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Alan Green covers Guardian Metal Resources #GMET, Voyager Life #VOY & Cykel AI #MUST on this week’s Stockbox Research Talks
Alan Green covers Guardian Metal Resources #GMET, Voyager Life #VOY & Cykel AI #MUST on this week’s Stockbox Research Talks
Quoted Micro 22 January 2024
AQUIS STOCK EXCHANGE
Standard listed Mustang Energy (MUST) has entered into non-binding heads of terms for the acquisition of Cykel AI (CYK). The offer is 1.844 Mustang Energy shares for each Cykel AI share. The Mustang Energy share price is 30.6p, having risen from 25.5p prior to the announcement of the deal. Cykel AI is developing artificial intelligence software, which will be marketed via a Software as a Service (SaaS) model, and it joined Aquis on 25 October 2023 at 3p/share. Trading in Cykel AI shares has been suspended at 9.25p, valuing the company at £19m. Mustang Energy previously tried to do a deal with Bushveld Minerals (BMN), involving one of its subsidiaries but that fell through. A prospectus for the acquisitions is expected in the second quarter of 2024.
Fuel additives developer SulNOx Group (SNOX) generated third quarter revenues of £98,400, up from £53,500 in the second quarter. Nine months revenues were doubled. There is £2.68m in the bank. Fourth quarter invoiced sales are already £64,500.
Global Connectivity (GCON) says 15%-owned investee company Rural Broadband Holdings has increased its stake in UK broadband provider Voneus from 32% to 36% as part of a £25m financing.
Cooks Coffee Company (COOK) has increased the number of coffee shops and revenues in the 12 months to December 2023 were 16% higher at £26.9m. Like-for-like UK sales were 6% ahead and in Ireland it was 6.8%. December was a record month and there was positive operating cash flow. The year-end is being changed to March.
Electric motors and drivetrains developer Equipmake Holdings (EQIP) has gained a contract for the next stage of its electric motor development with aerospace company H55 for electric aircraft. There will be £315,000 of work deliverable by the end of May 2024 with a further £400,000 after that. Aircraft production could commence in 2025. Dr Nicholas Moelders has been appointed as chief operating officer. Interim revenues rose from £1.05m to £2.07m, while the loss increased from £2.79m to £2.96m because of higher admin expenses.
Hydrogen production systems developer Hydrogen Future Industries (HFI) has commenced its first mining sector feasibility study in the US. The idea is to use wastewater from tailings as a way of generating hydrogen. Management is discussing a potential deal with a partner in Australia for the deployment of renewable energy microgrids.
Marula Mining (MARU) subsidiaries have been issued seven new graphite mining licences for Takela and NyoriGreen projects in Tanzania. The licences last seven years. Marula Mining owns 75% of the licence owners and it is paying $25,000/licence, as well as issuing 1.05 million shares at 13.5p each as additional consideration for the investments. Marula Mining has approved a $6.38m exploration budget for its projects in Tanzania.
Igraine (KING) investee company Fixit Medical, which has developed the Cingo drainage catheter fixation device, expects to produce the first production prototypes in the first quarter of 2024. Fixit Medical is preparing a technical dossier for the ISO 13485 application.
Looking Glass Laboratories (NFTX) has decided to withdraw from the Aquis Stock Exchange, having joined in November 2022.
WeCap (WCAP) has invested a further £900,000 in WeShop convertibles, taking the total investment to £3.75m. The conversion price is 200p/share. WeCap has also invested in £4m of convertibles with a conversion price of 300p/share. Including an investment in a company owning shares, WeCap owns 15.3% of the diluted share capital of WeShop. This is valued at £24.6m at the latest fundraising price.
A purchase of 4,250 shares in Investment Evolution Credit (IEC) at 50p each led to a 125% jump in the share price to 45p. There were four other trades during the week, and they were at 24p/share and 25p/share. The online consumer loans company joined Aquis on 14 December 2023 when it raised £508,000 at 4.5p/share. There is no reason for the share price to have risen so far other than the limited liquidity of the shares.
Valereum (VLRM) has restarted talks with Vinay Gupta of Mattereum and they are exploring potential opportunities.
Chief executive Dr Michael Hudson has acquired 50,000 EDX Medical Group (EDX) shares at an average price of 8.89p each, taking his stake to 6.77%.
Michael Edwards has bought one million shares in Aqru (AQRU) at 0.12p each.
AIM
Tissue converter Accrol (ACRL) has acquired wet wipes and tumble dryer sheet manufacturer Severn Delta for around three times EBITDA. There is a factory in Somerset with four production lines. Revenues are £5m and this will take Accrol into new markets.
Scientific instruments manufacturer Judges Scientific (JDG) generated organic sales growth of 15% in 2023. Profit should be in line with expectations. Liberum expects pre-tax profit to rise from £28.3m to £31.4m. Increased stocks have held back cash generation. Net debt is forecast to be £44.9m.
Paper and technical fibres maker James Cropper (CRPR) has been hit by weak trading in the paper business and slower growth in sales to hydrogen companies in advanced materials. As a highly operationally geared business this has led to a slashing of current year pre-tax profit forecast from £5.9m to £500,000. Employee numbers have been reduced in the paper division, completing the restructuring. Higher capacity utilisation will improve the profit contribution.
Trading in scientific instruments developer Microsaic Systems (MSYS) has recommenced after a 625-for-one share consolidation and a placing raising £2.1m at 1.25p. The consolidated share price was 4.0625p and it fell to 1.4p in initial dealings and stayed at that level, which is a 65.5% decline. Cash will be used to acquire assets from DeepVerge. Full year results for 2022 and interims for 2023 were published to enable the shares to recommence trading after suspension.
Growth at payments technology company Bango (BGO) was held back by contract delays. Moving into profit for the full year was always going to be a tough and Bango has fallen well short. Revenues grew 62%, which is 6% below forecasts. Bango did move into profit in the second half, but it was not enough to make the full year profitable, and the loss is likely to be around $3.7m. That is due to the high margin, lower sales, increased costs and negative foreign exchange movements. Bango should still move into profit in 2024 and start to generate cash.
Hercules Site Services (HERC) did well in the year to September 2023 with underlying pre-tax profit better than expected at £900,000. HS2 work is building up. The construction workers provider is opening its own training centre. That will help the business in the longer-term, but initial costs will hold back profit this year.
XP Factory (XPF) says Boom Bars generated like-for-like growth of 29% and Escape Hunt grew 17% in the past 12 months. This is much faster growth than the market. Group revenues were 95% ahead at £44.5m and this underpins the current forecast for the 15 months to March 2024. XP Factory is on course to move into profit in 2024-25.
Third quarter trading was in line with expectations at Naked Wines (WINE) with the decline in constant currency sales of 10% lower than in the previous quarter. This was the peak trading time. Quarterly operating profit is likely to be £3m-£5m. Annual costs have been reduced by £7m. Net cash is £3m and the business should become cash generative by 2025.
Zeus has cut its 2024 and 2025 forecasts for Big Technologies (LON: BIG) after the monitoring technology company’s trading statement. The 2023 figures were in line with expectations, but Big Technologies expects its Colombia prison service contract to end in the first half of this year. This year’s revenues are expected to fall to £51m and the operating profit estimate is reduced from £31,7m to £23.9m, down from £28.9m in 2023. The 2025 operating profit is expected to be £27m.
A trading statement from utility infrastructure platform IQGeo (IQG) shows 2023 revenues 6% ahead of forecast and a much higher cash figure of £11m. Annualised recurring revenues are 50% higher at £21.1m. This has sparked an upgrade of 2024 estimates by Cavendish with revenues of £49.8m and pre-tax profit of £5.5m, up from £3.4m in 2023.
Strategic Minerals (SML) says that the Cobre magnetite operation has regained a major client that has ordered 30,000 tons. There could be a second contract of a similar size. This follows a halving of sales volumes in 2023.
There were positive drilling results from Thor Energy (THR). The drilling at the Wedding Bell and Radium Mountain uranium prospects in Colorado intersected high-grade uranium. Grades were up to 0.69%. This follows positive results from the Groundhog prospect. The assay results should be received in February. There are plans to drill other prospects in the region. The uranium price has moved above $100/lb.
Prospex Energy (PXEN) says that the Podere Malar-1 well in the Selva field is producing gas at the expected levels. Prospex Energy owns a 37% working interest in the Selva Malvezzi production concessions. Operator Po Valley Energy is determining the optimal flow rate for the longer-term. There are plans for further drilling on the concession.
MAIN MARKET
Foams manufacturer Zotefoams (ZTF) had a strong end to 2023 with revenues in line and pre-tax profit slightly better than forecast at £13.1m – a small increase on 2022. The foam business did particularly well and should continue to as new Nike shoe designs are launched. The ReZorce recyclable carton business remains loss-making and trials with customers will happen in the next few months. Net debt is £31.9m and capital investment will lead this to increase in 2024.
Gulf Marine Services (GMS) has updated guidance for 2023. The offshore energy vessels provider says underlying EBITDA will be around $86m, which is one-fifth higher than in 2022. The 2024 EBITDA range is $87m to $95m.
Andrew Hore
Andrew Hore – Quoted Micro 3 May 2021
AQUIS STOCK EXCHANGE
Decentralised finance (DeFi) focused investment company Dispersion Holdings (DEFI) raised £9m at 3p a share. The share price closed at 4.15p (3.8p/4.5p) and there were just over one million shares traded on the first day. The market capitalisation is £25.4m. Shares were originally issued at below the placing price and the underlying NAV is 1.8p a share. Dispersion has already made two investments, although one of those is a £210,000 investment in NFT Investments, which has management in common, at the equivalent of 7p a share. NFT’s placing was at 5p a share and the investment was made after the shares commenced trading. Since then, the share price has fallen to 3.85p (3.7p/4p).
Semper Fortis Esports (SEMP) has the management experience to exploit the fast-growing esports sector. The board includes football adviser Keith Harris. Chief executive Kevin Soltani was a co-owner of an esports franchise in MENA and co-founded the GIMA Esports Agency with chief operating officer Jassem Osseiran. The Semper Fortis Esports shareholder register includes the likes of Chris Akers. Semper Fortis Esports raised £2.5m, after expenses, at 1p a share. Pro forma net assets are £2.13m, with £2.15m cash in the bank. The pro forma NAV is just over 0.5p a share. The share price ended the week at 3.95p (3.8p/4.1p).
Greencare Capital (GRE) has invested £100,000 in Voyager Life, as part of a £671,000 before an Aquis flotation. Voyager Life supplies CBD and hemp seed oil products. This follows the £100,000 investment in CBD products supplier Clearly Supplements in the form of a 5% convertible loan. The Covid-19 pandemic and legislation changes hampered the planned reverse takeover, and it did not go ahead. There should still be more than £1m in cash in the balance sheet after the investments.
Revenues fell 59% to £8.49m at Newbury Racecourse (NYR) and there was a loss of £2.27m. Only four race meetings had people attending last year. There were 20 race days last year and there will be ten by 17 May this year. There was £1.5m raised from the sale of surplus land. There was £5.53m in the bank at the end of 2020. Net assets were £48.9m, down from £51.4m.
Spirits maker British Honey (BHC) says that first quarter revenues, excluding hand sanitisers, increased by one-quarter to £1.33m. The integration of Union Distillers is nearly complete. A new bottling line will increase capacity to four million bottles a year by the end of 2021. A new bottling line for miniatures is also being installed.
Gunsynd (GUN) has made a £200,000 in DiscovOre (ORE) at 2p a share. DiscovOre is changing its investing strategy to focus on the medical psychedelic sector.
Supported housing provider Walls and Futures REIT (WAFR) says that NAV has fallen by 5% to 102p a share. John D Wood values the company’s properties at £3.2m. The company collected 100% of rents last year. Virgata Services has to publish an offer document by 6 May.
Primorus Investments (PRIM) has invested $2.5m in convertible loan notes in standard listed Mustang Energy (MUST) as part of a fundraising to pay for a 22.1% stake in VFFB-H, which owns 50% of Enerox, an Austria-based vanadium redox flow battery manufacturer. AIM-quoted Bushveld Minerals (BMN) is the majority shareholder in VFFB-H. Enerox plans to raise £30m. Trading has been suspended in Mustang Energy shares.
Altona Rare Earths (ANR) is proceeding with the acquisition of the Monte Muambe rare earths project. The contract is being finalised and then Altona will start the earn-in to progress towards a 70% stake in the project. Altona is still assessing other projects. An application has been filed for a standard listing.
Angelfish Investments (ANGP) has raised £42,000 at 0.00258065 a share, plus £90,000 via a convertible loan facility at the same conversion price as the placing. Simon Grant-Rennick has been appointed executive chairman and Burns Singh Tennent Bhohi, who has taken a 14.8% stake, as an executive director.
Two locations have shown strong gold intersection at surfaces at NQ Minerals (NQMI) 100%-owned Beaconsfield gold mine in Tasmania. The surface potential could add significant resources to Beaconsfield.
Positive results have been reported by BWA Group (BWAP) from the sampling at the Nkoteng rutile sands project in Cameroon. There are elevated intervals of rutile-ilmenite, zircon and kyanite over continuous zones.
SulNOx Group (SNOX) has signed an Africa-focused distribution agreement with Rigworld Solutions. This formalises and earlier agreement.
Watchstone Group (WTG) has made the switch from AIM to Aquis.
Coinsilium (COIN) has raised £18,500 from the sale of treasury shares at 18.5p each.
AIM
Hurricane Energy (HUR), which at one time was a constituent of the AIM 50, is restructuring its balance sheet. This would involve swapping $50m of the principal of the company’s convertible bonds into 95% of the enlarged share capital. The terms of the remaining $180m of bonds will be amended. The business will focus on extending the oil production case for the Lancaster 205/21a-6 well.
Construction services consultancy Driver (DRV) says that its latest underlying interim profit will be slightly lower than for the same period last year, which was £1.25m. That is a strong comparative period. Lockdowns have varied in the different operational countries. Driver also lost a team in Asia Pacific to a rival. The focus is higher margin work and activity levels are improving. Net cash was £7.2m at the end of March 2021. The interims will be published on 8 June.
Pennant International (PEN) fell into loss in 2020 and it should manage to return to profit this year. Forecast revenues of £16m are 90% covered by the order book. Pennant wants to win more business in the rail sector.
Pollen Street Capital is bidding 75p a share for spend control software supplier Proactis (PHD) and the board is recommending the offer, which values the company at £71.6m. Pollen Street has the finance to accelerate growth. The bid is at 24 times prospective 2020-21 earnings, falling to 19 next year.
Building software supplier Eleco (ELCO) says that first quarter revenues were 9% ahead at £7m, while year-on-year pre-tax profit was one-fifth higher. Net cash was £7.9m at the end of March 2021. A general meeting has been requisitioned so that shareholders can vote on the re-election of executive chairman Serena Lang and non-executive director Kevin Craig, a resolution to make it compulsory for all directors to come up for re-election at every AGM and a vote on the remuneration report in the 2020 accounts.
Cosmetics supplier Warpaint London (W7L) had an improved second half and momentum is continuing into next year. In 2020, revenues fell from £49.3m to £40.3m, but earnings halved from 6.3p a share to 3.1p a share.
President Energy (PPC) expects to bring the EV-1001 well on the Estancia Vieja gas field into production during May. The drill rig will be moved to the next location. President is expected to return to profit in 2020.
Amiad Water Systems (AFS) plans to transfer its quotation to the Tel Aviv Stock Exchange.
MAIN MARKET
In 2020, Argo Blockchain (ARB) increased revenues from £8.6m to £19m, but it made a small loss. Cash inflow from operating activities was £12.3m, according to finnCap. This year a pre-tax profit of £30m is forecast, although working capital will consume most of the cash generated even before significant capital expenditure.
Moulded plastic parts manufacturer Carclo (CAR) says that it has maintained its full year revenues for plastics, but there was a decline in aerospace revenues, and made a profit. Net debt has been reduced from £22.1m to £20m.
InnovaDerma (IDP) raised an additional £500,000 in an open offer and that took the total raised to £4.5m. This will fund ecommerce investment.
Andrew Hore