The UK Investor Magazine Podcast was thrilled to welcome Stephen Mullowney, CEO of TRX Gold, for a deep-dive into their gold production and exploration activities in Tanzania.
TRX operate the Buckreef Gold project and poured 8,874 ounces of gold and sold 8,598 ounces of gold in the year ended August 2022.
The company is also embarking on a blue sky exploration programme that promises additional resource upgrades and production capacity.
The company has achieve a low cash cost of $665 and is funding additional exploration through production cashflows.
UK households have been dealt a minor reprieve from soaring prices as CPI fell to 10.7% in the year to November 2022, down from 11.1% in October.
GBP/USD rose on the news after US CPI fell to 7.1% yesterday and raised the question of whether the Fed would start to slow their rates before, or a to a greater degree, than the Bank of England.
Although the rate of inflation fell, prices were rising at an eyewatering pace and putting pressure on the financial health of UK consumers.
The main culprit for rising inflation was again higher fuel and electricity bills while food prices continued to rise.
“News that prices aren’t rising quite as quickly as they were last month is positive news, but they are still rising and at more than twice the rate they were this time last year,” said Danni Hewson, AJ Bell financial analyst.
“There will be much debate about whether the slight dip is a sign that the relentless price rises that households have endured over the last 18 months might finally be coming to an end, but one drop doesn’t signify a trend. Look back just a couple of months when August’s cooling breeze quickly gave way to an Autumn which delivered a 40-year inflation high.”
The lower UK CPI followed the US in seeing inflation fall suggesting global prices were moving in unison to the downside. If a trend is established, it will provide justification for central banks slowing their rate increases.
Perception of the timings of a pivot by each respective central bank will dictate GBP/USD in early in 2023.
The market will receive their first central bank insights in light of the fresh CPI this evening from the Fed and Bank of England tomorrow.
TUI shares were weaker on Wednesday after the travel operator released 2022 full year results which demonstrated a material bounce back from the subdued activity during the pandemic.
Revenue more than doubled to €7.6bn and EBIT increased €1.1bn as holidaymakers took the first unrestricted opportunity since the start of the pandemic to get away.
“TUI is back on track, as pent-up travel demand and a return to more normal travel patterns helped jet-fuel profits in the fourth quarter,” said Sophie Lund-Yates, Equity Analyst at Hargreaves Lansdown.
“The number of passengers in the core Markets & Airlines business doubled – with the per-seat margin benefit shining through in the numbers. Demand for winter bookings is also looking bright which means all-in-all, TUI is doing well.”
Despite the solid set of numbers for 2022 and some encouraging signs for 2023, TUI shares were 6% weaker at the time of writing.
The travel company has rallied markedly since their October lows but are still down 40% in 2022. Travel disruption and concerns about the cost of living crisis have rocked investor sentiment around travel companies this year. Analysts highlighted the uncertainty around the ability of holidaymakers to afford higher priced holiday next year as a reason to be cautious on TUI shares.
“In 2022 holidaymakers have been willing to pay what it takes to get away for the first time in what feels like an age. However, if prices move too high then affordability becomes an issue,” said AJ Bell investment director Russ Mould.
“This could be a key test for TUI in 2023 and, given people have shifted to booking their holiday at shorter notice to avoid the risk of being caught off guard by disruption, the company has limited visibility on its future business.”
There were three companies that had their AIM quotations cancelled in October and November. Two were taken over and the other went bust.
14 October 2022
TransGlobe Energy Corporation
Oil and gas producer TransGlobe Energy Corporation was introduced to AIM on 29 June 2018. It was also listed on TSX and Nasdaq. The share price opened at 208p. TransGlobe Energy had operations in Egypt and Canada.
Calgary-based TransGlobe Energy merged with VAALCO Energy Inc (LON: EGY) to create an Africa-focused exploration and production company. VAALCO offered 0.6727 of one share for each TransGlobe share. Tran...
Helium One Global (LON: HE1) is raising at least £7m at 5p a share and the cash will be spent on a single exploration well in the Tai prospect in the Rukwa Basin, Tanzania. The AIM-quoted share price closed at 6.35p before the placing was announced.
Management has secured a drilling rig for the first quarter of 2023. Helium One Global has selected Exalo as preferred drilling contractor because of legal problems concerning the previous contractor. The rig will be moved from South Africa to Tanzania.
The drilling rig will cost £2.07m and formulation evaluation will cost £2.05m. The rest will go on other costs and working capital.
When Helium One Global joined AIM at the end of 2020 it raised £6m at 2.84p a share. In April 2021, a further £10m was raised at 10p a share. The share price peaked at around 28p later that year. There have been small cash injections from the exercise of warrants. By the end of June 2022, there was $4.91m in the bank.
Helium is a colourless, odourless and inert gas and it is used in the medical, aerospace and computing sectors. MRI scanners and welding are the largest users of helium. Global production is lower than consumption.
A combination of organic and acquisitive growth continues to push forward the figures of AIM-quoted business recovery services provider Begbies Traynor (LOB: BEG) with higher insolvency figures increasing demand. Organic growth was around 6%.
The growth came from both the business insolvency business and the property and transactional services operations. Begbies Traynor has 14% of overall insolvency volumes, although many of these are small companies. The order book is 15% ahead at £33.9m.
In the six months to October 2022, revenues improved from £52.3m to £58.5m, while pre-tax profit rose from £8m to £9m. The interim dividend is 1.2p a share. Net debt was £2.4m at the end of October 2022, after spending £7.4m net on acquisitions.
Administration levels are still lower than at the beginning of 2019. Compulsory liquidations are also lower, but they are increasing at a faster rate.
The full year pre-tax profit forecast has been maintained at £19.7m, up from £17.8m. The total dividend is forecast at 3.7p a share. A strong third quarter trading statement in February could spark an upgrade.
The share price fell 9.6p to 137.2p, which means the shares are trading on less than 14 times prospective earnings. There are still potential increases in the insolvencies and administrations of larger companies and Begbies Traynor is in a strong position to make further progress in the next couple of years.
Savannah Energy (LON: SAVE) has completed the reverse takeover of the Chad and Cameroon assets of ExxonMobil and been readmitted to AIM. This deal was set to be followed by the purchase of additional stakes owned by Petronas in the assets in Chad and Cameroon, but this has fallen through. However, there is a potential $1.25bn transaction to acquire Petronas upstream assets in South Sudan.
The ExxonMobil deal was announced in June 2021 and the abortive and the Petronas transaction was revealed exactly one year ago. There was a $65m placing and subscription at 19.35p a share at the end of 2021. ...
The global economy has received the welcome news the rate of inflation in the US has again slowed and raised hopes major central banks could be nearing the end of drastically sharp increases in interest rates.
The downside surprise in US CPI will add to the argument inflation is cooling and provide justification for easier monetary policy.
The FTSE 100 jumped above 7,500 as US CPI in November came in at 7.1% versus expectations of 7.3%. US futures surged and European stocks also added to gains in a sharp risk-on rally. S&P 500 futures were 3.1% higher at the time of writing.
The Federal Reserve are meeting to decide on interest rates with a decision due tomorrow evening. This reading is unlikely to impact tomorrow’s announcement. However, the chair’s press conference will be closely watched for any hints of a change in the trajectory of rates in 2023.
The Bank of England and ECB will release their interest rate decisions on Thursday.
FTSE 100 consumer stocks
The FTSE 100 consumer constituents dominated the top gainers on Tuesday as investors hoped the dynamics of the US economy would soon be seen in the UK.
Although the US economy’s composition and factors influencing inflation are very different to the UK, any sign of slowing inflation and better conditions for consumers has been jumped on by traders.
Ocado was the FTSE 100’s top gainer, adding 10%, while JD Sports, Next and Kingfisher all posted respectable gains.
Wealth management stocks were higher on hopes savers would soon be able to despot more in their investment accounts. Hargreaves Lansdown shares gained 5.6% and St James’s Place added 4%.
The FTSE 100’s rally was broad with only 13 of the 100 constituents trading negatively at the time of writing.
Greatland Gold shareholders will be frustrated by the company’s performance in 2022. The company has announced a series of positive updates on the Havieron gold project, only for the Greatland Gold share price to continue to fall.
The most recent announcement 8th December was arguably positive, but GGP shares were met with selling.
Greatland said good progress was made with evaluating the resource to support further resource expansion. For a long-term holder, this is undoubtedly welcome news. However, short-term traders were evidently perturbed by comments feasibility studies would continue well beyond the end of the year.
Any disappointment with Greatland Gold is a disconnect between investor’s expectations and the realities of mineral exploration.
Many traders would have bought into Greatland Gold on the high-grade discovery at the Havieron project in 2020, most probably hoping for a quick buck. Many would have achieved this, but many have found their short-term trade has turned into a long-term hold.
Greatland Gold shares are down 50% in 2022 and are over 75% lower than all-time highs.
As illustrated by the below graphic by the Visual Capitalist, some traders would have acquired shares at the beginning of the ‘orphan’ stage of the lifecycle. When these short-term traders grow impatient with ‘slow’ progress they sell shares and create an overhang that leads to a period such as Greatland has experienced this year.
Greatland Gold’s exact stage of the lifecycle is subjective, but the speculative rally is well a truly in the rearview mirror.
Credit: Visual Capitalist
Quick gains can be made in mining shares such as Greatland Gold. However, this is usually the result of a speculative strategy that will ultimately produce more losers than winners.
Investors that understand the mineral resource lifecycle will now know Greatland Gold shares could face further downside in the immediate future and the real value will not be achieved in the next 12 months.
Greatland Gold have proven reserves through their 30% stake in Havieron. They are now conducting feasibility studies that will take time to complete. Whether Greatland Gold shares recover in 2023 will be dependant on the timing of feasibility studies and patience of investors.
The completion of feasibility studies will ultimately open the doors to mine construction. The Havieron project has already secured financing, a major feat paying testament to the strength of the resource. Despite having financing in place, production is still some time off.
There is inherent value in the Havieron project and the biggest uncertainty is when this value will be unlocked for Greatland Gold shareholders.
Blackbird (LON: BIRD) has revealed that its major partner is EVS Broadcast Equipment, which has already announced a $50m, ten-year deal with a US broadcaster that includes Blackbird’s video editing technology. The Belgium-based live video technology developer has a strong market position in sport and news and Blackbird completed the development and integration of its technology with EVS earlier this year. The first deal provides Blackbird with a per-seat user licence fee, as well as maintenance and support revenues. Similar deals are likely to be secured in the coming years. The share price rose 10.9% to 12.75p.
Invinity Energy Systems (LON: IES) is selling a 1.5MWh vanadium flow battery to partner Hyosung Heavy Industries and this system will be evaluated by Korea Electric Power Corporation. If the test is successful, then the battery system will be qualified for use in grid scale projects in South Korea. There will be an advanced payment in 2022 and the rest of the revenues will be in 2023. This is the latest deal in Asia. The share price increased by 20.9% to 55p, which is more than double the level at the start of the month.
Data analysis software provider WANdisco (LON: WAND) has announced a third deal with a large European automotive supplier. This is worth $13.2m, taking the total value of contracts to $25.3m. The original contract was to replicate automobile sensor data and the requirements are increasing. The share price improved by 8.01% to 688p.
Touch sensors supplier Zytronic (LON: ZYT) improved full year revenues from £11.7m to £12.3m, while pre-tax profit increased from £453,000 to £705,000 and the dividend has been raised by 47% to 2.2p. There are still supply chain problems. Net cash was £6.4m at the end of September 2022, following £2m of share buybacks. The share price is 5.45% ahead at 145p.
On Monday, shareholders approved the PCF Group (LON: PCF) plan to leave AIM on 19 December and the share price has slumped 44% to 0.35p.
Marketing software services provider Access Intelligence (LON: ACC) almost doubled revenues in the year to November 2022 and EBITDA was better than expected. The company has withdrawn from loss-making contracts. However, management expresses concern about the pace of contract conversion and growth. The share price dived by 27.4% to 63.5p.
Morses Club (LON: MCL) has issued a practice settlement letter to scheme of arrangement creditors. This scheme will largely be finance through an equity issue. The share price fell by more than one-third to 1.56p.
Digital advertising services provider Dianomi (LON: DNM) says revenues will be flat in 2022. New advertiser spending has not grown as expected. This means that 2022 EBITDA will be around 50% of the £3.1m reported for 2021. US digital advertising spending is growing, and long-term prospects are positive. The share price is 15.4% lower at 107.5p.
Atome Energy (LON: ATOM) has raised £2.7m via a placing at 106.2p a share – the share price slipped 6.44% to 109p. Electrolyser developer Clean Power Hydrogen (LON: CHP2) invested £1.5m, whose share price rose 5.79% to 32p, and much of the rest came from management and employees. A retail offer via Primary Bid closes at 7pm. The cash will help to finance the doubling of capacity at the green hydrogen and ammonia project in Paraguay to 120MW.
