08/08/2023

Tirupati Graphite (TGR), the specialist graphite producer, updated on operations and business development for its flake graphite projects in Madagascar since the start of this financial year on 1 April 2023 and production figures for Q1FY24. The company said it chose the tough but prudent path of refraining from a dilutive equity raise in the current subdued capital markets, managing its operations and growth within our available resources. With the establishment of consistent and growing production it is progressing   to its next target of hitting a positive bottom line at corporate level in the foreseeable future.

Comment: The magic words here at TGR are “non dilutive” once again underlining that the company is set to fund itself out of production, and is in the home stretch to profitability.

San Leon (SLE), the independent oil and gas production company, announced a further investment of $5.0 million in Energy Link Infrastructure (Malta) Limited, which owns the new pipeline and the floating storage and offloading vessel for the OML 18 oil and gas field in Nigeria. This further investment in ELI is being funded by the issue of a secured $5.0 million loan by the company’s largest shareholders, certain funds managed by Toscafund Asset Management LLP. SLE said its agreement with ELI to provide further financial support should soon see San Leon become ELI’s largest shareholder.  For ELI, its support enables it to address its financial obligations and continue the process of commissioning the ACOES – once operational, this is anticipated to be a profitable and cash-generative project from which San Leon expects substantial upside.

Comment: One would imagine that not many would have anticipated today’s positive developments from SLE, something which perhaps underlines how tough financing is these days, but that it is still possible.

SEED Innovations (SEED), the AIM-quoted company investment company, noted an announcement by its portfolio company, Clean Food Group. SEED said it is very exiting that CFG, has added another respected food industry partner to its list of investors. It sees this investment and collaboration as another key enabler towards this mission, one that aids CFG’s near term growth aspirations; to deliver scale of its bio equivalent food oils such as Palm oil.

Comment: SEED appears to be the smart investors recovery play, especially with the mooted 7p a share NAV, as compared to the present paltry 2.1p share price.

Atlantic Lithium (ALL), the African-focused lithium exploration and development company announced further assay results from the resource and exploration drilling programme underway at the Ewoyaa Lithium Project in Ghana, West Africa. The company said it was pleased to report ongoing drilling assay results across the Ewoyaa Lithium Project, which have returned high-grade infill and extension intersections. These include some significant apparent widths and grades from relatively shallow depths.

Comment: It can be seen that despite the slings and arrows of the shorters, and news from Ghana, the company is determined to get on with the job of developing Ewoyaa.

Longboat Energy (LBE), an emerging full-cycle E&P company active in Norway and Malaysia, announced the commencement of drilling operations on the Velocette (PL1016) exploration well in Norway (Company 20%). The company said it was excited to have commenced drilling the Velocette prospect which will be its ninth exploration well. Velocette is a gas weighted opportunity targeting very significant prospective resources. The exploration well also has significant follow-on potential that will be derisked in the case of success.

Comment: LBE included the magic word spud in its RNS today, something which reminds us that the extended rally in the shares should continue to extend over the rest of the summer.

SDI Group (SDI) reported finals to April 2023. The acquisitive groups headlines are 36% increase in Revenue to £67.7m but ignoring the adjustments the underlying PBT decreased to £5.8m from £9.9m. This gives a 3.72p so a P/E of 33x and there is debt of £13.3m. There are cost pressure concerns, but the performance is made worst by £3.5m impairment from an acquisition. SDI made four acquisitions last year and 17 since 2014, following its buy build corporate growth strategy in analytical technology products. It owns a wide range of niche brands for digital imaging, and sensing and control applications. The applications are in life science, healthcare, astronomy, and art conservation with clients across the globe. In the backdrop of an uncertain economic environment, the portfolio effect of operating in multiple markets remains is effective strategy in delivering organic growth. After the recent acquisitions, the organic growth rate is yet to emerge although the management have a track record of creating synergies and adding value to acquisitions.

Comment: SDI perhaps made a deal too far and with need some time to consolidate and reestablished a growth trend.

Contango Holdings (CGO), the producing London listed natural resource development company, is confirmed the installation of the weighbridge at the Muchesu Coal Project was completed last week and is now fully operational. The completion of the installation of the weighbridge enables trucks to collect coal from Muchesu and meets the necessary standards for the sale and transportation of bulk commodities in Zimbabwe and beyond, as well as confirming the tonnages and subsequent sales totals.

Comment: Shares of CGO bottomed out in June, and one would expect the latest weighbridge news to resume the recovery.

Metals One (MET1), which is advancing battery metal projects, announced that the company’s Råna Project partner and operator Kingsrose Mining Limited (ASX: KRM) has completed the acquisition and interpretation of magnetotelluric geophysical surveys (Spartan MT) at the Rånbogen prospect. MET1 said it was delighted to announce results from geophysical surveying at Rånbogen, one of three priority prospects at our Råna Project. Utilising modern geophysical techniques never previously deployed on the area, our partner Kingsrose has identified highly conductive zones which demonstrate potential for massive nickel-copper-cobalt sulphide mineralisation, further supporting that the Råna intrusion is highly prospective for a significant nickel deposit.

Comment: The latest director buying so soon after listing hinted that MET1 was set to hit the ground running, especially in terms of newsflow. The massive mineralisation potential should be more than supportive to the share price.