31/08/2023

The FCA issued an update on its FCA’s wholesale data market study. It announced it was on track to publish its wholesale data market study report by 1 March 2024. The regulator said well-functioning data markets are important for economic growth and the UK’s international competitiveness. Its work is a key part of its broader strategy to strengthen the UK’s position in global wholesale markets.

Comment: Just how a regulator can boost business remains something of a mystery, given that history shows the opposite. Perhaps the FCA should focus on boosting liquidity in the stock market rather than tinkering with the wholesale market, and encourage UK companies not to list in the USA by improving the listing experience over here. Kafkaesque rules and red tape, plus the cost of dealing with them, are the main barrier to competitiveness.

I3 Energy (I3E) announced an interim report and operational update for H1 2023. H1 2023 revenue (net of royalties) of £75.5 million (H1 2022: £101.6 million), net operating income of £38.9 million (H1 2022: £68.8 million), and cash flow from operations of £24.3 million (H1 2022: of £48.4 million). The company said it completed its planned Q1 capital program, drilling 8 gross (5.5 net) wells in its Central Alberta, Wapiti and Clearwater acreage, re-financed its outstanding loan notes which were due in May with a new CAD 100 million loan facility and successfully conducted 20 planned operated facility turnarounds. Its asset base continues to perform well, having averaged 20,640 boepd in H1, 9% higher than the same period last year and exiting H1 at greater than 22,000 boepd, and with 2P reserves of 182 mmboe provides a solid platform for growth.

Comment: Shares of I3 remain near the levels they were at the start of last year, something which seems totally out of kilter with the operational progress the group has made. One would expect an improvement in the shares over the rest of the year given the platform for growth the company has set up in the first part of 2023.

Ananda Developments (AQSE:ANA), a company developing cannabinoid medicines, provided a corporate update. The company said the response to the announcement earlier this month that the endometriosis trial is being funded by NHS Scotland has been extraordinarily encouraging. Suddenly, it was experiencing awareness that a cannabinoid medicine has the potential to be a mainstream licenced medicine for this condition which affects more than 190 million women globally. The decision to pause medical cannabis flower operations at DJT Plants until there is a clear path to a profitable operation is the right one. It has resulted in the development of an innovative and cost-effective strategy to pursue the breeding programme with grant funding, which reduces Group costs significantly and gives us the agility and flexibility required to properly pursue the clinical trials with the aim of NHS acceptance.

Comment: The NHS acceptance for ANA is the big validation for the company, and it should be the case that the share price responds in kind from current levels given the scaleability and market need for what the company is developing.

Zenova Group (ZED), announced that Omnis, its distribution partner in the USA, has entered into a sub distribution agreement with Petra Industries, a renowned distributor of consumer products via the retail sector. Through this strategic collaboration, Petra Industries will serve as a warehousing, distribution and logistics partner to improve market access and shorten supply chains and deliveries for Zenova customers in the USA. ZED said it was confident that this partnership will not only bolster its presence in the US market, but also provide it with unprecedented opportunities for growth.

Comment: Given the potential of the USA, it is evident that the market is being rather reticent regarding the valuation of ZED. One would expect that updates regarding this opportunity will eventually move the dial, sooner rather than later.

Kodal Minerals (KOD), the mineral exploration and development company focused on lithium and gold assets in West Africa, announces that the company, and Hainan’s wholly owned UK-incorporated subsidiary Xinmao Investment Co. Limited have approved an extension of the previously agreed deadline of 31 August 2023 for the completion of the funding package announced on 19 January 2023.  The deadline has now been extended to 30 September 2023. KOD said it and Hainan continue to work together to finalise the transaction as well as continuing the pre-development work to allow a rapid transition to the construction phase when the Funding Transaction is complete.  In August, Hainan completed a pre-payment of $3.5M to Kodal.

Comment: Given that the funding package is still on, it is intriguing that the market has priced KOD as if it is not. Current share price levels are therefore in the value zone given that we are trading at half April’s 0.90p peak.

Power Metal Resources (POW), the AIM listed metals exploration and development company, announced an exploration and project development update covering multiple projects within the company’s portfolio. This included the Tati Gold, North Wind Lithium, Athabasca Uranium projects, The company said that shareholders will be reassured that despite difficult conditions in the capital markets, it is pressing ahead with its operational plans and, in its view, continues to generate significant value.

Comment: The arrival of mining heavyweight Sean Wade has seen POW entering a period of consolidation for the shares, and a rejig of focus. The key here is generating value, something which should start to feed into the share price over the remainder of 2023.

Thor Explorations (THX) announced drill-intersections of significant gold mineralisation from the Makosa gold deposit and the Sambara prospect at its Douta Gold Project, Senegal. The company said it was pleased to announce further encouraging drilling results from Thor’s Douta Project in Senegal. The main purpose of the drilling has been to advance the project towards development by upgrading more of the resource to indicated classification and also to commence detailed metallurgical test work that is focussed on achieving the most suitable and efficient ore treatment and extraction process. Once all the drilling results are in, it looks forward to updating its Mineral Resource Estimate to form the basis of a preliminary feasibility study.

Comment: Perhaps rather unfairly, shares of THX have retreated since the news of its push into lithium. However, the run up to the MRE update should provide fresh momentum from current share price levels.

Rosslyn Data Management (RDT) a fund raising of £3.3m at 0.5p with a CLN of £0.6m and a 50 into 1 share consolidation is announced.  This cloud-based enterprise data analytics platform had a Mkt Cap of just £1.7m. The recent Trading Up-date for its April Y/E reported increasing revenue momentum whilst successfully maintaining a tight focus on cost control, enhancing efficiency, and reducing cash burn. Revenues are £2.9m and the Annual Recurring Revenue is 20% higher at £2.6m and expected to constitute at least 79% of total revenue in FY23, ‘sticky’ revenue is attractive.  Gross margins improved to 30% and should improve further as non-core businesses are closed or sold. The revenue growth primarily reflects new customers won during the year but also increased spending from existing customers as the service provision expands. As the strength of Rosslyn’s new platform has enabled it to enrich data, such as providing insight into diversity and sustainability within the supply chain.

Comment: RDT were unfairly valued for its IP and today’s announcement helps to restore faith in the AIM markets ability to provide growth finance for loss making technology companies. In time this will seems an astute entry price.

Oxford Cannabinoid Technologies (OCTP), the pharmaceutical company developing prescription cannabinoid medicines, announced its final results for the year ended 30 April 2023. The company said this has been a defining year for Oxford Cannabinoid Technologies, marked by a number of major milestones and significant achievements. The dedication, expertise and relentless pursuit of excellence by its team has delivered the transition of OCT from pre-clinical stage to a clinical-stage pharmaceutical company. It has seen two of its programmes complete their pre-clinical stages during the year with one of them moving into a Phase I clinical trial in Q2 2023 and are well-positioned for future clinical developments.

Comment: OCTP’s strong cash position, and bit between the teeth management, underline the transition of the group from pre-clinical to clinical, at a time when medical cannabis is increasingly in the spotlight.

Helium One Global (HE1), the primary helium explorer in Tanzania, updated on progress at its Rukwa (100% Operated) project area ahead of its Phase II drilling programme. The company said it was delighted with the continued progress that it has achieved in the lead up to spud.  It now has an experienced crew in place to carry out our 24-hour drilling programme, the rig is almost completely rigged up at site and the last few long lead items will arrive shortly. It also recognises the contribution made by Zenith in assembling an experienced, first-class crew to drill this well. This is an incredibly exciting time for the company as it approaches the spud of Tai-C in the second half of September.

Comment: With the company saying itself that it is approaching spud, it would appear that we have the easiest trade on the market for those with a one month view. Even more interesting is that so far the nearer the date, the cheaper the share price, suggesting this is not the crowded trade one might have expected.

Union Jack Oil (UJO) a UK focused onshore hydrocarbon company, announced that operations have commenced on the Wressle-1 well to install a downhole jet pump and associated surface facilities as part of the planning to optimise future production. The company said industry sources indicate that over 90% of oil wells employ artificial lift during their life-cycle, therefore, the natural sequence of the installation of a jet pump on the Wressle-1 well offers a reliable method of ensuring the continued operation and the optimisation of its future production performance.

Comment: UJO just squeezes it its second RNS of the month, after announcing that it has hit $17m revenues at Wressle. Rather strangely, this achievement has seen the stock hit 1 year support, although it may be suspected that the 20p zone will be the floor for the shares.

Coro Energy (CORO), the South East Asian energy company with a natural gas and clean energy portfolio, announced that it has received the £1M proceeds due from the sale of ion Ventures Holding Ltd announced on 24 August 2023. It also announces that, further to the successful Wind Energy Service Contract award in the Philippines, it has contracted the meteorological mast for its 100MW onshore Oslob Wind Power Project.

Comment: CORO has been and may continue to be a frustrating market. The £1m received today may start to change this state of affairs, but this is one of those situations where holders may have to remain patient.