Morning everyone!
Again, a bit of a rushed morning here I am afraid. A combination of a busy worklife and bad internet connections. It would appear the forces are against me.
Apologies to Chris – he requested that I look at PREM’s release yesterday. I haven’t had time today, but I will try and cover this tomorrow. Sorry Chris!
Circle Property CRC 146.00 -2.00 -1.35%
Market Cap: £42m
Price: 148p
Spread: 2.7%
The company has announced results for the 6 weeks (yes, 6 weeks!) to March 2016. I assume this is because they trying to align their accounting dates, which is a complete ball ache for me and others trying to analyse their finances. The company only listed in February 2016, so it is aligning their reporting dates with the financial year I presume.
They have never reported before, so these figures are impossible to contextualise. No comparisons can be made. Plus, they only account for a 6 week period, so it is not really long enough to draw any concrete conclusions. As a result, I am not going to spend too much time on this.
Interestingly, the company have adopted a progressive dividend policy. A rare breed among smallcap stocks. The company paid a maiden dividend of 2.4 pence per share, based on performance to 31 March 2016. Those that have read my thoughts about smallcap dividends may wish to skip to the next paragraph. This case is slightly more justified I think as the stock is a property company, so income is more stable. However, my thoughts remain the same, smallcap investors invest in penny stocks to achieve significant capital growth, not income.
From 31 March 2016, the company state that the market value of the Group’s investment property portfolio was £77.73m. With a Market Cap of £42 million, this would appear very undervalued. The company also reported a £1.1m pre-tax profit for the 6 week period, which looks pretty healthy.
Brexit
Our share price reflects the strength of our well located portfolio with strong tenant covenants and low rental base offering scope for rental growth – or insulation from any future weakness in rental values.
My opinion
All told, this company looks decent. However, I’d reserve full judgement until I’ve seen a proper set of results, rather than a snippet. No doubt the company have taken a hit from the Brexit fallout like other property companies, which means they are likely undervalued – whether they offer something beyond this remains to be seen.
Rare Earth Minerals REM 0.799 -0.066 -7.66%
Market Cap: £64.5m
Price: 0.865p
Spread: 3.6%
Rare Earth Minerals have announced that Macarthur Minerals, which REM has a 15.5% stake in, has applied for an additional exploration licence in the Pilbara región of Western Australia.
The application covers a 211 square kilometre area in the Pilbara region. The identifies ares has shown attributes that are broadly consistent with the currently accepted exploration/mineral system model for rare element pegmatites, particularly Lithium, Caesium and Tantalum.
The company, Macarthur Minerals, now holds a total of 21 exploration licences spanning an total of 2,021 square kilometres. The company have also entered into a agreement to acquire the Stonewall project in Nevada (23 square kilometres).
Macarthur Minerals are now exploring the possibilities of a joint venture to maximise its exploration effort in 2016.
Harvest Minerals HMI 16.00 -1.75 -9.86%
Market Cap: £16.7m
Price: 18p
Spread: 4.4%
Hot-stock Harvest Minerals have announced the positive results for the latest agronomic and metallurgical testwork. This testing was in relation to the Arapua Fertiliser Project based in Brazil.
The company suggest the results of this testwork have “exceeded the Company’s expectations”. The results show materials to be of a high grade. There are no toxic elements revealed in the testing process. Solubility results were “excellent” – 90.99% to 95.00% in 2% citric acid, which is close to the acidity levels of the soils (in the Brazil region). The pH was almost neutral (6.5 – 6.7) suggesting the fertiliser could be used a neutralising agent. The product grades can be increased by a wet sieving process, a simple low cost process. The results appear very promising.
As a result of this study, the company have made an application for its Direct Natural Fertiliser product to be classified as a “soil remineraliser”. The company feel this would offer longer term marketing benefits.
The company appears to have a decent upcoming newsflow. They are expecting the announcement of their environmental permit in the “next few weeks”. Then, the company hopes to secure its trial mining permit, which is in the process of being applied for. Additionally, the company are hoping to undertake a drilling programme by the end of the year.
This looks promising to me – the company has real momentum behind it. However, I am wary of what happened with Asiamet, who produced fantastic results that exceeded expectation only to see their share price tumble. Unfortunately, this was case of traders looking to make a quick buck. This stock has had a fantastic run, I’ll be interested to see how it performs today.
Elsewhere…
Tlou announced that it has renewed a Co-operation Agreements with General Electric and IK Holdings. To support the delivery of this demand, a new 50MW power generation facility for which Tlou has been approved by the Government of Botswana to negotiate gas supply.
Journey have agreed on terms of a recommended cash offer with Jaguar Holdings. The agreed terms are that Jaguar will pay 240p per Journey share equating to £28.4 million in total. This represents a 18.23% premium compared to the closing price yesterday. Also, it’s a 30.16% premium compared to the weighted average price.
Vast Resources sent out a quarterly update and operations update. I didn’t get round to reviewing this properly today. The worrying thing that jumps out me after a quick scan is the increase in MPM’s cost per tonne. These costs increased by 45% to US$1,341 per tonne concentrate produced. MPM is only one of three assets the company has a stake in. However, the company state some upgrading on BPPM – a separate asset – is anticipated to commence once MPM revenue stream has been corrected. Basically, it is being delayed. The problems with MPM costs are having a knock-on effect it would seem. Also, the company have made 3 placings in the last two months, so against a backdrop of unexpected costs, this looks worrying to me.
Challenger Acquisitions has agreed an extended agreement with Starneth Vendors. The Payment of €1.25 million that was due on 15 July 2016 will now be paid on the earlier of the financial closing of the Jakarta project or 50% of the balance on 15 January 2017 and the remaining 50% of the balance on 15 April 2017. The payment accrues interest of 5% from 16 July 2016 – so has already began accruing interest. The company welcomes the flexibility, but this comes down to the company not being able to pay its bills. It doesn’t sound great and it doesn’t look great to me. Strapped for cash, the company may have more flex, but it will end up paying more overall.
If there are companies that you want me to cover in coming days or have significant news due imminently then let me know. My aim is to deliver value to readers, so I want to ensure I’m doing this as much as I can.
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