STOCK MARKET NEWS – THE DAY/WEEK IN SMALL CAPS
The Week In Small Caps: August 13
There was not much good news on either the political or economic front this week, with perhaps the saving grace being that many stock market participants have decided that hiding away on holiday might be the preferred course. Indeed, the fact that UK growth grew by 0.2% in June, better than expected, was perhaps a case of good news being bad news. The market took this is suggesting that the Bank of England may still be keen to deliver a fresh interest rate hike in the autumn, to cool inflation. It would perhaps be ironic if the deflation we have seen in China is the first sign that central banks having been too slow to raise rates, may now be raising them too high. The ECB hiked to a 22 year high of 3.75%, which is of course a level we in the UK would now be delighted with.
On the small cap front, with no free ride here for at least 18 months, it was up to special situations and surprise news to get stocks on the leaderboard. That said, a few of the biggest risers of the week rose on no new fresh news. Powerhouse Energy (PHE) was still feeling the afterglow of last month’s announcement of European patent progress on its waste treatment method. What investors appear to have cottoned onto here is that the application for a patent on heating controls in a thermal conversion chamber could pave the way for a full grant. The shares were up nearly a third.
Investors appears to deliver a positive retake on last month’s news from producing mineral company, Strategic Minerals (SML). The company said at the time that was working towards resubmitting an application in Cornwall, after its first application for its Redmoor project was unsuccessful. Once again it looks like speculation regarding grants / funding from government has inspired the bulls, given that metals such as tungsten and tin are classed as critical metals.
Upland Resources (UPL) made the grade, up another third, even though there has not been any fresh news this month. The last we heard on July 28 was that progress was being made with regard to an onshore rig to develop block SK334 in Sarawak, Malaysia. Followers of the company are clearly still licking their lips regarding indications that its block could be on a par with the neighbouring Seria field, a billion barrel affair.
Another stock which appears to be finally resurrecting itself is Asiamet (ARS), whose shares rose 22% on the week. Here the company also flagged progress it was making, in this case financing its flagship BKM copper mine in Kalimantan. The company said that representatives of both a potential lead finance bank and the appointed Independent Technical Expert, SRK Consulting, recently completed visits to Central Kalimantan and the proposed BKM mine development site. The shares are only half where they were at 3p to start 2022, well before the latest positive signs emerged regarding BKM.
Trinity Exploration (TRIN) also delivered for its holders, after a long period of underperformance, by delivering a decent fundamental rabbit out of the hat. In this case it was the discovery of oil at the Jacobin-1 site Palo Seco, Southern Basin, near Trinidad. The shares were up 30%, and arguably should have been up far more, given the way that the company said that the well will now be used to de-risk and re-rank the remaining “Hummingbird” prospects across the Palo Seco blocks.
One of the obsessions of the mainstream media, and something which it is keen to ram home, as a Brexit disaster, is the move of UK companies, both off the LSE, de-listing, and / or going to the US. With Spectral MD (SMD) we have the best of both worlds for the Britain bashers, as the company is set to leave AIM and head to the Nasdaq. Of course, not wanting to agree with the Britain bashers, it has to be said that in this case they have a point, and that the history of the SMD on the London market, explains why they are right, even though their agenda is simply to get rid of the Conservative government / get us back in the EU. Unfortunately, since the start even though Spectral has been an AI medical diagnostics company with an outstanding edge, anything tech focused here tends to be up against it, as compared to resources stocks. Indeed, the more complex or market leading, the more it is apparently rejected by investors. Indeed, even though the company has said it is moving to the Nasdaq having had its business model vindicated, the shares are only up some 50% since it said adios amigos. And of course, its share price is still lower than when it listed here.
Spectral MD reminds us that while there have been noises from the powers that be, that they are going to encourage companies to going public, there is a long way to go. Having effectively regulated the stock market to death, and ensuring that the costs of being listed make it only a large caps game, token gestures are being made, presumably under pressure from the LSE. But it Is till the case that most small caps have to raise annually just to cover the cost of being listed (and salaries). The RTO rules, prospectuses, and being a clay pigeon to market sentiment, all mean that like Ormonde Mining (ORM) last month, the temptation to head for the exit due to expense and red tape is hard to resist. Encouraging companies to go public is one thing, the problem seems to be that there is little encouragement for them to stay public.
In a week where there were not many bright sparks, there were some points of interest. Dr Graham Cooley of ITM Power (ITM) fame took a 3% stake in eEnergy (EAAS). Obviously, given all the virtue signalling regarding the questionable net zero fad, eEnergy is right in the box seat with its smart meter angle. Its shares were up 21% on the week, and perhaps with Cooley’s TR1 they will head towards their pandemic peak at 25p, versus just 6p now.
Finally, one of this week’s ZaksTradersCafe interviews was with Ryan Mee, CEO Fulcrum Metals (FMET). As we are seeing all too frequently with junior minors, they tend to be rather underappreciated, even when all the boxes are ticked. The highlight here was the acquisition of the Tully Gold Project, and to go with it, a premium placing of £525,000, just above the listing price at 17.5p. This should have been and should still be taken as a decent signal for the market.
Disclaimer & Declaration of Interest:
The information, investment views, and recommendations in this Zaks Traders Cafe interview are provided for general information purposes only. Nothing in this interview should be construed as a promotion or solicitation to buy or sell any financial product relating to any companies under discussion or referred to or to engage in or refrain from doing so or engage in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the commentator but no responsibility is accepted for actions based on such opinions or comments. The commentators may or may not hold investments in the companies under discussion.