St Leger Day
The week should have been the week when participants returned to the stock market for the “autumn term.” However, I was reliably informed that with events like the Goodwood Revival, and the St Leger stakes on September 16, the richest players are yet to return. Surprisingly enough, I have not invited been invited to either event, although Goodwood would have been great for my birthday this week.
While the great and the good may not be back, there was plenty to chew on in the small cap world. A stand out for me, and a theme I have gone on about here like a broken record is the state of the small cap market. As we live in a post democratic, Orwellian, Kafkaesque dystopia, protest is of course futile. But in the case of the present illiquid bear market disaster zone, there is some comfort at watching those who cause this now suffering the problems of having killed the goose that was laying golden eggs.
The AIM Market
The point was underlined this week in an article by Ryan Long, of the Junior Mining Insights Newsletter. In “Is the AIM Market Finished – year to date is the worst in a quarter of a century?”
Well, there are a number of points to mention. AIM has never been a colossus. It could have been the Nasdaq, but like not allegedly having good teeth, us Brits have a bit a blind spot as compared to the Yanks as far as tech. Without a Google, Facebook, Tesla, et al, the cupboard was always going to be a little bare. The culture of investing in the stock market in the UK is also way behind the USA. After all, when you have a dead cert win on the housing market, why take on the risk of stocks? This is notwithstanding the Bank of England moving interest rates up from 0.1% to 5% plus against you in less than two years, just to try and dislodge the Conservative government.
Ryan’s main explanations for AIM being in the bin are its risk as compared to the main market, and the UK’s economic woes, e.g. cost of living crisis and rising interest rates. But there is so much more. I will try to mention everything possible, to make it easier for interested parties. In no particular order, stamp duty / being taxed up to the eyeballs in the unlikely events of making profits, the account opening process, “protecting” retail investors with nanny state dictats, cost of being listed on AIM, even worst cost of Nomads. This is over and above audit, accounting, legal, insurance, and ESG.
There is also having to put out a speeding ticket RNS in the unlikely event that your shares go up. The £6m market cap minimum, was another disaster, as was the ridiculous £30m main market minimum up from £750,000. Both of these were bound to destroy the IPO market, and have, along with AIM’s £6m minimum. Whoever signed off on these two aspects alone should have known the consequences, and carried on regardless. There is also the day to day issue of any malevolent keyboard warrior being able to spit on an AIM company (to go short) with no right of reply or redress other than spending tens or hundreds of thousands of pounds on lawyers. It is funny how the mud slingers do not go for companies above £100m. Obviously because they know that these would have deep enough pockets to beat them legally. As things stand any private company worth its salt would not dream of heading to the stock market.
So apart from AIM becoming the new Aquis, what is the solution to make London a leading stock market again? At least Aquis is a relatively cheap market to be listed on. Well, apart from AIM merging with the Turkish stock market, which has had far more IPOs than we have, I have come up with a masterplan. The answer would be that rather than coughing up hundreds of thousands to list and hiring all the services providers separately, one would simply pay a fixed fee subscription to the exchange, with everything included. Obviously, this is rather unlikely to happen given that it would mean the lawyers, accountants and auditors would be significantly out of pocket. Add to this the market cap minimum criteria of a company should be on a case by case basis. Bring back the old caveat emptor, investors themselves should be responsible for making sure of the probity of the companies they are invested in. The nanny regulation has proved to be a cost, but with no guarantee of any safety: the GFC, de-banking, savings rate rip offs, energy prices, et al.
Speaking of the slings and arrows of the stock market, this week delivered a real humdinger of what life is like in the small cap space. A feature of the past 18 months or so has been the way that it is so difficult to raise money either for IPOs or even for a round of drinks in the pub. This point was rather well illustrated in the case of AMTE Power (AMTE). Shares of this (former) go-go stock peaked at 330p when they came to market in early 2021. One would have thought that being a lithium-ion and sodium-ion battery cells developer and manufacturer in the current environment would be like falling off a log, but clearly it is not as easy as it might seem. This was illustrated on Friday as the company revealed a £2m fundraise at 1.7p, something which I had to actually check with the overnight close share price of 9.20p. I suppose the moral of the story here is there is a price for everything. It will be interesting to see whether speculation that the shares will be squeezed higher ahead of the general meeting on September 25 proves to be correct. I suspect that this could be the case, but perhaps not until nearer the date. Those short of the stock from before the announcement on Friday morning, the shares dipped a subtle amount on Thursday, have little reason to cover until nearer the 25th.
From a stock which those who bought £1 for less than 20p and are hoping for victory, we go to Atlantic Lithium (ALL), where perhaps rather frustratingly for now, the shares are still well down on where they were hit by a bearish report. This is said in the wake of news that Ghana’s Minerals Income Investment Fund is to invest $32.9 million, something not on the horizon in March when the stock was 38p. One would expect the shares to have returned to at least that zone off the back of the new funding. This is especially true given that the funding effectively renders the Blue Orca report rather less credible than before GMIIF stepped in.
CleanTech Lithium (CTL) gave us another compare and contract this week in terms of its newsflow. The shares tumbled in February from 90p plus on Chile jurisdiction / regulatory fears. But it actually appears that CTL is actually in the box seat as far as the countries National Lithium Strategy is concerned, almost as if the strategy was written for it. The company is way ahead of the pack in the country now, and having upgraded Laguna Verde and Francisco, the logic of suggesting that the shares should now be way above 90p seems strong.
It was a decent week for shares of Pensana (PRE), in the wake of the turn of the month share buying that the ever enigmatic Chairman Paul Atherley between 20p and 25p. He is now up to owning 5% of the company, and it should be said that our Paul is not known for buying stock just for the sake of it. It is also the case that some in the market are expecting significant news regarding PRE to arrive in the wake of this director dealing, presumably after an appropriate / discreet time interval.
One of my pitches is that I probably interview more CEO’s than anyone else in the country. It is of course not rocket science to press record and then stop, and there are plenty of would be Michael Parkinsons entering and leaving the financial PR space all the time. But the passing of the years does provide insight. It is also surprising that so many CEOs still use channels that have either no audience or influence. This is understandable given that one would not expect most CEOs to be experts in PR or social media.
Tertiary Minerals / Golden Metal Resources
What is particularly pleasing though, is when an interview receives a decent reaction, especially in current stock market conditions. This could be said as far as the aftermath of a Tertiary Minerals (TYM) and Golden Metal Resources (GMET).
TYM was helped along by a positive government decision regarding its Storuman Project in Sweden, whereas for GMET it was listing on the OTCQB to give it access to USA liquidity, appropriate to its Nevada base.
A company which may be next in terms of a turnaround, just off the back of the increase in newsflow is Zenith Energy (ZEN). The moves in the USA, especially with the acquisition of a listed vehicle make sense to ensure the company’s income stream going forward. It should also reassure the market that while it continues to seek opportunities in more far flung geographies, such as the latest MOU and 90 day exclusivity deal for oil production asset in Kazakhstan, the momentum continues. Of course, there is also the potential lottery win dispute in Tunisia for those who like something more high octane.
It remains somewhat puzzling that given the massive potential upside at its Gravelotte mine, URA Holdings (URAH), are still under 3p, and with only a £4m market cap. Given the JORC resource potential of the mine being more than 50 times this, and Andrew “42x” Austin having already invested, even in current stock market conditions the valuation appears mean. With costs if anything less than previously expected, and more confidence in the scope of Gravelotte, URAH looks to be a stock which one can tuck away, and not have to wait too long for a result.
A company I interviewed during the week, after quite some time was Blackbird (BIRD), the cloud video editing platform. It is clear that the company has kitchen sinked the fundamentals, ahead of its Creator SaaS platform event on September 13, which I am going to. Given that there has been director buying, and the stock bounced after the interview with CEO Ian McDonough, things seem set for further recovery.
Speaking of meet and greet, it may be that those who have been following Tirupati Graphite (TGR) may wish to take up the company’s offer of a meet and greet with Executive Chairman and Managing Director, Shishir Poddar on Monday. This is especially the case given that this summer has been the time when the company has apparently got all its production ducks in a row.
Panther Metals / First Class Metals / Fulcrum Metals
On a lighter note there was a 3 in 1 RNS this week, which reminded me of the good old days before the pandemic. Before the pandemic there were regular events at the Cote Brasserie near St Paul’s station. Many a pie, and a pint were consumed, on top of course of top insight provided by the companies presenting. It looks as though September 19 will see an echo of the good old days, with Panther Metals (PALM), First Class Metals (FCM), and Fulcrum Metals (FCM). I know all three companies and presenters well, a and described them as a supergroup in the RNS Hotlist. I reject The Good, The Bad and the Ugly analogy someone suggested on Twitter, and will be in attendance!