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Tekcapital #TEK – SP Angel Research Buy rating, with 49p target price
Event: Lucyd’s US subsidiary, Innovative Eyewear Inc., completed an IPO on Nasdaq.
- The IPO for Innovative Eyewear Inc. was priced on 14 August 2022 issuing 980,000 new units at US$7.50 per unit, for a total of US$7.35m. Each unit was comprised of one share and 2 warrants in the company.
- The pre-money value of LUCY was set at US$47.5m, translating to a post money/IPO value of US$54.8m
- TEK owns 100% of Lucyd Ltd. and approximately 71% of Innovative Eyewear Inc. post IPO
- The IPO places a market value of US$54.8m on LUCY, translating to US$38.9m for TEK’s 70%, a 43.5% premium to its book value holding.
Outlook: We continue to believe there is significant upside to the current valuations of each of TEK’s portfolio companies. Looking at the valuation of the portfolio companies we derive a minimum current value for TEK of ~49p/shr. We continue to rate TEK a Buy.
Link here to view SP Angel Research
SP Angel Update – Mosman Oil & Gas #MSMN – Acquisition of material interests in key leases
Mosman Oil & Gas* (MSMN LN): Acquisition of material interests in key leases
Share Price: 0.15p, Market Cap: £5.8m
- Mosman has confirmed the Company will acquire an additional 25% working interest in the Falcon lease (including the Falcon-1 well) and 25% of the adjacent Galaxie lease.
- Mosman will acquire these interests from Baja Oil and Gas, for a cash consideration of US$160k and the effective date is 1 July 2021.
- Since the recent recompletion, production at the Falcon-1 well has been steady with the recent average flow rate of circa 112boepd of gas and 7bopd of oil condensate for a total of 119boepd.
- Unaudited gross revenue from Falcon-1 in June is estimated to be c.US$40k after royalties.
This acquisition means Mosman’s share of production increases by c.30boepd to 90boped (as of the effective date of 1 July). - There is not currently any independent report to quantify resources or reserves on the Falcon on Galaxie leases.
- As previously announced in the Company’s interim results for the six-month period to 31 December 2020, with the Falcon-1 well only coming on production in December 2020, there was no revenue recognised by the Company until cash for hydrocarbon sales was received in January 2021 and thus there was no revenue recognised during H1 2021.
- Similarly, all costs prior to January 2021 have been capitalised so there was no accounting profit or loss for Falcon in H1 2021.
- The consideration will be paid from the Company’s existing cash resources and the transaction is due to complete on 30 July 2021.
- Baja has agreed to use part of the US$160k consideration to repay an existing debt to Nadsoilco; monies owed by Baja for work at the Falcon-1 well, and a prepayment towards the drilling of the Stanley-5 well.
- The AFE for the Stanley-5 well has been issued and drilling is scheduled to take place after the Winters-2 well is drilled.
SP Angel take: Another shrewd acquisition for Mosman picking up further material interests in these key leases, boosting the Company’s production profile whilst ensuring additional upside exposure ahead of drilling at Galaxie. Importantly, the Company also has more control of the timing of technical work and operations with the increase from 50% to 75% WI at Falcon the lease and increasing to 85% ownership at the Galaxie lease, where Mosman will become Operator.
* SP Angel acts as Nominated Advisor and Broker to Mosman Oil & Gas
SP Angel – Mosman Oil & Gas #MSMN high margin production growth strategy
Bucking the trend of many of its peers, Mosman Oil & Gas (‘Mosman’ or ‘the Company’) enjoyed a year of operational development in 2020. Against a challenging market backdrop, the Company successfully transitioned into a low cost, high margin producer, exiting the year with a transformed production profile. Recent positive news flow has seen Mosman’s share price rally over 30% YTD alone, however we believe there remains considerable running room in the stock for investors. We therefore initiate coverage with a BUY rating, setting a 0.42p/share risked target price.
Link here to read the full SP Angel broker note MSMNFINAL2021
Monetary Stimulus = Currency Devaluation = Increasing Gold Demand
As the world starts to emerge from the first wave of the COVID-19 crisis, the implications for the unprecedented monetary stimulus measures employed by Governments around the globe to support citizens in lockdown are becoming ever clearer.
As stock markets roar back from the coronavirus-led rout, advisers to the world’s wealthy are urging them to hold more gold, questioning the strength of the rally and the long-term impact of global central banks’ cash splurge, Reuters writers commented.
In a note for Kitco News, Allen Sykora noted Gold had started a new week on firmer footing amid worries about the rising number of COVID-19 cases. “The price of gold jumped to its highest in more than a month this morning ($1,757), after surging coronavirus cases heightened concerns over a delay in global economic recovery,” said a research note from commodities brokerage SP Angel. Analysts cited news reports showing that while social distancing in March and April slowed the spread of the virus, reopening in a number of U.S. states and European nations has coincided with a new wave of infections.
Commerzbank believes the U.S. economic recovery is “hanging in the balance” with a likelihood of “increasing calls for the U.S. government to implement further stimulus measures, especially as [Federal Reserve Chair Jerome] Powell had already called for more fiscal stimulus during his virtual testimony before the U.S. Congress last week,” Commerzbank also believes the U.S. Fed is “likely to keep the pedal to the metal – i.e. to expand its balance sheet”… and thus the issue of currency debasement/inflation ..”will remain high in the minds of market participants.”
Geologists speculating with fees for professional services
This ‘pedal to the metal’ approach to monetary easing and the conseqential strength in gold continues to drive investor interest in junior gold explorers. Increasingly this sector is seeing mining geologists taking fees for their work in shares as well as cash, as armed with knowledge and experience, a successful drilling campaign can have a transformational effect the valuations of small cap explorers with quality projects, meaning that professional fees can potentially multiply in value. The majority of small mining companies however only have one or two key projects in their asset portfolio, so micro-cap explorers that own a broad spread of assets are particularly sought after.
AIM listed ECR Minerals (AIM: ECR) is firmly in the latter category. The company 100% owns the Bailieston and Creswick projects in Central Victoria, Australia, and also has financial interests in the Avoca, Moormbool and Timor projects following the sale of those licenses, detailed below. In addition ECR has earned a 25% interest in the Danglay epithermal gold project in the north of the Philippinesand and holds a net smelter royalty on the SLM gold project in Argentina.
Creswick
Creswick has long been viewed as a potential pivot project for ECR after the highest grade duplicate result of 80.97 g/t gold came from a 1 metre interval that originally assayed 44.63 g/t, confirming the original findings announced on 8 May 2019. Referred to by ECR as ‘nuggety gold mineralisation’, a study by pre-eminent consulting geochemist Dr Dennis Arne, whose experience includes extensive consultancy at the highly successful Fosterville gold mine in Central Victoria, underlined the significant gold exploration potential at Creswick
Bailieston
Bailieston is also at the centre of the current gold exploration boom in Victoria, located close to the highly successful Fosterville mine owned by Kirkland Lake Gold. The project potential was underlined by the arrival of mining giant Newmont Exploration with a license application for ground immediately to the north of ECR’s Black Cat prospect. The Fosterville mine is located approximately 50km west of the Bailieston project.
Flagship Projects Set to Deliver Value
The focus on Creswick and Bailieston prompted the board decision in April 2020 to sell three further Victoria licences (the Avoca, Moormbool and Timor gold exploration projects) to TSX-V listed Fosterville South Exploration Ltd for an upfront cash payment of A$500,000, plus additional potential of a further A$2 million based on resource estimates and gold production.
This, added to the two recent R&D cash refunds and the GB£500,000 placing at 0.5p mean that ECR are fully funded and ready to spend on further developing the two flagship assets.
And with external parties currently reviewing data on the Bailieston and Creswick gold projects with a view to potential commercial transactions and joint venture opportunities, the ECR board believes that both projects “hold considerable potential and inherent value for the Company.”
Currently valued at just GB£3.9m, there are great expectations for ECR in the coming months despite the restrictions resulting from the COVID-19 lockdown. Given the compelling backdrop in the Gold market and the ‘pedal to the metal’approach to monetary easing by Governments around the world, ECR shareholders could be set for a bonanza if Creswick and Bailieston come good.
References:
Tertiary Minerals #TYM – Broker Views following landmark agreement with global Commodities trading giant Possehl Erzkontor GmbH & Co.
Tertiary Minerals #TYM
Broker Views following landmark agreement with global Commodities trading giant Possehl Erzkontor GmbH & Co.
SP Angel: Tertiary Minerals* (TYM LN) 0.7p, Mkt Cap £2.2m – Securing fluorspar off take agreements – The MoU and offtake agreement and its link to financing is an important milestone for Tertiary as it provides a route to market for potential future fluorspar production as well as access to finance to help put the projects into production.
Beaufort Securities: This looks like an important relationship for Tertiary, and one which could enable Tertiary to complete a near term acquisition. If the acquisition is good enough quality, we’d expect Possehl to provide the funding, technical and marketing support. That would lead to a transformation for Tertiary. We maintain a Speculative Buy recommendation.