05/09/2023

Golden Metal Resources (GMET), a mineral exploration company focused on tungsten, gold, copper and silver within Nevada, USA, published an Open Letter to Shareholders from the company’s Chairman outlining the progress that has been made on its mining projects in Nevada. GMET also said full trading on the OTCQB is expected to commence in the coming weeks, allowing U.S. based investors to more easily invest in the company going forward. Taken together, the announcements above set out the progress the Company has made in only a few months since Admission. Significant value has been added to the business and we will continue to drive the Company forward with the same tenacity throughout the rest of 2023 and beyond.

Comment: While many companies new to the market say that they will hit the ground running in terms of newsflow, GMET is one of the few who have really delivered on this, and seem intriguingly poised given the strategic value of Pilot Mountain in particular. One would expect a decent denouement here, as soon as the end of this year. The OTCQB move should help awareness and liquidity in GMET’s home geography.

Reabold Resources (RBD), the oil & gas investing company, provided a further update on developments in the approvals process for the onshore Colle Santo gas field in Abruzzo, Italy. The company said it was pleased with the speed and efficiency of the regulatory process in the Abruzzo Region to date and delighted to reach this stage of the Early Production Programme. It can see a clear pathway to generating revenue from gas to power in the near-term, and it believes this news considerably de-risks the granting of the full concession to LNEnergy and the small scale LNG project. Italy needs domestic energy supply to keep prices lower.

Comment: It is perhaps admirable that RBD continues to build its strategy, ignoring the market’s lack of appreciation, either via the share price or sentiment. It is up to RBD to continue developing projects, something that it has already proven it can do successfully at the top flight.

Rainbow Rare Earths (RBW) announced that the front end of the Phalaborwa pilot plant in South Africa has successfully produced its first batch of mixed rare earth sulphate, totalling ca. 3 kg. This major milestone has been achieved on time and within the expectations of the PEA in terms of reagent consumption/costs and recoveries. The company said the production of mixed rare earth sulphate from the front-end pilot plant is a major milestone for the Phalaborwa project and validates Rainbow’s strategy to recover rare earth elements from phosphogypsum stacks. This achievement not only de-risks Phalaborwa, it also opens up exciting opportunities for the company to apply the proprietary technology to other similar phosphogypsum resources globally, including at the Mosaic Uberaba stack in Brazil.

Comment: RBW is perhaps one of the few mining plays where events appear to have happened rather more quickly than many in the market may have been expecting. Certainly, today’s news should be a follow on driver for the recent rebound in the stock price.

Celadon Pharmaceuticals (CEL), a UK-based pharmaceutical company, announced that it has entered into a new contract for the commercial sale of its cannabis product with a second UK pharmaceutical company customer that the company anticipates could generate up to £1.2 million in revenue. The company said it was very happy to have signed a second sales contract with a new customer so soon after the first. Demand for its product continues to grow, and converting this interest into commercial sales remains its top priority.

Comment: Shares of CEL have been quite a firm market in recent days, presumably as some psychic investors looked into their crystal balls ahead of today’s announcement. Hopefully, a £1.2m deal is significant enough to re-ignite the momentum in the stock from earlier in the year.

Molecular Energies (MEN), the international energy company, published a circular to be sent to shareholders relating to the proposed sale of its Argentinian oil and gas business to PLLG Investments Limited, a company beneficially owned by Peter Levine, for a total potential consideration of up to $40 million. MEN said the proposals contained in the Circular represent the best interests of the Company. It is clear that the market is not appreciative of investment in Argentina and the current economic and political environment combined with the rampant inflation and severe restrictions on foreign investment have led the Independent Directors to conclude that the divestment of its Argentine business is appropriate.

Comment: It may be said that MEN is one of the many companies that underline how mispriced the bear market in small caps is concerned, with in some cases hardly any connection between market cap and asset value. MEN currently has a market cap of £12m, so $40m would be quite a result.

KEFI Gold and Copper (KEFI), the gold and copper exploration and development company, provided an operational update covering developments in Ethiopia since the release of the company’s Quarterly Operational Update on 9 August 2023. KEFI said that at Tulu Kapi it remains focused on final credit and board approvals for the project financing, ahead of project launch in Q4 2023, with first production expected by the end of 2025.

Comment: Hopefully the market is happy with an end of 2025 first production timeline. It has certainly been quite a journey at KEFI, especially given the way the stock is currently half the 1.10p April peak. Some might suggest that such a valuation is somewhat harsh.

Andrada Mining (ATM), an African technology metals mining company, confirmed that the Development Bank of Namibiahas served notice confirming that all conditions have been fulfilled or waived and that financial close has occurred. Accordingly, the Group is in the process of requesting the drawdown of the NAD100 million (c $5.8m) facility which are expected to arrive this week. These Funds will be used to expedite the implementation of the Uis Mine Stage II Continuous Improvement Project. ATM said the conclusion of the DBN funding is an essential component of the overall funding and development strategy. These proceeds will be used to implement the improvements at Uis Mine which will enhance the plant’s productivity and output. The targeted increase in the tin recovery rate should complement the royalty portion of the Orion funding by enabling Andrada to achieve the requisite thresholds of concentrate tonnages. The improvement in cost efficiencies and overall productivity at Uis, lays the foundation for the management of the lithium processing plant and other future operations.

Comment: A $5.8m drawdown facility means that the Milky Bars are certainly on ATM, which is certainly living up to its ticker code. Just as importantly we are reminded that the company is progressing at pace in terms of developing its projects and operations.

GetBusy (GETB), a provider of productivity software for professional and financial services, announces its unaudited results for the six months ended 30 June 2023. The company said core markets remain robust, driven by structural changes in the way people work and a strengthening mandate for security and productivity optimisation. Recurring revenue growth of 16% at constant currency to £10.1m, comprising 96% of total revenues. Gross margin remain strong at 89.9% (H1 2022: 90.4%) with greater volume of cloud revenue. Strong net revenue retention of 100.5% per month.

Comment: With gross margins of around 90%, and recurring revenue growth of 16%, it is hard to quibble about GetBusy. One would expect the latest share price breakout to have legs.

Luceco (LUCE), the supplier of wiring accessories, announced its unaudited results for the six months ended 30 June 2023. The company said it has been an encouraging first half for Luceco. Its gross profit margin improved as material and freight cost pressures continued to ease during the period, albeit partially offset by wage pressures. It continues to build an attractive M&A pipeline and it has further strengthened its balance sheet.

Comment: After trading sideways for much of 2023, it looks as though shares of LUCE are ready to break higher, helped along by the latest position on the balance sheet and profit margin.

88 Energy (88E) announced that it has executed a rig contract with All American Oilfield (AAO) for the use of Rig-111 to flow test the Hickory-1 well on the Alaskan North Slope. 88E said the execution of a rig contract is another important step as we advance towards the Hickory-1 well flow testing program planned for the 2023/2024 Alaskan winter operational season. It continues to be very encouraged by progress by its northern neighbour, Pantheon Resources, who recently announced a material, independently estimated, 2C contingent resource for the Lower Basin Floor Fan reservoir.

Comment: Until this week flying on the coat tails of Pantheon Resources may not have been a winning formula. But shares of 88E have stabilized in recent days, and this could market the start of  a meaningful turnaround.