25/08/2023

Falcon Oil & Gas (FOG) noted that Falcon Oil & Gas Australia Limited’s joint venture partner, Tamboran (B2) Pty Limited, has given notice that the 2014 farm-in commitments have now been met, having reached the associated cost carry commitment of A$264 million. Falcon Australia has been carried by its partners, formerly Origin Energy and more recently Tamboran since 2014 through the drilling and testing of five vertical wells and three horizontal wells. Falcon’s group bank balance as of 24 August 2023 was $15.3 million and thus it remains in a strong financial position.

Comment: One would have thought that the strong cash position and news regarding the farm-in commitments will be enough to deliver a bounce for FOG shares off their one year lows near term.

Zenova Group (ZED) Interims to end May 2023, are reported from this provider of proprietary fire safety and installation management solutions to commercial markets.  The revenues of £108,000 with a reduced operating loss to £0.71m illustrate the stage as it moves through R&D, Testing to the commercialization. Headway is being made with its international Distributor network, Housing Associations and NHS all are large market opportunities helped by a definitive study by the John Moores University evidencing the effectiveness of its fireproof paint. The aerosol FX  500 fire extinguishers can put out any-fire including Lithium Batteries and 7,500 being delivered to its German distributor. Its scalable manufacturing in three separate jurisdictions (Europe, UK and Canada) should help Zenova to satisfy the expected growth while maintaining its 52% gross margins. There is net cash and loans available to buy perhaps six months pipeline and  Zenova expect to show stronger results soon.

Comment: If the potential at last turns into meaningful contracts the £5.5m mkt cap will start to look cheap.

Zinc Media Group (ZIN), the award-winning television, brand, and audio content production group, is having a record time, yet the shares at 88p are well off the year’s 112.5p high. Yesterday afternoon Directors added 303,856 shares to their holding at the current price. Last month’s Trading update ahead the Interims to June reported total revenue won and due to be recognised in FY23 is £31m. This figure exceeds the total revenue generated in the whole of FY22 and represents Zinc’s best performance at this stage in a financial year for over a decade.  After the Edge acquisition there are 12 business and 8 are new since 2020 and all divisions continue to deliver revenue growth despite increasing economic headwinds. The pipeline remains strong with programs such as Sunday Life, Putin V the West and  Brits in the Sun, a further £7m of revenue for recognition in FY23 is  in highly advanced discussions.  The net cash, we estimate is around £5.4m which is sufficient for the significant planned organic growth. The interims will be reported towards the end of September.

Comment: It seems a clear signal that the Interims could be a profitability inflexion point and in turn be a driver for the shares.

Shearwater Group (SWG), the cybersecurity, advisory and managed security services group, provides an update on the timing of its final results for the year ended 31 March 2023 and on trading. The company said a number of the delayed contracts have now been received and revenues in the first quarter exceed levels for the comparable period last year. The significant investment made in the Software Division is now delivering on a number of promising opportunities and with market conditions in the sector being more favourable, the Board is confident in seeing a much improved financial performance in the current year.

Comment: With shares of SWG near their lows for the year ahead of today’s bullish update, one would expect a 10% – 20% mark up for the stock over the next day or so, even if this fades after.

Bradda Head Lithium (BHL), the North America-focused lithium development group, announced its audited financial results for the year ending 28 February 2023, and the Management’s Discussion and Analysis for the same period. The company said several catalysts are on the way for Bradda in H2 2023 and H1 2024, as it continues to develop its assets. Drilling is wrapping up at Basin with an updated MRE being worked on currently. It has an internal target of a +1Mt LCE resource, which would trigger the second royalty payment of $ 2.5 million from Lithium Royalty Corporation. It has also mobilised a drill rig to kick-off the second drill programme in 12 months at San Domingo, with the primary aim to delineate a resource. Funding is in place for these programmes.

Comment: Given all the positive catalysts at BHL, and the relatively strong funding position, it is still surprising that the shares remain at a relatively low position in their recent range.

Premier African Minerals (PREM) announced a placing and subscription to raise £4,000,000 before expenses at an issue price of 0.35 pence per new ordinary share for the ongoing Zulu Lithium and Tantalum Project Pilot Optimisation where the company is targeting revenue generating production by November 2023. The company said based on current projections this funding and the arrangements set out below is expected to see Zulu pass through the current interim remedial situation and allow the company to reach target nameplate production at Zulu.

Comment: If this is the last raise prior to production the market may be sympathetic to PREM, especially given that the £4m raise has been carried out at the floor of the recent range.

Corcel (CRCL), the pan Angolan and Brazilian focused oil and gas company, announced that it has received notice from the operator of Block KON-11 in Angola, preparatory work has begun for drilling and appraisal on the block, located in the Kwanza Basin.  The company said the commencement of activity on its Angolan acreage is a significant milestone for the company as it refocuses its strategy and look to create material value for its investors. This news is an important part of Corcel’s evolution as its focus on oil and gas opportunities.

Comment: Hopefully from the bull perspective, the commencement of activity in Angola could be the trigger to turn around the decline in the stock we have seen since April.

Kibo Energy (KIBO), the renewable energy-focused development company, announced that its subsidiary MAST Energy Developments, has released its unaudited interim results for the six months ended 30 June 2023. The company said as reported in an MED RNS dated 4 August 2023, the completion date of the JVA has been extended and is now expected around 31 August 2023. Under the JVA, the Institutional Investor will inject all required capital into the joint venture with an expected total investment of c. £5.9m, with no funding contribution required from MED.

Comment: Both Kibo and MAST have thus far not exactly set the stock market on fire, but the message regarding a £5.9m cash injection may provide comfort to some. This is especially so given that both shares are near year lows.

Panthera Resources (PAT), with assets in West Africa and India, announced that LCM Funding SG Pty Ltd  has successfully completed its due diligence and issued the Funding Confirmation Notice. The company said following an extended due diligence process, it is pleased that LCM has reaffirmed its view that IGPL has a meritorious claim against the Republic of India.  LCM’s detailed examination, supported by advice from multiple legal, mining and valuation experts over many months reinforces the view that an actionable expropriation, amongst other Treaty breaches perpetrated by India, has occurred to an asset of substantial value to the company.

Comment: PAT shares have been in something of a holding pattern over the past couple of months, something which should be resolved to the upside following today’s news regarding an “asset of substantial value to the company.”

i(x) Net Zero (IX.), the investing company which focuses on the Energy Transition, announced that Enphys Acquisition Corp. (NYSE: NFYS) has filed a preliminary proxy statement in connection with an extraordinary general meeting of shareholders of Enphys for the purpose of, among other things, extending the time by which it has to consummate an initial business combination from October 8, 2023 to July 8, 2024. IX said it believes that Enphys has significant growth potential and it is supporting the company as it looks to establish itself as a leading biofuels operator in the alternative energy sector in Latin America.

Comment: Shares of IX. have quadrupled since their April lows, something which is not a typical thing to happen in the small cap space of 2023. Today’s RNS should be supportive to further gains.