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STOCK MARKET NEWS – THE DAY/WEEK IN SMALL CAPS

The Week In Small Caps: June 18

18/06/2023

The Week In Small Caps: June 18

Honours

It is interesting in life how some things change, but most do not. For each age you are, there are equivalents. Each year as a child I waited for a Christmas present from Santa, each year I waited at school promotion to prefect, and for some strange reason when it is honours time, I am kind of hoping a knighthood, peerage, or at least a MBE, maybe in the post. None of the above happened, and that is fair enough. Indeed, I was touched that to at least partly make up for people who got gongs this year, for doing favours, being in the right place at the right time, virtue signalling and to make up numbers, Sir Martin Amis received a knighthood just in the nick of time.

Small Cap Awards

The same kind of irrational waiting game in terms of not receiving a prize happens to me every year at the Small Cap Awards, which were held in London this week. It has to be said, that going to the event always gives me a whiff of being back in the 1970s. As for the awards themselves, so many great categories, and not even a nomination. The low hanging fruit as far as I am concerned, should of course be journalist of the year, if only on the basis of the amount of content produced. However, if there is a profession where one can be shadow banned, journalism is the one.

Lifetime Achievement

It is always interesting to see who wins the Lifetime Achievement Award at the Small Cap Awards. The award that really hit home a few years ago was Giles Hargreave, now at Cannacord, someone I have known of for more than 35 year, and a true City great. This year the Lifetime achievement award went to Tim Ward, of the Quoted Companies Alliance. I found it interesting that the QCA on its website says that it believes that “the public markets are the best place for companies to source funds to grow”. Alas for many, the red tape and cost of listing means it is better to stay private, and they are happy to go for the venture capital route, borrow from banks, or high net worths.

Quotes Companies Alliance

A second quote from the QCA website is that it “seeks to inform policy in dialogue with regulators and government.” I presume the QCA can share the credit for the December 2021 change in stock market listing rules:

https://www.fca.org.uk/news/press-releases/fca-confirms-new-listing-rules-boost-growth-and-innovation

Growth and Innovation

The rule changes may have boosted “growth and innovation”, but IPO numbers have fallen off a cliff, and liquidity is through the floor. After all, how would more companies list if the minimum market cap goes from £700,000 to £30m? All logic would suggest that the lower the financial barrier, more would list. Instead, since then we have had a bizarre shell mania on the few standard list companies left from before the changes, with market caps much less than £30m, underlining that the 2021 moves were an unforced error.

Liquidity

Quite helpfully, the “wild card” (a reflection of his chances of winning) Conservative Mayor of London candidate Mozammel Hossain, KC, has said that lack of liquidity is the main concern in the City. This is hardly a surprise. The more regulation there is, the less liquidity, and the overregulation we have now means there is now more liquidity in the Gobi Desert than in the small cap market.

Predator

Speaking of liquidity, it has been noticeably that as we head up to the summer holidays, many small caps have been shoring up their finances with fundraises, so presumably, they can enjoy their summer holidays. A company which thankfully may have stopped fundraising, at least for a week or two, is Predator (PRD). Its shares rocketed as it offered an interim MOU-3 drilling update. Once again, one can say that given how many fundraises (it feels) the company has undertaken, the shares appear remarkably strong.

Edenville / Shuka

In fact, the PRD effect – when share prices go up after raises, is one of the best fundamental signals on the stock market. Obviously, if a stock goes up even after dilution, it should be a winner. For instance, Edenville (EDL), the soon-to-be Shuka Resources (SKA), raised £1.5m earlier this month. The shares are up 40% this week.

Clontarf

Clontarf (CLON), is an example of not only a stock being strong after a fundraise, but also the market being happy to take things on the chin. At the beginning of the month the company raised £350,000 as its JV with NEXT-ChemX Corp progresses. This allowed investors to be rather more philosophical about CLON abandoning the Australian Sasanof-1 well.

Bezant / Galileo

On the subject of funding, Bezant (BZT), the copper-gold exploration and development company, confirmed that it has agreed with Sanderson Capital Partners to extend the repayment date for the £700,000 drawn down under the unsecured convertible loan funding facility. The £700,000 drawdown is now repayable by 23 December 2024 and convertible by the Lender at the fixed price of 0.08p. Points to note here is that SCP is one of the largest liquidity providers in the small cap space, and the extension of the facility is clearly a thumbs up in terms of BZT is doing with reference to its key Hope and Gorob projects. Fellow Colin Bird stable company Galileo Resources (GLR) was also in focus as its  Kamativi lithium – tin target was said to be substantial, and comparable in size to other large lithium deposits including the 42.3Mt Arcadia deposit also located in Zimbabwe.

Acuity RM

Acuity RM (ACRM), the former Drumz, had a decent announcement, with relation to dilution this week, in the sense that after the shares closing above 6.99p for 5 days in a row, it was no longer obliged to issue some 2.4m shares. The shares are now nudging close to 10p on the “non-dilution.”

Vast Resources

One is always attracted to companies that the bears like to throw stones at, especially when their swivel-eyed analysis gets past its “sell-by date.” This may be the case with Vast Resources (VAST). Therefore, it was very pleasing that there was a decent TR1 announcement by Capstone Investment Advisors, LLC, in at 6% on the shareholder register. Hopefully, this will be seen as a decent validation of VAST by the market.

 

First Class Metals

Multi-pronged metals exploration group First Class Metals (FCM) was also in positive focus this week, as it said the confirmation of visible gold underlines its increasing confidence in the potential of the Dead Otter Trend. FCM said it intends to drill as soon as “all the factors allow”. That said, if there is visible gold, presumably the drilling will not have to be very deep.

San Leon Energy

One of the stocks this week where it would appear investors ran out of patience was San Leon (SLE). Here we have been waiting on funding news for a year. It is ironic that after the company has put out “wait and see” RNS’s thus far, the shares fell this week, when it delivered an optimistic tone. It is worth noting that the stock hit 11p in March 2020, so that at 15p now- rather better times, we would appear to be approaching a value point.

URA Holdings

As far as what has been going on at ZaksTraderscafe.com this week, we started off with a company profile on URA Holdings (URAH). In fact, the kicker here for some is the investment made in the emerald mine owner’s last fundraise. Perhaps the best thing to focus on though is the size of the asset this still minnow rated company is sitting on, something which as JORC resource proven, could be sold to the highest bidder at any time if need be.

https://zakstraderscafe.com/ura-holdings/7160/

Amazon Natural Spring Waters

Finally, there was an interview with a thus far private company, currently offering an equity placing. Given how scalable Amazon Natural Spring Waters can be, both in terms of the size of the asset, and the supply chain already in place, this may be attractive to those who wish to get in at the ground floor of what could be a blue chip sized business.

https://zakstraderscafe.com/joachim-von-halasz-head-of-investor-relations-amazon-natural-spring-waters/7163/

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.

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