Deutsche Bank and abrdn favour this FTSE 350 housebuilder

UK Investor Magazine
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Deutsche Bank and abrdn favour this FTSE 350 housebuilder

The UK housebuilding sector is suffering from higher mortgage rates and the cost of living crisis. UK house prices have fallen over the past year but have shown recent signs of stabilisation.
The FTSE 350 Home Construction sector is down 35% over the past three years as investors sold housebuilding shares ahead of a downturn in activity. There is now an argument softer housing activity is largely priced in.
abrdn fund managers and equity analysts at Deutsche Bank favour this FTSE 350 housebuilder with the inclusion in an abrdn equity income portfolio and a recent price target increase by Deu...

AIM movers: Yu Group trading ahead of expectations and no bid for Purplebricks

Andrew Hore
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AIM movers: Yu Group trading ahead of expectations and no bid for Purplebricks

Energy supplier Yu Group (LON: YU.) is trading well above expectations and Liberum has upgraded its earnings expectations by 42% to 61.1p a share – double the previous year. That is similar to the previous 2024 forecast which has been upgraded by 10% to 68.4p a share. Net cash could reach £34.9m by the end of 2023. The share price jumped 26.1% to 580p.

Lithium project developer Savannah Resources (LON: SAV) has received a positive declaration of environmental impact from the Portuguese authorities for the Barroso lithium project. Savannah Resources has agreed to the conditions issued. A new scoping study should be done in the second half. The share price moved ahead by 19.7% to 4.4p.

Oil and gas company Challenger Energy Group (LON: CEG) has updated the market on its OFF-1 licence offshore of Uruguay and the related prospects. The prospective recoverable resources for three prospects based on the mean have been increased to 1,986mmbls. A discovery of 150-200mmbls is required to be economic. Each of the three prospects has the potential for this. Cash generated from producing wells in Trinidad can cover ongoing costs. The share price increased 13.5% to 0.105p.

Shares in Premier Premier African Minerals (LON: PREM) have recovered following yesterday’s premium article on UK Investor Magazine: Was Premier African Minerals’ share price destruction justified? – UK Investor Magazine. The share price recovered 8.77% to 0.62p.

Offshore services provider Tekmar Group (LON: TGP) has won a new contract for the Generation 10 cable protection system worth more than £5m. The project will be delivered in 2024. The share price edged up 8.33% to 1.95p.

Lecram Holdings does not intend to make a bid for Purplebricks (LON: PURP), so the sale of the business and assets to Strike Ltd is set to go ahead if it receives shareholder approval. The general meeting is on 2 June. The share price fell 20.6% to 0.5p, which values the company at £1.9m. The cash remaining after costs, which could be £2m, will be distributed to shareholders, but that won’t happen until early next year.

Antibody profiling company Oncimmune (LON: ONC) reported a cash outflow from operations of £2.32m in the six months to February 2023. This is prior to the recent sale of the IVD EarlyCDT Lung blood test antibody technology to US biotech Freenome for £13m. That will lower ongoing costs. The share price declined by 21.8% to 28.7p.

Kefi Gold and Copper (LON: KEFI) has raised £6.44m at 0.7p a share, while the share price slipped 19.7% to 0.671p. This cash will help to complete the project financing for the Tulu Kapi gold project and the share of the cost of the exploration programme in Saudi Arabia.   

There has been profit taking at Empire Metals (LON: EEE) following yesterday’s announcement showing a giant-scale hydrothermal titanium and copper mineral system at its Pitfield project in Western Australia. The maiden drilling programme indicated a metal-rich 40km by 8km system with more to be drilled. The share price fell 13.9% to 2.625p, which is still well above the 1.85p the share price closed at on Friday.

Consider the abrdn Equity Income Trust for a heavy-hitting income

UK Investor Magazine
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Consider the abrdn Equity Income Trust for a heavy-hitting income

This UK-focused equity income trust packs a punch. The trust contains all the heavy-hitting cyclical FTSE 100 dividend income payers you’d expect from a portfolio that outstrips the benchmark in terms of yield.

With a 7.15% yield, the abrdn Equity Income Trust should be considered by those seeking a substantial dividend while willing to accept the risk and benefits associated with high-beta equities.

The high yield is achieved through a portfolio of predominately UK stocks. The portfolio has an 82% weighting towards UK equities. abrdn identifies 57% of the portfolio as cyclical and remaining sensitive or defensive.

Financial services account for 35% of the portfolio, and the trust enjoys steadily increasing dividends from FTSE 100 banks NatWest and Barclays, both of whom have also announced share buybacks. The Natwest holding was added increased recently.

The trust is harnessing the higher energy price environment with top holdings, including Shell, BP and SSE. Managers recently took the opportunity to take profits in BP while increasing their holdings in Diversified Energy via a placing.

Ithica Energy’s strong cash generation is seen as an opportunity by the trust – managers see the potential for attractive dividends from the company.

In their half-year report issued 26th May, abrdn managers reflected on a note of caution in UK equities. Still, they were confident in the income generation capabilities of the portfolio and were positive on current valuations:

“The fluctuating macro landscape has created some sharp swings in performance within the UK equity market during the period. Although markets went up during the six months, there was an underlying tone of caution, as reflected in the continued out-performance of large cap stocks. This was largely driven by the ever-present fear that recession could be imminent. Many commentators pointed to the inversion in the yield curve (where long- dated bond yields fall below short-dated bond yields) as a forward-looking indicator that recession is likely at some point in the next two years.

“Against this uncertain backdrop, our approach remains to stay focused on companies that have the ability to generate strong cash flows and pay these cash flows out in the form of dividends. We believe that many companies with these characteristics have been overlooked by the wider market in recent years, resulting in valuation opportunities.”

The trust is clearly well thought of by the market with a 0.3% premium compared to a UK equity income investment trust sector dominated by trusts trading at deep discounts.

The trust’s share price has returned a 13.72% annualised return over the past three years.

FTSE 100 declines as debt ceiling nervousness persists

UK Investor Magazine
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FTSE 100 declines as debt ceiling nervousness persists

The FTSE 100 was on the back foot on Tuesday as fears about the US debt ceiling lingered. Weaker oil prices dragged the index, with BP and Shell falling.

The FTSE 100 was down 0.8% at the time of writing.

“A deal may have been struck on the debt ceiling, but it’s not fully calmed nervousness on financial markets. Limits on spending are being imposed just as America looks set to head towards recession, which could make it harder for growth to snap back,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“Clamour from dissenting voices on both sides of the political divide are rising, ahead of a crucial Congressional vote later today. Nevertheless, the US does appear to be inching towards Budget agreement, although it’s likely to take a good deal of wrangling this week before it’s passed.”

Major US indices outperformed Europe with help from tech stocks and Tesla.

Nvidia was again pushing higher as the hype around AI provided continued support for the stock. Last week, the chipmaker revealed strong revenue forecasts directly for the adoption of AI. 

Tesla shares were higher on hopes the EV maker would see further growth in China as Elon Musk met with Chinese officials.

FTSE 100 movers

FTSE 100 Oil majors were a large drag on the index as oil prices dipped on growth fears. BP and Shell were down 2.2% and 2.7%, respectively.

Unilever shares were lower as key staff departed ahead of the new CEO’s arrival. The CFO and marketing head will soon be clearing their desks. Unilever shares were 2.9% down at the time of writing.

Rolls Royce was off by 2.3% after reports India launched criminal proceedings against BAE Systems and Rolls Royce for the procurement of fighter jets.

Was Premier African Minerals’ share price destruction justified?

UK Investor Magazine
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Was Premier African Minerals’ share price destruction justified?

Last week, Premier African Minerals' share price sunk on news production at their Zulu lithium project would be delayed.
Delays at the project have ramifications for the project's funding and will defer future cashflows for Premier African Minerals. The company may be required to raise further funding.
In this article, we explore whether the selloff was justified. We conduct peer analysis and compare PREM's current valuation to lithium miners at a similar stage of their lifecycle and with similar lithium assets.
We look at their cash position and the implications for PREM over the rest of th...

AIM movers: Empire Metals discovery and Woodbois requires cash

Andrew Hore
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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’

Mark Watson-Mitchell
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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

Andrew Hore
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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.   

New standard listing: Oneiro Energy

Andrew Hore
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New standard listing: Oneiro Energy

Oneiro Energy has raised enough cash to finance the search for an energy acquisition and undertake due diligence on a target. A gas asset is preferred. The first deal could be used as a platform for further acquisitions.
NAV is 2.4p a share. The share price finished the week at 6.75p (6p/7.5p). There were two trades on the first day worth less than £7,400 and ten trades worth less than £32,000.
There is no reason to chase the share price any higher.
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Oneiro Energy (LON: ONE)
Energy shell
www.oneiro.energy
Market: Standard list
Placing
Flotation date: 25 May 2023
Share price: 5p
Amoun...

Aquis weekly movers: Marula Mining moves towards copper ore processing in Tanzania

Andrew Hore
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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.

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