FTSE AIM catalysts: 5 lithium shares ready to rocket higher Part 1

Charles Archer
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FTSE AIM catalysts: 5 lithium shares ready to rocket higher Part 1

Premier African Minerals (LON:PREM), First Class Metals (LON:FCM), Kodal Minerals (LON:KOD), constitute the first three of five of the best FTSE AIM lithium plays ready to rocket higher on near-term catalysts.

I have been covering the exploratory lithium sector for many years now — and not just the London-listed small caps, but also many of the most promising outfits in North America and the growth stories of Pilbara Minerals and Core Lithium on the ASX.

And what’s becoming clearer is that 2023 is the time of the FTSE AIM small caps. I have covered the following five companies in great detail over the years, and all five are ready for that next catalyst to send the share price to new heights.

1. First Class Metals (LON: FCM)

FCM received the UK Investor Magazine IPO of 2022 award and has released several bullish recent RNSs which has renewed interest in the company. Long-time Premier African Minerals backer, James Goozee, has also invested £300,000 at 16p per share, showing confidence in the company’s long-term prospects.

One of FCM’s latest updates includes the signing of an agreement with Nuinsco Resources Limited regarding the Zigzag lithium project in Ontario. This signing completed the process outlined in the ‘Exclusivity Agreement’ announced on 12 December 2022 for the ‘lithium property earn In.’

Zigzag boasts historic grades at surface up to 1.68% lithium over 7.9m and 0.168% tantalum over 2.54m. Additionally, the claim group covers the historic Tebishogeshik occurrence, as well as other mineralized occurrences. Sampling by Nuinsco returned strongly anomalous lithium, tantalum, and rubidium, peaking at 3.55% Li20 with significant tantalum and rubidium results at 836 ppm Ta₂O5 and 4,003 ppm Rubidium Rb₂2O.

Moreover, the pegmatite hosting the deposit is reported to be 800m in length and 20m thick at the surface, and it is located just 10.5km from Green Technology Metals’ Seymour Project alongside several other producing hard rock lithium properties. The project is also close to nearby current key infrastructure, which will significantly reduce any capex costs.

Furthermore, FCM is pleased to announce that it has received payment in full of the 2022/3 Ontario Junior Exploration Grant ‘OJEP’ for work carried out on the flagship North Hemlo property.

2. Premier African Minerals (LON: PREM)

PREM’s Zulu Lithium Project has achieved a truly remarkable feat within just one year, transforming from a site of undeveloped bush and scrubland to a fully functional pilot plant.

Zulu is considered one of the largest undeveloped lithium reserves globally, and there are several exciting developments in the pipeline, including confirmation of production, first sales, receipt of income, assay results, resource upgrades, and a definitive feasibility study. Furthermore, there are plans to optimize the pilot plant, increase the plant’s output, implement solar energy power plans, and obtain approval for a mining license application for the wider EPO.

Despite minor delays, production is expected to commence shortly, and Premier African Minerals CEO, George Roach, is optimistic about first shipments imminently. However, investors should be aware that the commissioning of a plant often comes with minor issues, and that there is a risk associated with the prepayment interest currently being charged by partner Canmax.

Nevertheless, it is beyond unlikely that Canmax will walk away from Zulu, and long-time investors are excited about the possibility of a buyout or a larger strategic investment from the partner, who already holds a 13% stake in PREM and 50% of offtake rights.

Additionally, the project retains grandfathered rights for selling unprocessed ore, and could benefit from the hundreds of millions of dollars the Chinese are investing in lithium mines and infrastructure in Zimbabwe, which would significantly reduce their capex costs.

3. Kodal Minerals (LON: KOD)

Kodal Minerals has a bright future ahead with its world-class Bougouni Lithium Project in Mali. The project has been the subject of multiple resource upgrades and is comparable to Premier African Minerals’ (PREM) Zulu Lithium Project in Zimbabwe in terms of its size and potential.

KOD has already secured a conditional funding package worth $117.75 million with Hainan Mining and its subsidiary Xinmao Investment Co. The deal will see Hainan invest $100 million into a new joint venture subsidiary Kodal Minerals UK, which will be majority-owned by Hainan, with Kodal managing the mining work.

The funding package covers the $65 million required to bring the proposed Dense Media Separation (DMS) plant into production, leaving $35 million for working capital, further drilling, and increased exploration. Once the DMS plant is online, it will be able to ramp up to 130,000tpa of spodumene concentrate at pace. KOD has a conservative lithium price estimate of $2,080/tonne, which would yield $270 million in revenue every year, with KOD entitled to half of these profits under the JV, or $135 million every year.

KOD’s market cap is currently only £130 million, indicating significant upside potential. With China’s Hainan Mining providing the necessary funding and investment, there is a good chance that KOD will become a lithium money-spinner, assuming the lithium price holds up and there are no major problems between now and production.

The recent announcement that Hainan has received all necessary approvals from the Chinese Government authorities to allow it to complete its funding and investment is a major milestone for KOD. KOD is now focused on completing the reorganization of its subsidiary companies to have all its Mali lithium assets held within Kodal Mining UK (KMUK), including the Bougouni project.

Aquis movers: SulNOx emulsifier development

Andrew Hore
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Aquis movers: SulNOx emulsifier development

SulNOx Group (LON: SNOX) has diversified into the demulsification market through developing a product with Cleaner Fuel Solutions in South Africa. The new product reduces the time taken to separate water and oil from toxic waste oil. The share price jumped 46.7% to 11p. That is a sharp recovery from the low less than two months ago.

Ananda Developments (LON: ANA) says that the highlight of last month was the quality of the cannabis plants grown from second-generation seed genetics. They are better than the plants developed from clones. MRX1 unlicensed medicinal cannabis oil is set to be listed in three medicinal cannabis clinics. The share price improved 11.6% to 0.675p.

KR1 (LON: KR1) had net assets of 61.29p a share at the end of March 2023. The income from digital assets was £583,000 during March. The share price rose 1.32% to 38.5p.

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Fallers

Four shareholders owning a 19.4% stake have requisitioned a general meeting at TruSpine Technologies (LON: TSP) on 31 May. They want four directors to be removed: Norman Lott, Nikunj Patel, Annabel Schild and Laurence Strauss. The only director they are not seeking to remove is Timothy Evans. They also want three nominees to be voted onto the board, which includes two of the requisitioners Peter Houghton and Todd Michael Cramer, as well as Anthony Swoboda. The board recommends voting against the resolutions. There are also disputes with the inventor of the company’s main technologies and the requisitioners talk about negotiating a new licence. The share price fell 10.5% to 0.85p.

Cadence Minerals (LON: KDNC) says investee company Hastings Technology Metals has hired GR Engineering Services as engineering, procurement and construction contractor for the Yangibana rare earth project. The overall cost is $210m, which is lower than previously estimated. First concentrate delivery should be in the first quarter of 2025. The share price slipped 0.55% to 9.995p.

AIM movers: Mirriad Microsoft deal

Andrew Hore
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AIM movers: Mirriad Microsoft deal

In-content advertising company Mirriad Advertising (LON: MIRI) is working with Microsoft to integrate its new application programming interface with Microsoft Azure. This is a positive for the technology, but cash is still flowing out of the business. Even so, the share price quadrupled to 4.4p, which is the highest it has been since the beginning of the year. That could make it slightly easier to issue shares, but any share issue would still be heavily dilutive.

Japan Petroleum Exploration is acquiring a 49.9% stake in the Norway-based subsidiary of Longboat Energy (LON: LBE) in return for a cash injection of $16m, plus a finance facility of $100m. There is a further contingent cash payment of $4m linked to an acquisition. If there is a discovery at Velocette then up to $30m more cash could be injected by the new partner. The share price jumped 118% to 20.75p.

Braveheart Investments (LON: BRH) subsidiary Paraytec gained CE Marking for its CX300 rapid cancer and pathogens test instrument. It can be sold to researchers. The tests correlate 100% with PCR tests. The 80%-owned Kirkstall is already getting interest in its QV1200 technology that enables testing of drugs without the use of animals. The Braveheart Investments share price doubled to 14p.

T42 Lot Tracking Solutions (LON: TRAC) shares rose 47.4% to 7p following the announcement that it had secured a strategic partnership with Ashdod port in Israel. This will help to promote tracking products.

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Fallers

Solgenics (LON: SGN), formerly known as Ncondezi Energy, intends to leave AIM. Management does not feel that the quotation is effective for such a small company with a lack of liquidity, and it wants to focus on the Tete solar project. A working capital loan has been agreed in principle with directors. The share price slumped 54.8% to 0.26p. This represents a recovery on the initial share price decline after non-exec director Scott Fletcher acquired 31.4 million shares, taking his stake to 27.3%.

Life sciences company Aptamer Group (LON: APTA) says that potential deals are slow in converting into commercial projects and it will require more cash. In the ten months to April 2023, revenues were £1.4m and Liberum has slashed its full year forecast from £5m to £1.8m, down from £4m last year. The monthly cash outflow is £500,000 and costs are being cut. That could cut the cost base to £4.5m. Net debt is expected to be £1m at the end of June 2023 and £2.5m is estimated to be required to be raised to get the company to June 2024. The share price slumped 49% to 13p. The December 2021 flotation price was 117p.

Supercapacitors designer CAP-XX (LON: CPX) has raised £2.5m at 1.3p a share. The share price slumped 48.6% to 1.375p. Anthony Kongats is stepping down as chief executive, although he has subscribed for new shares. A retail offer that could have raised up to £500,000 generated £180,000. The cash will fund product development and marketing.

Graphite technology developer Versarien (LON: VRS) is raising £532,000 at 1.25p. The share price slipped 46.4% to 1.15p following the announcement. The cash will pay for commercialisation of products and fund working capital. More cash will be required and the fall in the share price will not help. A new strategic plan will be published in a few weeks and the mature cutting tools business may be sold.

Strong second half at FIH

Andrew Hore
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Strong second half at FIH

AIM-quoted FIH Group (LON: FIH) had a strong second half and profit will be better than expected in the year to March 2023. WH Ireland has raised its pre-tax profit forecast by 15% to £2.8m

Art and museums logistics services provider Momart continues to trade well thanks to more exhibitions. Momart has a purpose-built facility estimated to be worth more than £20m.

Gosport ferry owner Portsmouth Harbour Company benefited from price increase and a recovery in passenger numbers. Even so, they are still four-fifths of pre-Covid level.

Falkland Island Company recovered some of the fall in profit in the first half and contributed a similar amount to the previous year. The Falkland Islands tourist board forecasts 60,000 cruise passengers in the year to June 2022, compared with 3,155 the previous year.

Net debt is down to £500,000. The share price rose 6.83% to 266p, which is 15 times estimated 2022-23 earnings. This year’s forecast has not been changed and a pre-tax profit estimate of £3.4m.

Housebuilders and banks help lift FTSE 100

UK Investor Magazine
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Housebuilders and banks help lift FTSE 100

The FTSE 100 rose on Friday as investors continued to assess a week of central bank action, major economic data, and the reinvigoration of the US regional bank crisis.

The FTSE 100 was 0.8% higher at the time of writing, shortly after the Non-Farm Payrolls release on Friday.

Widely seen as the globe’s most important single data point, the Non-Farm Payrolls provide deep insight into the health of the US economy.

Friday’s highly anticipated jobs number beat expectations, with 253,000 jobs added in the month of April. An Economist consensus had predicted 185,000 jobs added. The unemployment rate also fell.

While the beater-than-expected number suggests underlying health in the US economy, markets will be mindful that it means the Federal Reserve has no reason to cut rates in the short term.

Although many economists expect a US recession later this year, the US economy is showing little sign of slowing down.

FTSE 100 movers

UK banks and housebuilders were among the top risers on Friday. A rebound in stricken regional US banks PacWest and Western Alliance helped spur a rally in UK banks.

Barclays, HSBC and NatWest were up over 2%, while Lloyds gained 1.6%. UK banks have seen little operational impact during the banking turmoil, which has been limited to a few European institutions and mainly US regional banks.

Housebuilders were again performing strongly after upbeat house price data earlier this week. Taylor Wimpey, Persimmon and Barratt Developments were up between 0.5% and 1.6%. The sector has been heavily sold off, and many will see long-term value in individual names.

Underlining the cyclical nature of today’s rally, miners were higher after being under pressure for the past few weeks.

IAG was higher after reporting a surprise profit in the first quarter.

AIM movers: T42 port deal and Aptamer slow in converting pipeline to revenues

Andrew Hore
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AIM movers: T42 port deal and Aptamer slow in converting pipeline to revenues

T42 IOT Tracking Solutions (LON: TRAC) shares have risen a further 35.9% to 8.25p following yesterday afternoon’s announcement that it had secured a strategic partnership with Ashdod port in Israel. This will help to promote tracking products.

Bushveld Minerals (LON: BMN) plans to refinance debt through a three-year, 6% loan of $27m, a new convertible 12% loan of $13.5m – with a conversion price of 8p – and conversion of $4.5m of the existing loan at 6p a share. There is a supplemental production financing agreement at not more than 0.22% of gross revenues, which reduces by four-fifths at loan maturity. The share price jumped 21.4% to 4.4p.

Corcel (LON: CRCL) is selling a 20% interest in the Mt Weld rare earths project to Extraction Srl, an Italian private company for A$1m. The gain on book value is £475,000. Extraction Srl owns 9.61% of Corcel. Riversgold can still earn 50% of the project by spending A$500,000 over 12 months. The share price is 15.4% ahead at 0.375p.

Sareum (LON: SAR) has gained approval in Australia to conduct phase 1 clinical studies on SDC-1801, a new potential treatment for autoimmune diseases, such as psoriasis. The share price rose 12% to 140p.

Life sciences company Aptamer Group (LON: APTA) says that deals are slow in converting and it will require more cash. In the ten months to April 2023, revenues were £1.4m and Liberum has slashed its full year forecast from £5m to £1.8m, down from £4m last year. The monthly cash outflow is £500,000 and costs are being cut. That could cut the cost base to £4.5m. Net debt is expected to be £1m at the end of June 2023 and £2.5m is estimated to be required to be raised to get the company to June 2024. The share price slumped 51% to 12.5p. The December 2021 flotation price was 117p.

Shares in Solgenics Ltd (LON: SGN) have fallen back even though non-exec director Scott Fletcher has acquired a further 11.9 million shares, taking his stake to 27.3%. Solgenics plans to leave AIM. The share price fell 13.8% to 0.25p.

Clontarf Energy (LON: CLON) has concluded its Bolivia lithium extraction joint venture agreement with NEXT-ChemX and paid $500,000 to the partner and is in the process of issuing 385 million shares to it. The share price is 8% lower at 0.115p.

Full year figures from EQTEC (LON: EQT) were in line with guidance, although the EBITDA loss of €4.9m was at the higher end of the range. Waste-to-energy projects are being progressed, but it is taking a long-time to get to a stage where they are generating income. The share price fell 3.9% to 0.185p.

Alba Mineral Resources shares near lows after final results dominated by delays

UK Investor Magazine
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Alba Mineral Resources shares near lows after final results dominated by delays

Alba Mineral Resources shares traded near multi-year lows on Friday after the Wales-focused miner released final results dominated by delays to their Clogau gold project.

Alba Minerals shares were down 5% in low-volume choppy trade at the time of writing on Friday – and were trading near the lowest levels since 2020. Shares had been trading between being 4% higher and 5% lower for most of Friday’s session.

Alba Mineral Resources shares have sunk circa 70% over the past 5 years.

George Frangeskides, Executive Chairman of Alba Mineral Resources, said he had purchased £15,000 worth of shares during the period and now has a total of 48 million shares worth around £48,000 at current prices.

The Chairman hopes to purchase more shares to demonstrate his “steadfast belief” in the company. His holding represents 0.68% of Alba.

Discussing the ongoing delays at their key Welsh project, Frangeskides said:

“Although the ongoing hiatus in the planned in-mine work activities at Clogau has been frustrating, we believe that we are finally approaching a conclusion to the current ecological permitting process and that the HRA, once concluded, can provide a framework for a more streamlined and efficient process for future permitting applications.”

Greater operating loss

Alba recorded a £1,623,000 operating loss in the year, primarily due to costs of listing GreenRoc Mining, a spinout with assets in Greenland.

Alba has two externally operated investments in GreenRoc and the Horse Hill oil project in Surrey.

GreenRoc has increased graphite resources at their Amitsoq Island Deposit threefold with an average grade of 20.41%. Amitsoq is one of just two projects globally with grades in excess of 20%.

Alba wrote down their investment in Horse Hill to £2.6 million – in line with the valuation attributed to the project by the largest shareholders.

All Things Considered moves into profit

Andrew Hore
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All Things Considered moves into profit

Music artist management and services provider All Things Considered Group (LON: ATC) reported better than expected 2022 figures and managed to make a £10,000 underlying pre-tax profit. The Aquis-quoted has benefitted from a recovery in live touring activity and could make a larger underlying pre-tax profit this year.

In 2022, revenues were one-third higher at £12.1m, as recruitment of more managers and agents helped the business to grow and expand into North America. A £300,000 loss had been expected rather than the small profit.

Livestreaming service Driift is no longer consolidated following the investment from Deezer. There was a notional disposal gain of £2.51m on this transaction, which reduced the stake to 32.5%. There was a period when the loss was consolidated and part of the year when the share of the loss was included in the figures. That consolidated loss wiped out the profit made by the other activities. Stripping Driift out, continuing revenues more than doubled from £4.5m to £9.45m.

Artist representation increased revenues from £3.77m to £6.57m and it moved back into profit. Live revenues grew by 400%, while management revenues were one-third ahead. There are more than 500 live clients and more than 70 managed artists.

The services division revenues jumped from £779,000 to £2.87m. That includes gross commission of $2.3m – $1.15m net – for advising on the acquisition of Napster by a US shell. This means that this year’s revenues are likely to be much lower, although there could be further one-off business.

Net cash before long-term loans was £1.4m at the end of 2022. There is long-term debt of £1.2m, including £900,000 payable over the period up to 2030.

Driift could be a valuable investment and it has cash to fund growth. The share of the Driift loss will continue to hold back profit, but Canaccord Genuity forecasts a 2023 pre-tax profit of £200,00. That is on reduced revenues of £7.7m because of the deconsolidation of Driift and the one-off commission in 2022.

The share price is unchanged at 92.5p. There have been no trades since Tuesday.

FTSE 100 tracks US lower on rates and banking concerns

UK Investor Magazine
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FTSE 100 tracks US lower on rates and banking concerns

The FTSE 100 tracked US stocks lower on Thursday as fears around higher interest rates and renewed volatility in regional US banks knocked confidence.

The FTSE 100 was down 0.76% to 7,728 at the time of writing.

Fed hikes

The Federal Reserve hiked rates 0.25% to the highest level in 16 years overnight and signalled they were not yet ready to cut rates. 

Investors keenly listening to the Fed Chair’s press conference would have been disappointed to learn rate cuts were still a way off. However, Jerome Powell did suggest the Fed was ready to pause rate hikes and wait for further data before amending rates again.

Traders reacted to comments suggesting rates will remain elevated for an extended period by dumping equities overnight. The selling spilled over into the European session this evening.

“We on the committee have a view that inflation is going to come down not so quickly,” Fed chair Powell said.

The risk is the transmission lag between higher rates and economic impact is yet to kick, which could result in a recession later this year.

Non-Farm Payrolls

Many economists are predicting a US recession later this year. While no one will truly welcome an economic downturn, a recessionary environment will help bring down inflation and bring easier monetary policy closer.

Non-farm payrolls due to be released tomorrow will provide insight into the health of the US economy.

PacWest

Regional US banks added to the cautious tone after PacWest was reported to be exploring asset sales and a possible capital raise.

The bank made an announcement after shares sank around 60% following reports the bank was seeking options.

PacWest shares were down 40% going into the US open but the heavy selling was primarily limited to US regional banks.

FTSE 100 movers

Shell was trading 1% higher after a solid Q1 2023 in which the oil giant generated $9.9bn free cash flow. The company will return $4bn to shareholders.

“Despite continuing pressure on the oil price, Shell is still throwing off vast quantities of cash. It’s renewed its efforts to return some of this to shareholders,” said Derren Nathan, head of equity research at Hargreaves Lansdown.

Next shares increased 2% after the retailer demonstrated they were able to withstand economic pressures and maintain healthy sales levels. Sales in the most recent did fall, but less than had been expected.

Stocks trading ex-dividend including Glencore and St James’s Place were the biggest fallers down 6% and 5.5% respectively.

UK banks and miners were also suffering as concerns around interest rates hit cyclical sectors.

Both Greatland Gold and Mosman Oil and Gas planning to make big listing moves

Mark Watson-Mitchell
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Both Greatland Gold and Mosman Oil and Gas planning to make big listing moves

Two of the UK private investor favourites in the resources sector are looking to raise further funds.

Greatland Gold (LON:GGP) and Mosman Oil and Gas (LON:MSMN) are both progressing corporate plans for further listings.

Greatland Gold

Earlier this week Greatland Gold announced the appointment of Australian-based corporate lawyer Yasmin Broughton as an Independent Non-Executive Director ahead of the group’s planned listing on the ASX.

Ms Broughton has considerable experience in that market and her skills will be extremely useful as the group pursues its additional listing in Q4 this year.

The £440m capitalised Greatland group is now evaluating a corporate reorganisation, which could mean that the company will sit under a new parent that will be incorporated in Australia.

Obviously, that will need significant approvals from the group shareholders, the UK courts and then also the relevant listing authorities.

Such a move would not interfere with the company’s AIM listing, therefore protecting the mass of UK shareholders.

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.

Newcrest Mining is currently ‘in play’ following a bid approach from global resource group Newmont Mining.

There have been suggestions that if Newmont wins control of Newcrest then Greatland might get the opportunity to buy out its JV interest in due course, for which additional investor interest would be very helpful.

Mosman Oil and Gas

Over at Mosman Oil and Gas it has today declared that it is considering floating off its Australian assets into a separate quote.

The business is an oil exploration, development, and production company with projects in the US and Australia.

Its strategic objectives remain consistent: to identify opportunities which will provide operating cash flow and have development upside, in conjunction with progressing exploration of its existing exploration permit and permit application.

The £5.3m valued company has several projects in the US, in addition to exploration projects in the Amadeus Basin in Central Australia.

Its Australian assets, being the EP 145 permit and the EP(A) 155 exploration permit application in the Amadeus Basin,

It has today issued news that it is progressing positive commercial negotiations on potential future helium production offtake arrangements in respect of EP 145, with two Chinese based companies.

Further to such development the group is now considering that that the best way forward is to pursue a separate stock market listing for the Australian assets in London.

Currently the group is lining up teams of corporate advisers to assist in that process.

Market Reaction

The shares of Greatland Gold have risen over 6% to the current 8.70p, after touching 9p on the news.

While Mosman Oil and Gas shares fell back to 0.0775p, off 7% on the news but after hitting 0.0945p at the best, with four times the daily average dealing volume being achieved by midday.

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