28/07/2023

Sovereign Metals (SVML) provided its quarterly report for the period ended 30 June 2023. Subsequent to the end of the quarter, Rio Tinto made an investment of A$40.4 million in Sovereign resulting in an initial 15% shareholding plus options to increase their position to potentially 19.99% within 12 months. Investment proceeds will be used to advance the Kasiya Rutile-Graphite Project (Kasiya) in Malawi. SVML said Rio Tinto’s investment represents a significant step towards unlocking a major new supply of low-CO2-footprint natural rutile and flake graphite. Under the Investment Agreement, Rio Tinto will provide assistance and advice on technical and marketing aspects of Kasiya including with respect to Sovereign’s graphite co-product, with a primary focus on spherical purified graphite for the lithium-ion battery anode market.

Comment: It is interesting that shares of SVML are only marginally higher following the transformational news that Rio Tinto has made an initial 15% investment in the company. Presumably the market has mistaken the international mining giant for someone else, hence the lack of movement to the upside for the shares.

Upland Resources (UPL) announced significant progress in the development of Block SK334 in Sarawak. The company, together with its joint venture partner in Sarawak, Big Oil Ventures sdn bhd are now in the formal process of assessing an onshore rig capable of developing Block SK334 in Sarawak. UPL said it is very satisfied at the effective pace of progress being made by all the team at UBO and it continues to work relentlessly to maximize the potential of this global scale asset in the most time efficient manner. It looks forward to updating the market on further progress throughout the month of August.

Comment: From this RNS, we have a decent window for followers of UPL to look forward, given the promise to update on further progress at Block SK334 next month. Ideally, the shares continue their recent squeeze higher in the run up to news.

Invinity Energy Systems (IES), a manufacturer of utility-grade energy storage, announced the sale of a 0.2 MWh Invinity VS3 flow battery system to VSUN Energy, a wholly owned subsidiary of Australian Vanadium Limited (ASX: AVL), for use by leading Australian power provider Horizon Power. The company said due to their durability, safety and reliability, vanadium flow batteries have a vital role to play in reducing the use of fossil fuels in power generation, particularly in remote communities. Invinity is pleased to be supplying our proven and commercialised VFB technology, that has important Australian roots, for VSUN and Horizon Power who are spearheading the use of alternative-to-lithium batteries for energy storage in Australia.

Comment: IES has served up a decent flow of news in recent weeks, with the latest underlining the way that the energy storage space and its relationship to reducing fossil fuels is so important currently.

Seraphim Space Investment Trust (SSIT) continue to buy back shares having appointed JP Morgan to do so. The program as already moved the shares from 26p-40p. The company has approval to buy back 14.99% of the shares, but management says it will not be buying that many. There is £35m in cash. Investee companies are managing to raise money with six done at higher valuations and one at a lower valuation in the year to June 2023. Full year results will be published in October. The shares cannot be bought for above NAV, which is 92p a share, so there is still no current danger of that. The investments will grow on the back of increasing investment in satellite technology and the sector is worth trillions of pounds. The strategy is to reach a £1bn market capitalisation – more than ten times the current market capitalisation and quadruple the NAV.

Comment: The share buyback should help to reduce the discount to NAV and the spread. The share price has improved by 53% this month.

East Imperial (EISB), a purveyor of ultra-premium beverages, announced a partnership with Air New Zealand. A refreshing new cocktail will be hitting tray tables as Air New Zealand launches the first of its signature drinks onboard its international network. The company said today marks a milestone that the East Imperial team is proud of. The opportunity to partner with the iconic Air New Zealand brand is an honour that signifies a significant achievement for East Imperial. This collaboration allows it to further introduce East Imperial to a broader and strategically important US audience, showcasing our craftsmanship and commitment to creating exceptional drinking experiences.

Comment: Shares of EISB have risen this week ahead of today’s news, as some in the market presumably guessed it was coming. But at least the company does seem to be improving its marketing / distribution, something which is key to get the stock back up to last summer’s levels near 5p.

Oberon Investments Group plc (AQSE: OBE), the boutique investment management, wealth planning and corporate broking group, announced its results for the year ended 31 March 2023. The company said that a result of new teams, initiatives and acquisitions, as well as organic growth, revenues are expected to rise by at least 65% to over £8m in the current financial year. It has built on its platform for growth and with significant new hires in the investment management division, with new product launches, with strategic acquisitions and with a solid contribution from our corporate broking business, it expects strong growth in this financial year.

Comment: We have a surprisingly bullish update from OBE, which has clearly been beavering away as far as laying the groundwork for growth. This is all the more impressive since given the stock market conditions of the past couple of years, suggesting it will be even better placed should conditions normalise.

AQRU PLC (AQSE: AQRU), an incubator specialising in opportunities in DeFi, announces its unaudited financial results for the six months ended 30 April 2023. Operating highlights included investment into Streak.ai IPO, a conversational gaming and social platform leveraging ChatGPT and other large language models to capitalise on the exploding market of AI adoption. The company said it was delighted with the progress made by the Streaks.ai team and the launch of their conversational social and gaming platforms following its participation in their IPO. The AI sector continues to go from strength-to-strength and giving its stakeholders direct exposure to this market was a key strategy going into 2023.

Comment: It will be interesting to see how AQRU’s Streaks.ai investment flourishes over coming months, as the UK market is clearly rather thin on decent AI plays, which have been a key driver in the extended rally we have seen on the USA market in recent months.

GreenX (GRX) issued a quarterly activities report. The company’s claims for damages against Poland are in the amount of up to £737 million (A$1.3 billion/PLN4.0 billion), which includes a revised assessment of the value of GreenX’s lost profits and damages related to both the Jan Karski and Debiensko projects, and accrued interest related to any damages. In July 2023, GreenX entered into an Option Agreement with Greenfields Exploration Limited to acquire up to 100% of the Eleanore North gold project (Eleanore North) in eastern Greenland. Eleonore North has the potential to host a “reduced intrusion-related gold system” (RIRGS), analogous to large bulk-tonnage deposit types found in Canada. Subsequent to the quarter, GreenX completed a Placing to raise gross proceeds of approximately A$4.2 million (~£2.1 million) from new and existing investors (Placing). The next proceeds from the Placing will be used for exploration activities at the company’s projects in Greenland. Cash balance as at 30 June 2023 and prior to the Placing was A$8.7 million.

Comment: While there is clearly more to GreenX than its eye-watering claim against Poland, the outperformance of the stock underlines the positive perception of its Greenland activities in particular, with the claim effectively being a rather large potential bonus.

Pantheon Resources (PANR), the AIM-quoted oil company, provided an operational update and refined management estimates of preliminary development costs for the Ahpun field. The company said Netherland Sewell and Associates have advised that they require a little more time to incorporate all of the additional acreage and the newly developed understanding of the reservoir fluid composition. It supports their desire to provide the most robust report possible and is happy to allow further time. It is pleased to be on track to begin the Alkaid-2 re-entry during September/October as originally planned.

Comment: PANR needs to get its act together in terms of convincing the market of its act together as far as convincing the market that the sell off in the stock has been overdone. Delivering on this at Alkaid-2 in the early autumn could be the first step in achieving such an outcome.

Oracle Power (ORCP), an international project developer, updated on activities during Q2 2023. The company said it looks forward to advancing the next phase of flagship hydrogen Project as it awaits the findings of the feasibility study by thyssenkrupp, which will guide the next stage of its flagship project’s development and bring this exciting project closer to fruition. It also looks forward to updating the market on a potential  solar powered plant at Thar Block VI as well as progress at Northern Zone Gold Project, with drilling set to commence soon.

Comment: ORCP has done well so far this year in terms of setting up its portfolio and establishing the model of being a project developer. The key now will be to progress on significant milestones at Thar and in terms of its flagship hydrogen project.