We are all aware that cars are a tax magnet, and perhaps this is the way it should be given the relative luxury of driving around, as compared to schlepping around on public transport. However, this week’s initiative by the Government to roll back on the anti-car measures of recent years is somewhat puzzling. What was the Government doing while we were being hit by LTNs, ULEZ, private parking fines, 20mph speed limits et al? Of course, the answer is not much. What is interesting now is that all of a sudden in the run up to a General Election, there is alleged to be a rolling back of anti-car policy. Unfortunately, it is rare for policy or taxes of any kind to be rolled back. For instance, do not hold your breath on the end of the BBC license fee or Inheritance tax. I can assure you that neither will be abolished in our lifetimes. In terms of cars the best you can expect is things to be left as they are.
While it is perfectly understandable that the last day of the third quarter delivers a tsunami of interim results, the effect is of incessant sniper fire, which arrived on Friday at random times of the day. This made it rather difficult to see what the real news was at the end of the week, rather than companies scrambling to get their updates out on time.
One of the standouts of Friday came from the two announcements delivered by Alkemy (ALK). Here we started the day with news that its wholly-owned subsidiary Tees Valley Lithium has together with Weardale Lithium secured a joint funding package of approximately £613,000, which includes a grant of approximately £430,000 from Innovate UK. The good news regarding such grants is that they validate projects and secure the way for more grants. This de-risking of TVL led to the RNS at the end of the day which revealed a directors’ subscription from Paul Atherley and Sam Quinn at £1.40. As Mr Atherley recently got his market timing spot on at Pensana (PRE), this ALK trade may be worth watching as well.
There was another funding standout to end the week. This came in the form of £92,750 raised by Caracal Gold (GCAT). Part of this was from CEO Robbie McCrae. What is interesting here is that the Chairman’s statement mentions the wait for the prospectus, courtesy of the FCA. This may lead some to conclude that the wait for the FCA is the reason for the latest fundraise. Once again we see growth companies hamstrung by red tape, delays and bureaucracy. In particular, there are open ended timeframes for events. How long does it take to approve a prospectus? Why is one needed again anyway? How can a company budget for all of this?
A company that remains something of a head scratcher in terms of its share price, if nothing else, is CleanTech Lithium (CTL). Here the shares are sat at 48.5p despite two key news releases this week. The first was the scoping study at Francisco Basin, and the second from its other exploration projects at Llamara and the Salar de Atacama. Of course, Laguna Verde and Franciso remain the flagship projects, news on the other targets should have been taken well for two reasons. The first is of course that they could add significantly to the company’s asset base. The second, and perhaps just as important, to remind the market that fears over Chile’s mining regulations which took the share price of CTL down from 90p earlier this year have been unfounded.
Although I perhaps should be right in the frame as far as celebrating Oxford Biodynamics (OBD)’s prostate screening blood test, and its expedited arrival, given my demographic, it has been the share price rise that has really been a standout. What is interesting here is that almost a year ago there was a decent charting set up when the stock was in the upper teens. However, this time the stock gapped up on the news day, and stayed up. The set up was an island reversal, the stock having gapped in May / June. The reason the island reversal works so well is that the gap down to start the formation flushes out the weak hands. Then the gap higher catches out the bears. One would suspect that there were rather a lot of them better on the company getting their PSE test over the line. This would explain why the shares have effectively tripled since the news.
One of the more galling aspects of the stock market at the moment is that even companies who have jumped through significant hoops to get where they are today, are not necessarily given the red carpet treatment. Indeed, in the case of Hummingbird (HUM) one could say that it has been given the red share price treatment: the shares have not been this oversold since the beginning of November last year. This is despite the way that the company swung to a $4.1m pretax profit, and all the metrics regarding cost of production and sales have improved. Even the F-word, funding has been addressed in the sense that it has a funding package amounting to $55m.
I interviewed Tertiary Minerals (TYM) a few weeks ago, and whether by luck or design it would appear that this has marked a turning point for the stock: both in terms of newsflow and sentiment. The latest driver for the stock has been a Konkola earn-in deal. This follows on from the company identifying a identified a major copper-in-soil anomaly at its Mukai project in Zambia.
There was a good illustration this week about how squeamish investors are regarding debt, as Prospex Energy (PXEN) pleased the market with regard to its CLNs. Indeed, the company said “These last two conversions mark the end of all the £1.87 million Convertible Loan Notes issued in July 2022 convertible at 4.25p per share, including all accrued interest. This completely clears the debt of this Loan Note instrument, strengthens our balance sheet and further improves our cash position.” What is interesting about this is that the move was required to start getting the share price off recent lows near 5p, quite a harsh retracement from February’s 20.7p peak.
Not quite harsh as frustrating is perhaps the best description of URA Holdings (URAH) in the recent past. With the company making progress on the ground in terms of getting the Gravelotte emerald mine back into production, it could be said that the present £4m market cap is factoring very little of what could be potentially massive output from the mine. A guestimate of when this production could start is probably looking at as soon as Q1 2024, which given that we are now into October is not far away at all. This timeframe was pointed to in the recent RNS, and included a mention of the optical sorter, a key part of getting production into gear.
Clearly, given that I discuss small caps in a generally positive way, it is often the case that followers on social media will keep me updated with the lay of the land regarding their trading experiences and expectations. Hydrogen Utopia (HUI) was a case in point this week, as it was pointed out to me that an investor was having to pay over the ask for shares. Obviously in current stock market conditions this is a standout. It also perhaps implies that Friday’s 15% share price rise may be the starting gun on a move, given the company’s new Chairman Simon Mann, and the run up to the financial contribution of the medical cannabis producer HUI has an option on to kick in from next year.