17/08/2023

PYX Resources (PYX), the publicly listed zircon producer, announced that it has received the licence for the export of rutile and ilmenite ores from the Indonesian government. The company said it was absolutely thrilled to have received the necessary authorisations and the new licence to export rutile and ilmenite. The board took the decision to start producing and stockpiling ilmenite mid-last year in anticipation of receiving the licence.  Rutile and ilmenite are by-products for PYX, which can significantly increase our revenue and margin levels, which is good news for all shareholders.

Comment: PYX has thus far not been treated kindly by the stock market, perhaps simply on the basis of a lack of appreciation of zircon. But it could be that the ilmenite / rutile angle is far more appreciated and leads to a re-rate for the stock as revenues rise.

Atlantic Lithium (ALL) the mighty $billion Piedmont Lithium are exercising its option to acquire 22.5%. It is committing to funding $70m of the total development expenditure and 50% of any additional expenditure required to build Ghana’s first lithium mine. In practical terms, we are at Stage 2,  $5m is needed for the regional exploration programme a further $12m for the Pre-Feasibility study. This leads to Stage 3, and the financing for the completion of construction with an initial production date in 2025 of spodumene lithium concentrate. The projects economic viability and exceptional profitability potential for 2.7mpa steady state operation producing 3.2mt over 12-years, is world class. This is of course subject to licensing approvals from the relevant authorities…..

Comment:  Its nearly inconceivable that the approvals will not be granted and a virtually fully funded lithium mine packs a lot of power. So it seems time for the bear raiders to buy back, as for them today’s news is a significant pie in the face.

Kin and Carta (KIN), the digital transformation consultancy, provided a trading update covering the year ending 31 July 2023. FY23 adjusted operating profit is expected to be £17.9 – £18.4 million, 10.5% – 14.0% ahead of market expectations, reflecting a realigned operating model with a lower cost base and improved operational efficiencies. The resulting adjusted operating profit margin is expected to be 9.3% – 9.6% and adjusted EBITDA margins are expected to be 11.7% – 12.0%. Net debt remains modest relative to adjusted EBITDA and is expected to be c. £20 million at 31 July 2023.

Comment: Companies offering the kind of fundamental improvements shown by KIN are understandably all too rare. Ironically the punters seem to be blind to such opportunities, choosing the binary bets and blue sky plays all too often.

Tremor International (TRMR), a company in data-driven video and Connected TV advertising technology, offering a unified platform that enables advertisers to optimize campaigns and media companies to maximize inventory yield, announced its financial and operating results for the three and six months ended June 30, 2023. Adjusted EBITDA significantly rebounded by 137%, and Adjusted EBITDA Margin doubled, in Q2 2023 compared to Q1 2023; Company expects further improvement to Adjusted EBITDA and Adjusted EBITDA Margin in H2 2023 vs. H1 2023.

Comment: In share price terms it has been a rocky ride thus far for Tremor, not helped perhaps by rumoured M&A, which ultimately fell flat. Today’s sharp fundamental bounce, especially the EBITDA margin improvement, could and should mark a decent turning point for the shares.

Firering (FRG), an exploration company focusing on critical minerals, announced that it has signed an option deed dated 16 August 2023 to acquire up to 28.33% of Limeco Resources Limited, the owner of a Limestone project located 22km west of Lusaka in Zambia for an aggregate of $5.1 million across two tranches. The project comprises of a limestone quarry with an estimated non-JORC compliant mineral resource of more than 73 million tonnes. FRG said it has been keen to add a production asset to its portfolio. It believes this is a unique opportunity for Firering to diversify its investments and secure a stake in an advanced project which is commission ready with the potential to be in production within a year.

Comment: Shares of FRG have perhaps rather unfairly been on the back foot since the autumn. However, it would appear that the company is back with a bang in the wake of the latest option on a significant production asset, something which should get the company back on the watchlists in coming months.

Horizonte Minerals (HZM), a nickel company developing two Tier 1 assets in Brazil, published its unaudited financial results for the six-month period to 30 June 2023. Approximately 65% of the overall construction of Araguaia was completed as of 30 June 2023, with physical site construction 53% complete. Several major milestones were achieved during the period including the delivery of the Rotary Kiln and commencement of ore mining. Liquidity and funding sources of US$344 million as of 30 June 2023.

Comment: HZM shares may be coming off year highs last month, but it is still the case that the company has provided a masterclass in how to develop a complex project. The funding, and the milestones achieved to date continue to impress.

Tekcapital (TEK), the UK intellectual property investment group, provided a summary of latest developments across certain of its portfolio companies. Belluscura (BELL), announced on 16 August 2023 it has received purchase orders for over 6,500 of its next-generation DISCOV-R portable oxygen concentrator. MicroSalt Ltd has been making steady progress towards its planned IPO. Lucyd Ltd and its US subsidiary, Innovative Eyewear Inc announced a multi-year, global licensing agreement with Authentic Brands Group for Reebok® Smart Eyewear. There was significant update to the Lucyd App, its patent-pending, voice-controlled onramp to ChatGPT for smart eyewear.

Comment: It can be seen from the latest update from TEK that its portfolio companies are delivering significant fundamental progress, something which is certainly at odds with the position of its share price near the year’s lows. This provides us with a reminder that investment companies and bear markets do not tend to go well together, however undeserved such a state of affairs would appear to be.