One week on from the renewal of the Palestine / Israel conflict we are reminded of how much of a pigeon hole conventional politics is. The alleged current alliances are that if you are left wing you are apparently on the Palestine side, if centre or to the right of centre, you are with Israel. It will be interesting to see how this straight jacket develops in coming weeks. Closer to home Rishi Sunak is presenting himself as the change candidate, and Keir Starmer, the non-threatening change. What will almost certainly not change is the big State, big tax regime.
San Leon Energy
After the previous week’s collapse, the AIM market was down just a few points this week, with no new notable calamities. Indeed, it was a week when a theme discussed here before on how small cap companies can cope with bear markets surfaced again: they have to pull rabbits out of a hat. They also have to totally surprise the market, and not flag good news, as then it will be better to travel than arrive. The prize for delivering such good news this week went to San Leon Energy (SLE), which announced an investment of up to $187 million by Tri Ri Asset Management Corp. into San Leon; and further investments by San Leon making it the largest and majority shareholder in ELI with approximately 55 per cent. of the company. For anyone wondering whether the $187m will do the job for SLE, in the Zaks Trader’s Café interview, CEO Oisin Fanning admitted to being “over funded.” This is something I am guessing few CEOs are currently able to confess.
Another interview of note this week was with Greg Martyr of Capital Metals (CMET). Here the stock soared in the wake of news that the Sri Lankan authorities have stepped up to the plate as far as the Minister of the Environment, who to say the least was not being helpful to the cause. Interestingly enough, the eventual rise through 4p plus had been written on the charts for some weeks, in the form of an extended sideways consolidation above the 50 day moving average. On a more understandable level, Greg underlined very well how CMET can now progress, and develop what is a significant mineral sands portfolio. Of course, the market being the market, until this week’s news the market cap was nominal, with investors wrongly assuming the worst case scenario.
One of the big risers of the week was Hummingbird Resources (HUM), the multi-jurisdiction, multi-asset producer, which enjoyed a 40% rebound on the week. The explanation for this was supposed to be the rebound in gold, as well as a robust interview, once again on Zaks Traders Café. Just for a change, it is not just me delivering the explanations here. It was interesting to see @BizTechAcademy1 on X providing his analysis of the situation. I was very impressed by this, something which does not happen very often. Indeed, one could say it was technical analysis of the effect of an interview on the company. I would agree with Steve Deacon, that a major driver for the shares apart from the interview itself and the rise in gold, was the fact that Hummingbird released the interview in a RNS. This and the way that the shares had fallen to the 7p zone lows of the year, after trading as high as 20p in the spring, meant that a re-rate was overdue. I had pointed this out on a charting perspective ahead of the interview.
Of course, after a stock goes up 40% in a week some people take the view that they have missed the boat. In the case of HUM I would doubt that this is the case. Last week in the wake of the Horizonte Minerals (HZM) meltdown, I pointed out that there appeared to have been a read across to other big project small caps. I interviewed Kiran Morzaria of KDNC on October 6, a few days after the HZM share price collapse. As I said in the interview, the shares are now back where they were in early 2020. Given all that has been achieved at the company since, this seems to be a surprising state of affairs. With the stock now at approaching pandemic lows, and having trading as high as 17p at the start of this year, one would expect a rebound from very oversold RSI levels to be seen over the next couple of months at the latest.
Perhaps an even more immediate candidate for a stock price rebound is Critical Metals (CRTM). This week CEO Russell Fryer was interviewed not only on Zaks Traders Café, but also by Jeremy Naylor of IG. This rather reminded me not only of cashflow coming to CRTM given the offtake agreement for the company’s copper, on short term contracts, but also that Jeremy is one of the few professional journalists in the small cap space. And it shows. But getting back to CRTM, it has the potential for several offtakers, and is looking to scale up production, not only at Molulu, but in neighbouring jurisdictions. Fryer has shown he can execute on production, unlike many others who just talk about it. Once again, the shares are in the wrong place given the fundamental progress of events. Currently at 18.25p, they should be nearer to 30p plus seen at the beginning of the year, well before the latest copper production agreement was signed.
Given what a buzzing a market Aquis is, you ask them, they will tell you, I suppose for EDX Medical (AQSE: EDX) to be up 84% in the past week is merely quite pedestrian. The shares have rallied hard, and it would appear that there is strong and significant buying here from smart and significant investors. While Aquis may be the new Nasdaq, such buying and the promise of more to come seems to be no accident. The official driver earlier in the month was the announcement that it has entered into a strategic agreement with Guardant Health Inc. (NASDAQ: GH), a precision oncology company, to distribute Guardant Health’s blood-based liquid biopsy tests in certain market sectors in the U.K. and several Nordic countries. One does not have to be Dr Marcus Welby MD, to understand the significance of such a deal, especially if one remembers that EDX was founded by founded by Professor Sir Christopher Evans, OBE, a legend in his field.
Although I may be known as the charting person, if I am known at all, the fundamentals are and always will be king. In the case of Avacta I was told by someone whom I have known for 30 years plus in the market that Avacta (AVCT) was going to be the big one as far as targeted cancer treatment. Of course, like many potentially successful UK companies there are those who like to throw stones, particularly in order to make a profit going short of a stock. Such shorters will and do say everything they can, whether true or not to prevail. This is because if they exaggerate or distort absolutely nothing will happen to them. It is pleasing that Avacta is now near the top of its range. One hopes this current rally will be the big one.