15/08/2023

Andrada Mining (ATM), the African technology metals mining company, updated on the previously proposed Funding Package with funds managed by Orion Resource Partners announced on 15 September 2022. On 11 August 2023, Andrada signed binding documentation for an updated, conditional US$25 million funding package with Orion. ATM said the signing of the Orion financing agreement will provide sufficient capital to complete its expansion programmes at its flagship Uis operation.  Finalising this funding will expedite its lithium implementation programme, expand its tin production, and concurrently bring a highly respected new investor onto its register.

Comment: It would appear that ATM is now primed to take Uis forward, with a decent A List funder in the form of Orion. This should be enough to allow ATM shares to build on their recent recovery.

Atlantic Lithium (ALL), the African-focused lithium exploration and development company, announced that it has signed a MOU with The University of Mines and Technology, Tarkwa in the Western Region of Ghana to undertake a Definitive Feasibility Study to assess the viability of producing feldspar feedstock as by-product of spodumene concentrate production at the company’s Ewoyaa Lithium Project in Ghana. ALL said it believes that the Ewoyaa Lithium Project represents a major potential source of feldspar, identified as a by-product of spodumene concentrate production at the proposed Dense Media Separation plant, which is widely used in ceramics and associated industries. The commercialisation of feldspar at Ewoyaa offers the potential to generate significant value to Ghana, in addition to the Project’s lithium production.

Comment: While shares of ALL have remained on the back foot since Q2 2022, it has been a highlight of the company that it continues to keep the show on the road in terms of its day job, centred around its flagship Ewoyaa project.

Oberon Investments (AQUIS:OBE), the boutique investment house, announced that John Gunn, has taken a 3% stake in the company.

Comment: Given the current state of the small cap market, it is quite an event when someone buys more than £10,000 of stock, let alone takes a notifiable position in a company. It is of course all the more interesting that investor John Gunn has entered the fray at Oberon, given his involvement in the financial markets.

Ananda Developments  (AQSE: ANA), a company whose ambition is to be a leading provider of cannabinoid-based medicines. announced that NHS Scotland (NHS) is providing the non-dilutive funding for the previously announced endometriosis randomised controlled trial using Ananda’s MRX1 sublingual cannabidiol oil. The CSO is providing £300,000 to conduct the trial using Ananda’s patent pending MRX1 formulation and matching placebo. ANA said its aim is to investigate if a future large scale, UK-wide trial to determine whether a cannabinoid can reduce endometriosis-associated pain is possible.

Comment: A double boost for ANA in the form of the validation of the NHS, and cash to take forward its flagship MRX1 valuation. The cash should underpin the share price ahead of a UK-wide trial.

MTI Wireless Edge (MWE) report flat Interims to June 2023, with a PBT of $2.1m on Revenue of $22.4m and an EPS at 1.6p. The commercial market is challenging but supply issues are resolved, and the business pipeline is strong for its technology. This is focused on comprehensive communications and radio frequency solutions across multiple sectors through its three core divisions. Its solutions support the next generation of 5G networks, its largest division is water management which alleviates global water scarcity, and its technology is used in defence. Investment has been made in ABS, Automatic Beam Steering which is an antenna used in 5G and there is significant interest from leading OEMs. MTI has established a new subsidiary, MTI Wireless Communications India, to cater for the anticipated demand for antennas in India’s rapidly evolving 5G cellular and this could be a substantial opportunity, over the medium term.

Comment: Since its finals in March the shares have drifted down from 53p, not helped by the company trading shares held in treasury, although it been buying again. The track record of profits and dividend payment makes the P/E of 12 and yield of 5% attractive.

Canadian Overseas Petroleum (COPL, an international oil and gas exploration, production and development company, announced the publication of its Financial Statements and Management Discussion and Analysis for the three and six months ended June 30, 2023. COPL said it had commenced upgrading its gas gathering system in the second quarter to debottleneck restrictions at certain well locations, to recover produced gas back to the gas plant and to reduce gas flaring. The company said that the gas gathering system is functioning and was commissioned on time and under budget in July 2023.

Comment: The recent share price recovery for COPL should have at least underlined to the shorters that the stock is not quite the one way bet they have assumed for so long. It can be seen that at least on an operational basis the company has the bit between its teeth.

Bradda Head (BHL), the North America-focused lithium development group, announced that it has staked just under 8km2 of new lode claims at its San Domingo pegmatite district following the positive results of soil sampling completed in February 2023 and that it has identified further Spodumene in outcrops at San Domingo. The company said that following the promising initial drill results and soil sampling at San Domingo it was delighted to have staked these further 8km2 of claims, which strengthen Bradda’s strategic position in Arizona and demonstrate its belief in San Domingo that it has the potential to host a significant lithium resource.

Comment: There have been tentative signs of recovery at Bradda in terms of the share price over the recent past. This should start to gather momentum as the company proves up San Domingo.

Zephyr Energy  (ZPHR), the Rocky Mountain oil and gas company, provided initial second quarter 2023 results related to hydrocarbon production and cashflows from its non-operated asset portfolio in the Williston Basin, North Dakota, U.S, and an update on its flagship project in the Paradox Basin, Utah, U.S. The company said near term growth includes its investment in the newly drilled and completed Slawson-operated wells which are expected to significantly boost non-operated production rates when brought online in the autumn.  The new wells proposed by Continental will also help to grow volumes over the upcoming year and demonstrate continued growth from the existing non-operated portfolio.

Comment: Ironically, today’s update from ZPHR shows us that there is more to the company than Paradox, and much of the share price underperformance could be regarded as growing pains rather than anything else.

Goldplat (GDP). the AIM listed Mining Services Group, announced an operational update for the 4th quarter ended 30 June 2023, of the financial year just ended. The company said the completion of the new TSF in South Africa is a big milestone for the group from a business continuity perspective, but it also opens up opportunities for the processing of the old TSF and other potential projects. It was pleased with the operating results achieved by the group during Q4 and the for the year as a whole, considering some of the difficult circumstances it faced, and it looks forward particularly to improved operating results in Ghana during Q1 of the 2024 financial year.

Comment: The strong cash balance at GDP speaks for itself, and it would perhaps be appropriate if the recent share price weakness was reversed as the market looks forward to an improved performance to start 2024.

Instem (INS), a provider of IT solutions to the global life sciences market, announced a trading update for the six months to 30 June 2023. Revenue for H1 2023 was expected to be in the region of £29.7m (H1 2022: £27.0m), an increase of approximately 10.2%, with recurring software revenue growing by 27%. The company said it was delighted with the continued momentum it was seeing, advocating its acquisition strategy and highlighting its standing across the drug research and development lifecycle. It believes there is significant potential to continue driving value and looks forward to building on the company’s growing market reach.

Comment: Shares of INS peaked out at the start of last year near 900p and are now down by a third from those levels, something which seems unjustified given the latest strong update, and outlook.