment. The dividend will be maintained, while debt continues to be reduced. Even so, the share price slumped 21.1% to 13.32p.
At its AGM, digital media marketing company XLMedia (LON: XLM) admits that first half revenues will be lower this year, but it maintains its full year expectations. Last year, was boosted by the launch of online sports betting in New York, but there is also a lower level of spending this year by gaming companies. There are positive long-term prospects as more US states legalise online sports betting. The share price slipped 15.6% to 9.5p.
Tern (LON: TERN) investee company InVMA, trading as Konektio, has secured a £2.5m fundraising in two tranches. Tern has invested £100,000 of the first tranche of £1.2m. The Tern shareholding is reduced from 39.9% to 28%, while the value of the stake has fallen from £1m to £900,000 – including the latest investment. Tern has invested £2.3m in the company with at least £280,000 expected to be invested in the second tranche. If it does not make that minimum investment, then three-quarters of its stake will effectively be given up. The Tern share price fell 8.54% to 3.75p.
Tekcapital shares undervalued compared to NAV after year of progress for portfolio companies
Tekcapital has released final results for the year ending 31st December 2022 and provided a summary of progress for their portfolio companies during the period.
Tekcapital is an investment company holding both listed and private companies. Portfolio companies include MicroSalt, Innovative Eyewear, Belluscura, and Guident.
During the period, Tekcapital’s portfolio NAV eased to 31p compared to a current share price of 13p.
Tekcapital portfolio companies
Over the past year, Tekcapital portfolio companies recorded material commercial progress. MicroSalt is now stocked in thousands of US stores, and Innovative Eyewear launched the world’s first ChatGPT-enabled.
Guident will soon roll out its remote monitoring and control (RMCC) for the Jacksonville Transportation Authority and is undergoing testing of its regenerative shock absorbers.
MicroSalt has signed several distribution agreements with major US outlets, including Kroger and is now stocked in thousands of US stores. MicroSalt appointed Zeus Capital as an advisor for their AIM IPO at the end of 2022, and Tekcapital is unable to provide specific financials for the privately held company before the IPO. This will be included in MicroSalt’s prospectus.
“The Group has made good progress during 2022. Our portfolio companies have demonstrated solid growth and we believe they should achieve additional significant milestones by the end of 2023,’ said Dr Clifford Gross
“Of note, Lucyd’s Innovative Eyewear Inc. subsidiary completed its flotation on the NASDAQ and raised US$7.3m in gross proceeds, in spite of a choppy year in the capital markets. Guident secured its first customer, the Jacksonville Transportation Authority for its remote monitoring and control (RMCC) service and has signed a letter of intent with its second customer, the Boca Raton Innovation Campus, to provide remote monitoring for its campus shuttle.
‘Additionally, Guident has made significant progress improving and fabricating its latest regenerative shock absorbers and has begun testing them with several Tier-1 companies.
“We are also pleased to highlight MicroSalt’s strong progress ending the year by growing its revenues, signing up additional customers and launching its low sodium saltshakers to an increasing number of supermarkets and engaging its advisory team for a prospective AIM IPO during 2023.”
Dr Gross continues to explain the macroeconomic picture’s impact on their portfolio’s value. Tekcapital’s listed portfolio companies are by their nature driven by general sentiment and softer economic conditions are evident in their share prices.
“Our financial results were negatively impacted by the reduction in the observable, closing share prices of both innovative Eyewear and Belluscura at the end of the period, which we believe were in large measure the result of exogenous macro-economic and capital market factors. These were partially offset by the approximate doubling of the share value of MicroSalt,” Gross said.
“We remain steadfast and excited about the commercial progress of our portfolio companies in 2022 and for their future prospects for the remainder of 2023. As per our mission and investment objective, we believe that all of our key portfolio companies have the potential to make a positive impact on the lives of the customers they serve as well as produce meaningful returns on invested capital for our shareholders over the mid to long term.”
Tekcapital valuation
Tekcapital’s revised NAV highlights the deep value in the current Tekcapital share price. Tekcapital’s NAV per share was adjusted to $0.38 (31p) per share as of the end of 2022.
Tekcapital’s share price was 13p on Friday.
The opportunity for a near-term re-rate of MicroSalt’s NAV after the IPO could dramatically alter the NAV to the upside and make shares look even cheaper.
The Tekcapital team is optimistic about their portfolio’s underlying growth prospects, which could also see NAV revised higher in the coming periods.
“We believe we will see significant growth of our portfolio companies in 2023,” said CEO Dr Clifford Gross.