18/07/2023

Andrada Mining (ATM), the African technology metals mining company, announced that it has raised £7.7million (c.US$10million) through the issue of 77 unsecured, convertible loan notes of £100,000 each to new and existing investors. The company said the raise demonstrates the strong support that Andrada has from its existing shareholders and other investors. The proceeds are to be used for ongoing capital expansion programmes related to the lithium and tantalum development. In addition, the funds will be used for working capital purposes as Andrada progresses its exploration programme, and commences a lithium feasibility study, to further consolidate its competitive lithium advantage within the Erongo region of Namibia. These developments underpin the Directors’ belief that Andrada is well-positioned to be a significant supplier of technology metals globally and to be the first AIM-listed lithium producer.

Comment: Shares of ATM have more than doubled from their March lows, and it is certainly timely and opportune that the company has raised money in the wake of recent strong price action in the stock. Investors will no doubt be boosted by the prospect that ATM’s race to production is well under way.

Great Southern Copper (GSCU), the company focused on copper-gold exploration in Chile, announced high-grade copper assay results from rock chip samples of its Abundante prospect located within the Especularita Project. The company said the geology of the prospect displays characteristic evidence of being a tourmaline breccia pipe, many of which are known to host high-grade copper deposits. Furthermore, tourmaline breccia pipes are often known to occur in clusters. Therefore, the company will fast track its exploration efforts at Abundante, including a detailed in-fill drone magnetics survey now in progress, to advance this prospect for scout drilling.

Comment: As previously noted, GCSU has been a surprisingly quiet play, in contrast to strong fundamental updates such as we have been treated to today. Perhaps if there was more of a light on the company the shares would be rather further away from their lows of the year than currently.

Quantum Exponential Group plc (AQUIS: QBIT), a company focused on investing in quantum technologies, is pleased to announce its audited final results for the year ended 30 April 2023. The company said with seven investments now made, its most recent being in Delta g, a UK based gravity sensing hardware and technology development company, it is increasingly excited about the pipeline of businesses it is seeing, and in its ability to add to our investee portfolio going forward.

Comment: There is little doubt that QBIT is a company investing in a hot space. However, in bear markets such as we are currently for small caps, such companies really need to discover big winners to move their market cap in a meaningful way.

Revolution Beauty Group (REVB), the multi-channel mass beauty innovator, and boohoo Group plc (BOO), an online fashion group, announce that they have entered into a settlement agreement under which:  boohoo has agreed to withdraw its requisition of a general meeting of the Company under section 303 of the Companies Act 2006. Bob Holt OBE and Derek Zissman have agreed to resign from the board of Revolution Beauty, although Bob will remain with the business as interim CEO until 31 August 2023. The company said the Board will continue to work with Revolution Beauty’s auditors towards the completion of the audit of the FY23 Accounts, which work is expected to be completed by the end of August 2023.  Following completion of the audit, Revolution Beauty will convene an annual general meeting, expected to be held in late September or early October 2023.

Comment: With “informed” speculation that REVB is a great recovery play, and business could go great guns, it is rather disappointing that the revered Bob Holt is exiting in Moses fashion before the Promised Land, and of course the FY23 accounts see the light of day.

Oracle Power (ORCP), a developer of energy and natural resource projects, announced receipt of a topography survey report on its Green Hydrogen Project site in south-east Pakistan. Further to the Company’s announcement of 19 December 2022, the survey was commissioned by its subsidiary, Oracle Energy Limited, from, and conducted by, Fugro Pakistan B.V., represents a further step forward in the development of this flagship project. The company said the successful conclusion of the topography survey for its Green Hydrogen Project marks a further significant step forward. It is now able to proceed with site clearance and can incorporate the survey data into project design and planning activities. It also sets the stage for the next phase of its Green Hydrogen Project, which includes the expected near term completion of the Green Hydrogen and Green Ammonia commercial and technical feasibility study.

Comment: Shares of ORCP have been punished of late, in the wake of the latest fundraise. However, the company is still moving forward on ambitious and large scale projects, which even if its share of the proceeds was only marginal, could be transformational for the company.

United Oil & Gas (UOG), the full-cycle oil and gas company, issued a trading and operations update summarising recent operational activities, providing trading guidance in respect of the half year to 30 June 2023. The company said it has had a strong start to the first half of the year from its Egyptian drilling programme with two successful development wells coming onstream and positive results from our low cost workover programme. In parallel, it remains focused on securing a partner in Jamaica for this potentially transformational licence and it is delighted to have multiple quality potential partners advancing their evaluation of the project.

Comment: UOG continues to be a frustrating company for the bulls, particularly with its perhaps overly blunt RNS wording. At the same time the undercurrents in the market regarding cash / debt are not fully addressed. Perhaps if they were made clear once and for all the share price of UOG would be multiples of where it is now.

Osirium Technologies (OSI), a vendor of cloud-based cybersecurity and IT automation software, announced an update on trading for the six months ended 30 June 2023. The company said it was pleased to report a strong start to H2 2023, with a healthy pipeline underlined by a growing pool of prospective new customers, as well as expected customer renewals, and contract expansions and upsells which are expected to contribute to an increase in ARR at FY23. Notwithstanding the positive trading momentum in the first half of the year, the Directors anticipate that the company will be required to raise additional capital before the end of the year and are exploring all options in this regard.

Comment: One wonders why companies in the new economy refer to ARR, when alas the acronym holds no sway with most investors. The confession that the company will be required to raise additional capital was / is unnecessary, as one would imagine most companies are on the stock market to raise money in such a timeframe.

CPP Group (CPP), a provider of assistance and insurance products, confirmed that it expects to report financial results for the six months to 30 June 2023 in line with the Board’s expectations. On a reported basis, the Board expects revenues from continuing operations to be circa +22% ahead of the prior year, and, on a constant currency basis, to be ahead of the prior year by circa +26%.  EBITDA from continuing operations is expected to be broadly in line with the prior year at circa £2.9 million (H1 2022 restated: £2.9 million). The company said from a trading perspective the Group’s performance in the first half was encouraging. Additionally, growth, renewals, and new client wins in Blink provide strong evidence that its strategy and approach is appropriate, and more importantly, starting to deliver positive outcomes, though at a somewhat more measured pace than originally expected.

Comment: An off the radar company which is flourishing despite the current macro-economic backdrop should be taken notice of. The revenue jump of more than a fifth for CPP suggests that this could be a decent growth situation.

Concurrent Technology (CNC) After the disappointing finals to December yesterday’s Interim Trading update came as a flash in the dark with Revenue 62% ahead at £12m. The PBT increased sharply to £1m from a low base and the shares rose 22% to 70p.  CNC supplies mission critical, high performance and robust computer products and systems sold mainly to the military and defence but also to the telecommunication and aerospace sectors. Ahead of this update a systems contract for £1.25m was won from a FTSE 250 company to supply a custom set of embedded systems for a national defence installation. This up-selling of higher margin products from the existing plug-in-cards business validates the strategy to broaden the utility of its products and to upgrade existing clients from legacy technologies to the more powerful and higher performance and margin solutions. The order intake was £14.5m and is added to the order backlog of £29m which arose from supply chain shortages of components, which are now easing. This cost increased working capital and net cash fell sharply to £4.5m from £12m, but this cash outflow should ease as emergency stocks holdings are reduced although perhaps not enough for the dividend to be reinstate. Profits for December 2023 of £2.5m would give a P/E of 35x.

Comment: Strong growth seems priced-in although acquisitions and or a return to paying dividends could justify the rating.