06/07/2023

Yesterday, Zenith Energy (ZEN), the international energy production and development company, announced that its newly incorporated fully owned subsidiary in the State of Texas, Zena Oil & Gas LLC, has conditionally agreed to fully acquire a portfolio of mineral leases and oil and gas wells in the State of Texas, United States of America from the wholly owned subsidiaries of Beam Earth Group Ltd. ZEN said it was pleased to have conditionally agreed our second acquisition in the USA. Texas is a favourable oil and gas jurisdiction with many attractive qualities for junior operators such as Zenith, specifically with regards to fiscal terms and the availability of equipment and technical expertise.

Comment: Zenith has quickly acted on its move to develop U.S. revenue, and arguably is in one of the best States in the land to be active in oil and gas. One would expect this to filter into the company’s very modest market cap relatively quickly this summer.

Cyanconnode (CYAN) reported its year-end trading update to March 2023.  Although revenue is set to be significantly higher than last year’s £5.5m and there is an order book from India alone of some 4.2m meters and growing. Its margins, however have been hit and EBITDA expectations are lowered. CYAN is a leader in Narrowband Radio Frequency (RF) Smart Mesh Networks, and is the primary vendor of smart meter connectivity technologies in several states across India while also targeting other countries. The benefits to the power company clients are established beyond doubt as it greatly improves billing and collection efficiency.  In January 2023, £5.5m was raised at 17p supported by directors to win orders and the price has slipped back. Its cash is estimated at £4.2m and the interim losses were £2.2m.

Comments:  The update illustrates the challenges for a small company in developing a massive markets opportunity.  The orders will eventually generate recurring revenue but with Cyan’s high-cost base it struggles to reach critical mass and sustainable profitability. Operational efficiencies now seem more important than winning new orders; turnover is vanity, profits are sanity but cash-flow is king, further funds are  likely to be needed.

HeiQ Plc (HEIQ), a company in materials innovation, announces that MAS Holdings, a global apparel & textile manufacturing and tech conglomerate headquartered in Sri Lanka, has secured a stake in HeiQ AeoniQ GmbH, a subsidiary of HeiQ Group that will produce HeiQ AeoniQ™. With this $2.5 million investment ($1.5 million with the contract signature, and $1 million upon reaching a mutually agreed milestone), MAS becomes the first manufacturer to partner with HeiQ AeoniQ™ in their efforts to provide a sustainable alternative to polyester and nylon. HEIQ said that with the introduction of HeiQ AeoniQ™, it solidifies its unwavering commitment to disrupting the textile industry -a sector that has long held the dubious distinction of being the world’s second-largest polluter.

Comment: It was difficult to resist looking at HeiQ today in the wake of the investment news and the reminder that the textile industry is one of the biggest polluters on the planet.

Emmerson (EML), the Moroccan-focused potash development company, provided an update on its corporate and operational activities at the Khemisset Project for Q2 2023. The company said its primary focus has been obtaining the environmental approval for the project. The environmental approval has recently been referred from the regional level up to the national Ministerial Committee.  As soon as the permit has been granted, we will move to complete a BFS, which will include updated numbers for the market. It expects that this study, which is a requirement of banks and other financiers, will take approximately six months.

Comment: Apparently there are only four stages to Nirvana, but many more for Emmerson in terms of its flagship Khemisset Project. At least the market can look forward to the BFS, with its updated numbers, to satisfy the financing requirements, and eventually leading to a more heavenly experience for shareholders than of late.

Horizonte Minerals (HZM), a nickel company developing two Tier 1 assets in Brazil, is pleased to announce that it has received its mining approval permit for its 100%-owned Araguaia Nickel Project  in Brazil. The company said it was pleased to announce the approval to begin mining activities at Araguaia, another important milestone for Horizonte. The approval allows ore to be mined and stockpiled with the aim of mitigating a key commissioning risk as part of its mine-to-mill strategy ahead of the plant start-up next year.

Comment: The gentle uptrend on the HZM share price chart underlines that the company is moving ahead in a slick fashion, perhaps in contract to some of its peers. We should be treated to a decent run up ahead of the plant start-up.

Canadian Overseas Petroleum (COPL), an international oil and gas company, gave an update on its operations. The company said it is progressing on all fronts outlined in its last Operations Update. Its Gas Gathering System Upgrades are on schedule, and it was fortunate to have been able to acquire the necessary high-pressure production equipment it requires in Alberta which alleviated supply chain issues in the United States. With the required upgrades to its field gas gathering system nearing completion, it is focusing its attention on a revised injection strategy to return the field to its designed depletion strategy which should result in a return to the previous production peak and an increasing production profile.

Comment: A surprisingly business as usual update from COPL, which may be what the company needs to get its share price back off the ground, given the early 2023 issues and the need to get back credibility in the market.

i(x) Net Zero (IX.), the investing company, announced that its portfolio company, WasteFuel Global, LLC, has secured a $10m investment from bp, the multi-national energy company. The investment will further assist WasteFuel’s plans to develop a global network of plants to convert municipal and agricultural waste into bio-methanol, a biofuel which could play a significant role in decarbonising hard-to-abate sectors like shipping.

Comment: In current stock market conditions any financial backing is welcomed as manna from heaven. In the case of i(x) one has to say that the $10m from BP is nothing short of incredible, both in its own right and on the basis of being the ultimate validation.

Zinnwald Lithium (ZNWD), the European focused lithium company announced that it has been granted an additional exploration licence covering approximately 4,933.9 hectares  in the Erzgebirge region of Saxony, Germany.  The Bärenstein Licence has the potential to provide additional resource upside to the Company’s Project and results in continuous licence coverage from the Zinnwald Mining Licence to the Falkenhain Exploration licence, thus complementing the company’s strategy to potentially develop future operations in this area.

Comment: Shares of ZNWD have perhaps been treated rather unfairly since the peak above 15p in May. One might expect that following today’s additional exploration licence news we may see the stock return to favour.

Andrada Mining (ATM), the African technology metals mining company, provided assay results for the inaugural drill programme undertaken over the B1 and C1 pegmatites, located within the ML129 mining license and referred to as the Spodumene Hill Project. The company said the highlighted intersections provide a promising starting point for the next phase of exploration which will aim to define the extent of these zones both laterally and with depth. It has also initiated a metallurgical programme to investigate the optimal beneficiation process for the recovery of both lithium and tantalum, whilst also producing tin as a by-product.

Comment: ATM shares have been rather more appreciated in H1 2023 than for much of the recent past, and newsflow such as today’s only serves to highlight this fact. One would expect the stock to continue its positive re-rate of late as the next phase of exploration at Spodumene Hill continues.

Golden Metal Resources (GMET), a mineral exploration company focused on tungsten, gold, copper and silver within Nevada, USA, announce the company has staked claims over a significant footprint within the Kibby Basin, where lithium brine discoveries were recently made. GMET said the staking of the claims at the Lithium Properties, which are located only a few kilometres from Pilot Mountain, is a positive step for our Nevada business, especially as the footprint now within the Lithium Properties includes an area less than 250m from one drill hole, which encountered a 169m thick zone of lithium brine mineralisation that was determined to be open in all directions.It is looking forward to informing the market as to next exploration steps on our newly acquired Lithium Properties.

Comment: GMET has not only lived up to its initial promise in terms of significant newsflow soon after coming to market, as today’s announcement underlines, it has exceeded it. Adding Lithium to its portfolio adds to its position as a company building itself up as being front and centre in terms of current U.S. commodities security concerns.

Graft Polymer, (GPL) the specialty chemicals company offering modified polymer solutions for refiners, compounders and processors announces the signing of an R&D and Supply agreement with Gabriel Chemie for a year. GPL said this agreement is a significant milestone in creating a strong platform from which to develop and enhance its product range. It is building a number of partnerships with best in class companies and it very much look forward to working with Gabriel Chemie who are a standard for excellence in masterbatch production. This agreement should take our R&D onto the next level with benefits for our competitive positioning, evolving contract pipeline and ability to deliver compelling cashflow to shareholders.

Comment: Hot on the heels of yesterday’s doubling of production capacity new, we have GPL signing an agreement to enhance its product range. As the company says, it is building the foundation for a business which should throw off cash, something which certainly is not factored into the GPL share price currently.

Xtract Resources (XTR) announced the preliminary unaudited results for gold production for the Fair Bride deposit and other mining within the Manica Concession in Mozambique, for the three-month period ended 31 March 2023. The company said it was very pleased with the progress being made at Manica and the first Quarter performance was excellent when one considers the effect of the heavy and prolonged rains that the Project was exposed to during the post-commissioning phase. The second Quarter results have seen a continued improvement in performance with more consistent gold production in April and May returning 68 and 66kg respectively. It will provide regular updates and anticipate continued improvement in the unit cash cost of production as the benefits of improvement and optimisation of mining, processing and grade control are felt by the operation.

Comment: Xtract shares have rebounded in recent days ahead of today’s update from Manica, something which reminds the market of the company’s production credentials, and why the bears have overdone the downside.