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.
FTSE 100 continues decline as debt ceiling fears rise
The FTSE 100 fell on Thursday as debt ceiling fears stepped up ahead of the crunch date at the beginning of June.
The FTSE 100 was down 0.7% at the time of writing on Thursday.
“The FTSE 100 continued to lose ground on Thursday as the US debt ceiling crisis remained unresolved with the beginning of June deadline rapidly approaching,” said AJ Bell investment director Russ Mould.
“Asian markets hit two-month lows as investors looked for safe-haven assets in an attempt to build some insurance into their portfolios. This is aimed at protecting against the still unlikely risk that the US defaults on its debt.”
Washington regularly goes through political wrangling ahead of debt ceiling limits, and investors have become desensitised to the ramifications of shutting down key US government departments.
Nonetheless, traders took the opportunity to take cash off the table and await a resolution.
FTSE 100 movers
Centrica was one of few FTSE 100’s gainers after the UK government announced the energy price cap would be reduced in July. The move would make the domestic energy market more competitive and potentially help Centrica win new customers.
Coca-Cola HBC was the FTSE 100’s top faller despite raising revenue guidance and maintaining earnings forecasts. Coca-Cola HBC was down 5% at the time of writing.
BP and Shell were major drags on the index as oil prices fell on concerns about demand. Shell and BP were down 2.2% and 2.4%, respectively.
Add some rock & roll to your portfolio with Baillie Gifford’s Edinburgh Worldwide Investment Trust
Baillie Gifford’s Edinburgh Worldwide Investment Trust (LON:EWI) will add some rock & roll to your portfolio.
We’re not talking about electric guitars and biting off bat’s heads, but instead investing in naturally volatile young companies with the potential to shape the future. This is a long-term strategy; investors should be prepared to buckle up and ride out sharp swings.
Meeting with Baillie Gifford at their Edinburgh office last week, the Edinburgh Worldwide team described the trust as a ‘rock & roll’ strategy due to the composition of the portfolio.
The managers of this fund have picked some of the best winners of the last decade. However, the portfolio is highly volatile, and trust managers are prepared to ride out significant drawdowns in their holdings.
There is the acceptance that companies take time to create the impact on the world the Baillie Gifford team foresee.
The Edinburgh Worldwide Investment Trust has an investment time horizon of around 10 years. Over this period, they target at least 100% gains in a stock as a base case. Many have risen well in excess of this.
Manager Douglas Brodie explained how the trust first bought Tesla when the EV maker was worth $2 billion. They sold when it was worth £1 trillion. During this period, the stock fell as much as 47% before rebounding. The Edinburgh Worldwide team exited with a 25x total return. Tesla was held for more than 10 years.
The trust held STAAR Surgical through a 64% drawdown which turned into a 7x return.
Seeking sales growth
Edinburgh Worldwide targets companies that have the opportunity for rapid sales growth. The management identifies companies that can achieve substantial sales growth through their ability to shape the future, solve problems, and provide better and cheap solutions.
This approach has helped the strategy achieve sales growth over the past 5 years exceeding that of the S&P Global Small Cap benchmark.
Baillie Gifford’s test track
Edinburgh Worldwide’s strategy allows the portfolio to include companies which don’t meet the criteria of Baillie Gifford’s other strategies due to their size.
When we sat down with Baillie Gifford, they explained how the trust acted like a test track for young growth companies. Should earlier-stage companies succeed in the Edinburgh Worldwide portfolio, they may satisfy the requirements of other Baillie Gifford mandates.
Portfolio
Edinburgh Worldwide’s portfolio is a blend of both private and public equities. The nature of their strategy is perfectly demonstrated in the top holding, Space Exploration Technologies, or SpaceEx. Founded by Elon Musk, this is a privately held company with the aim of colonising Mars.
“It’s rare that you come across companies for which you can genuinely say ‘this might be a generation-defining company’, and with SpaceX everything points to that,” Douglas Brodie said.
Other top holdings include Alnylam Pharmaceuticals – a great example of a company finding its way into other Baillie Gifford strategies after initially being added to Edinburgh Worldwide.
Ocado accounted for 2.8% of the trust as of 30/4/23. Brodie explained this is a long-term holding that has produced excellent returns but faded to near original entry.
Brodie still believes in the company’s ability to become a major part of the global food distribution supply chain and highlights 50% of the economy is consumption, and 50% of consumption is food.
A rare opportunity alongside the majors with Challenger Energy Group
The UK Investor Magazine was thrilled to be joined by Challenger Energy Group CEO Eytan Uliel and Uruguay Managing Director Randy Hiscock.
Eytan and Randy provide a comprehensive overview of the recent developments at Challenger Energy Group. The focus is on their Uruguay asset which could yield as much as 1-2 billion barrels of oil. This would make the project a world-class asset.
Our discussion starts with a technical overview of the Uruguay asset and we move on to what investors can expect over the 12 months.
Eytan describes how the Uruguay asset is a unique prospect as it sits alongside fields operated by oil majors and Challenger Energy is the only junior operating in close proximity.
Fevertree sales build momentum
Fevertree Drinks (LON: FEVR) have trimmed rrofit forecasts, although Fevertree has reiterated its guidance of revenues between £390m and £405m.
The AIM-quoted mixer drinks supplier has improved UK sales marginally, but that is on the back of a 5% price rise, so volumes have fallen. The share is still higher than in the first quarter of 2020, though. Cost inflation remains a problem.
US revenues and volumes grew in both the on-trade and off-trade. Europe and the rest of the world are growing, although Australia will have a tougher first half because of the change in distribution partner.
EBITDA guidance is maintained at between £36m and £42m, but the forecasts are moving towards the lower end of the range.
The full year pre-tax profit forecast has been cut from £28m to £26.8m, down from £31m last year, which would mean that profit has more than halved over two years. The dividend forecast is still 16.9p a share, which is only just covered by forecast earnings.
The share price has slipped 1% to 1419.5p, but it is still nearly two-fifths higher than at the beginning of the year. The prospective 2023 multiple is 82, but that would fall below 50 for 2024 if the current forecasts are achieved.