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STOCK MARKET NEWS – RNS HOTLIST

RNS Hotlist: Angus, East Star, Galantas, Harvest, IOG, Kromek, LifeSafe, Oriole, Spectral, Tern, Vector

18/04/2023

RNS Hotlist: Angus, East Star, Galantas, Harvest, IOG, Kromek, LifeSafe, Oriole, Spectral, Tern, Vector

LifeSafe (LIFS), a fire safety technology business, announced the launch of its new StaySafe All-in-1 fire extinguisher featuring the Group’s next generation fluid.  The new StaySafe All-in-1 is specifically designed to tackle ten different types of fire, replacing the successful StaySafe 5-in-1 fire extinguisher. The company also said it has made a solid start to 2023, outperforming the Group’s budget with sales over four times those of the first two months of 2022 and gross margin ahead of last year by almost 4%.  It remains on course to reach profitability, on a monthly basis, in the last few months of 2023.

Comment: The new All-in-1 is a big deal, especially with the all important Lithium-ion component. Equally important is the prospect of LIFS being profitable later this year.

IOG (IOG) provided an update on the drilling of the Blythe H2 well. Having spudded on 5th March, the company estimated that the H2 well was expected to take approximately three months to drill, complete and hook-up, subject to the usual operational risks. The company said that encountering a gas and oil influx while drilling through the overburden above the reservoir is a known risk in the Southern North Sea. Associated drilling fluid losses present an additional challenge, however this is being actively and safely managed by Petrofac, the Well Operator, and Shelf, the drilling contractor, working closely with the IOG team, to ensure that drilling ahead can be safely resumed.

Comment: The latest RNS may not have been quite what those buying into IOG shares of late were looking for. However, the resumption of drilling promise may be soothing enough.

East Star Resources (EST), which is defining mineral resources in Kazakhstan, presented its annual financial results for the period ended 31 December 2022. The company said this summer will see East Star drilling the significant copper-zinc-lead Verkhuba Deposit Exploration Target on the Rudny Altai belt as it seeks to upgrade it to a JORC-complaint resource. Success in this objective alone positions East Star for a significant re-rating. At the same time, it intends to test priority HEM targets which offer the potential to become additional copper deposits proximal to Verkhuba, while conducting additional fieldwork and geophysics to refine more exploration targets.

Comment: It may very well be that given a recent rebound in many explorers, shares of EST were waiting on today’s update before enjoying their re-rate.

Tern (TERN), the company focused on the Internet of Things technology businesses, provided an update on the company and its portfolio companies. The company said it is encouraging to see such a resilient performance from its portfolio companies, with revenues growing, increases in headcounts and all winning important new customers during a time when technology company valuations are under pressure across the global market.

Comment: It will be interesting to see whether the company’s bullishness today will be reflected in the share price of Tern any time soon? This is even though the stock remains stubbornly near 2 year lows.

Kromek (KMK), a developer of radiation and bio-detection technology solutions, provides an update following the end of its Q3. The company said revenue in Q3 was approximately 50% higher than the corresponding period and Kromek continues to expect substantial revenue growth for FY 2023 compared with FY 2022. The Group is also experiencing improvements in its gross margin due to the product mix sold and expects to report gross margin in its traditional high-40s percentile and be EBITDA positive for H2 2023. The Group continues to trade in line with market expectations, was broadly cash neutral in Q3 and expects to remain so through Q4 2023. The company also announced that it has entered into an initial seven-year agreement with a Tier 1 OEM to develop CZT-based detectors for use in the Customer’s advanced medical imaging scanners.

Comment: Although it is always frustrating when a company cannot name a customer, of course, the bigger and better the customer, the more likely it is to not want to be mentioned.

Harvest Minerals (HMI), the AIM listed fertiliser producer, provided an update on Q1 2023 sales from its 100% owned Arapua Fertiliser Project in Brazil. The company said the start to 2023 is consistent with its internal planning expectations but notably a slower start than 2022, where concerns over the situation in the Ukraine accelerated buying decisions.  This “normalising” of buying patterns seems consistent throughout the industry and not specific to us.

Comment: HMI is happy to point to the “normalising” of buying patterns as being an industry wide phenomenon. This is perhaps not the kind of observation to help get the shares off recent lows.

Spectral MD (SMD), an artificial intelligence (AI) company focused on medical diagnostics, announced that it has received a $4 million award from the Medical Technology Enterprise Consortium. SMD said this funding will further Spectral MD’s innovation within the burn indication and support the continued development of our handheld digital burn assessment tool.

Comment: The momentum is really starting to build at Spectral MD, something which is well deserved given the AI aspect of the company that is right on the zeitgeist currently.

Oriole Resources (ORR), the AIM-quoted exploration company focused on West Africa, announced that it has received a rebate totalling £157k from HMRC in relation to a R&D tax relief claim in respect of geoscientific advances sought by the company through its exploration programmes. The Claim is for the year ended 31 December 2022. The company said the 2022 exploration work programmes in Cameroon continued to deliver exciting results, with a fourth drill programme at Bibemi leading to the definition of a JORC-compliant Inferred Resource, and excellent results from the early-stage work on the Central Licence Package, including the detection of anomalous lithium. It was delighted to have received further support for our research work from HMRC.

Comment: Shares of ORR have rallied well in the run up to the RNS today. With the backing of its happy relationship with those lovely people at HMRC, one would imagine further share price gains are in the offing.

Galantas Gold (GAL) announced that drilling at the newly acquired Gairloch Project will commence in the coming weeks. Drill mobilization has commenced for an initial 800-metre program targeting the Kerry Road deposit, including testing the depth potential of near surface mineralization. The company said it was eager to kick-off drilling at this underexplored region of Scotland. The Gairloch Project offers a fantastic opportunity for Galantas to diversify and build its portfolio having acquired some of the best exploration ground in the country in a gold-bearing volcanogenic massive sulphide (VMS) setting with known mineralization over 10 km and a number of high-priority targets that have yet to be tested.

Comment: Almost all gold plays have rallied over the recent past, and one would imagine that after today’s news the recent bounce at GAL will continue.

Angus Energy (ANGS) Angus announced the completion of the initial clean up of the new B7T well at Saltfleetby.  This well is producing from an approximately 185 m horizontal section in the main Westphalian reservoir at a vertical depth of 2292m. The company said based on the results it has concluded that at present, the well is capable of 4-5 mmscfd at a FWHP of 30 barg flowing into the system with the two other wells.  It is expecting the well to clean up further which is likely to raise that flow rate in the future.  Whilst producing through a temporary connection, the new well flowline will be constructed to enable full plateau production this summer.

Comment: It is interesting that shares of ANGS are actually rising more steadily than they were earlier in the year when there was arguably more retail investor fever associated with the company. This should bode well for the rest of 2023.

Vector Capital (VCAP), a commercial lending group that offers secured loans primarily to businesses located in the United Kingdom, announced its final results for the year ended 31 December 2022. The company said The Company performed well during the year despite the difficult market conditions. It has been able to grow our loan book by 14.9% to £53.2 million and the Group’s positive operational performance has been achieved despite the increase in external borrowing costs on new loans provided by our wholesale funders and co-lenders. The Group has been able to pass on the majority of these increases to customers and in some cases reduce gearing to maintain margins.

Comment: In a higher interest rate environment the key for VCAP is to be able to grow its loan book, something which is at odds with the logic of the recent share price trajectory.

Disclaimer & Declaration of Interest:
The information, investment views, and recommendations in this Zaks Traders Cafe interview are provided for general information purposes only. Nothing in this interview should be construed as a promotion or solicitation to buy or sell any financial product relating to any companies under discussion or referred to or to engage in or refrain from doing so or engage in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the commentator but no responsibility is accepted for actions based on such opinions or comments. The commentators may or may not hold investments in the companies under discussion.

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