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Oliver said in his stockbox interview that he was going to focus on US investors as the project is in Nevada and the US investors will be supportive of tungsten being vital for US strategic military interests. He has started with a very good interview on a US commodity focused podcast:” Critical Metals: Why China's Export Bans Could Shake the Global Market Guardian

Metal Resources

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Natural Resource Stocks 8.83K”

Oliver is heading to Nevada this week to visit site and will no doubt be giving several interviews on the US Commodities channels which are more professional and have much larger audiences than the UK channels.

I am pleased he is doing this as the UK market is largely ignoring the excellent drilling results that are being reported. The recent pull back from the 37p high is creating a buying opportunity which UK investors are ignoring but I think the much larger pool of US investors will take a much more positive view.

Second part of the article below:

“ Focus on Chrome in South Africa

In South Africa, Jubilee’s chrome concentrate production was a notable highlight. The operation delivered 20 per cent higher output of 1.55mn tonnes, so exceeding full-year guidance of 1.45mn tonnes, and capacity is set to increase further as two chrome modules are being brought into production next month.

Although the chrome concentrate cost per tonne increased from $67 to $84, the operations achieved a $36 per tonne higher average cost, insurance, and freight (CIF) chrome price of $296 per tonne, so the combination of higher output and higher profit margin led to an eye-catching 155 per cent increase in both divisional cash profit and pre-tax profit (pre-central overheads) to $17.8mn and $14.2mn, respectively. Furthermore, chrome production guidance of 1.65mn tonnes supports another hefty rise in profit from these operations in the new financial year.

The progress made by the chrome and copper divisions made good some of the profit shortfall from Jubilee’s platinum group metal (PGM) operations in South Africa. PGM cash profit plunged 72 per cent from $23.9mn to $6.7mn in challenging market conditions. The average PGM basket price fell by 21 per cent to $1,351 an ounce (oz), and production of 36,411 oz was down 14 per cent, too, as management made the strategic decision to prioritise higher chrome material to boost economic returns. Almost all the $22.3mn capital investment in South Africa was focused on the chrome operations in the financial year. Expect a similar level of PGM production this year.

Production ramp-up to drive materially higher profits

So, with diversification of Jubilee’s revenue improving its risk profile, and its chrome and copper operations an increasingly important part of the group, analysts at house broker Zeus Capital anticipate a material change in this year’s profitability, forecasting a doubling of cash profit to $54mn on 27 per cent higher revenue of $260mn. On this basis, both adjusted pre-tax profit and earnings per share (EPS) would rise fivefold to $41.5mn and 1p, respectively, at current exchange rates.

Of course, there is execution risk and we have been here before, hence why Jubilee’s share price rallied 68 per cent from 5.3p to 8.9p after I suggested buying the shares at the interim results before giving back the gains, and more (‘Lowly rated Jubilee Mining set to ramp up production and profits’, 26 February 2024).

However, with shares in the £140mn market capitalisation company trading on a forward price/earnings (PE) ratio of 4.7 and on less than three times forecast cash profit to enterprise valuation, then the anticipated step change in profit driven by organic growth initiatives is being woefully under-rated, as highlighted by the deep share price discount to Zeus Capital’s 11p-a-share target price. Buy.

SMALL COMPANIES & AIM

This step-change in profits is being hidden by commodity prices

Simon Thompson: The African miner is ramping up production to overcome lower PGM costs

This step-change in profits is being hidden by commodity prices

Published on October 8, 2024

by Simon Thompson

Annual cash profit down 7 per cent to $27.7mn

Pre-tax profit down 42 per cent to $8.6mn

Ongoing ramp-up of copper and chrome output

Shares trade on forward PE ratio of 4.6

Jubilee Metals (JLP:4.65p), an Aim-traded mining company that makes money by extracting platinum group metals (PGMs), copper and chrome from mine tailings in South Africa and Zambia, is set to deliver a step-change in profitability driven by a ramp-up in its chrome and copper production.

The expansion of Zambian copper processing capacity is a key focus of management. In particular, the completion of the Roan copper concentrator upgrade in August 2024 has now positioned the business to handle multiple feed sources of copper oxide and sulphides simultaneously, increasing Roan's copper output capacity to 13,000 tonnes per annum (tpa). In addition, the upgrade and expansion of the group’s Sable Refinery is under way and is targeted to be completed over the coming 10 months to reach a capacity of 16,000tpa. With Roan capable of operating independently of Sable, this will boost Jubilee's copper processing capacity to well above management’s initial target of 25,000tpa of copper.

In the 12 months to 30 June 2024, Jubilee’s copper production increased 17 per cent to 3,422 tonnes, in line with revised guidance of 3,250-4,000 tonnes, and the average copper unit price per tonne decreased by 18 per cent to $4,294 as sourcing and processing of higher-grade copper bearing concentrates at Sable and Roan improved copper margins. Although a higher proportion of copper units were sold as copper concentrate, which is priced at a discount to the London Metal Exchange (LME) copper price, the significantly lower-cost production helped boost underlying copper cash profit from $2.1mn to $3.6mn ($7.1mn including fair value adjustments) on annual revenue of $18.5mn. Moreover, guidance is for another sharp rise in annual production to 5,850-7,500 tonnes, which would drive up profit materially given that the spot copper price of $9,600 per tonne is more than 10 per cent above the average LME copper price in Jubilee’s last financial year.

It’s now Up 27% on volume of 26.4 million so somebody knows something.

A very sensible point roger65 and of course the completion of a Uranium JV by POW on the same day shows how they think.POW’s JV has got a very well regarded partner to put £10 million into the JV with POW having 30%. This will enable the exploration to be well funded and carried out more quickly without any dilution for POW shareholders. For all the strategic reasons explained by Oliver tungsten has to be the prime focus at this time and that is why the cash is being focused on the Pilot Mountain drilling. Good results will be very helpful in securing the US Government grants which would further accelerate the road to production without dilution of GMET shareholders. It could also release funds for GMET to explore its other assets. Oliver’s plan to spend time encouraging investment from US investors seems entirely sensible as the Tungsten asset is in the US and US investors will be very supportive of the need for the US to profits own Tungsten for military purposes in a very uncertain world.

Positive interviews from the CEO on Stockbox and Midweek Takeaway . It is now full steam ahead to get the Uranium JV working. It seems to me that the JV partner must be very confident to invest £10 million in taking forward all these uranium projects. Let us hope this starts to be fully reflected in the share price building on todays 6.45% rise.

GMET has also released outstanding drilling results today and as GMET currently accounts for all POW’s market cap, the Uranium JV and all POW’s other investments are essentially in for free.

I just happened to notice on my II account that the Morning Star Estimated fair value of GMET is 73.87p which means it is currently trading at a 62% discount to fair value. Last week we had the analyst 12 month target of 88p. Once investors start to understand that these drilling results are very good we should see a re rate above the recent high of 37p in fairly short order.

SEED took shares in PANR placing a couple of months ago at 17p. This investment has been under water for the last month but moved to a tiny profit on Friday and has moved up again today. Let’s hope it goes a lot higher because a £250000 punt has to have a very large gain to make any material difference.

Very good news that the JV is completed.

“ Sean Wade, Chief Executive Officer of Power Metal Resources plc, commented:

"I am delighted to announce the successful completion of this flagship transaction for Power Metal. We are extremely excited about working with UCAM to deliver high-quality uranium discoveries and I am confident that this Joint Venture will be a huge value driver for our shareholders. It is a strong affirmation of our business model, and will serve as a beacon for how we can continue to develop and crystallise value from across our portfolio.

"As we have previously stated, UCAM's investment is expected to provide Power Metal shareholders with exposure to at least five high impact drilling programmes, with significant advancement on several more.

"We have also recently acquired the Drake Lake-Silas property, which has now been vended into the Joint Venture. Drake Lake-Silas was originally intended to form part of the asset set of Uranium Energy Exploration plc ("UEE") which is now no longer pursuing an IPO, and was, therefore, part of the portfolio of licences offered to the Joint Venture at the outset of our discussions.

"As we have already reported, significant work has already commenced during the current field season, and I look forward to announcing results from this work as soon as we are able."

In the light of some less than enthusiastic comments from the traders I am going to post what the CEO had to say which is very positive:

“ Oliver Friesen, CEO of Guardian Metal, commented:

"It is safe to say we are extremely excited about the results reported today, including PM24-012 which has delivered a globally significant tungsten result. Not only did we intersect 39.3m of 1.02% W03Eq**, but this extended interval is located almost entirely within the scoping level open pit mine design, in an area which was previously occupied by relatively low grade material from the previous resource model.

"The drillholes reported today confirm that further exploration and drilling is needed to fully assess the Project's potential, of which we believe we have just scratched the surface. With the US $2.75m strategic North American financing recently completed at 27p, we are very well funded and look forward to continuing to drive this extremely exciting Project forward at a time when the U.S. needs secure supplies of tungsten."

Has Jim exercised all his warrants?

A good week for GMET in terms of the share price which was 21% up from Mondays close at 23p. GMET hadn’t seen 23p since 24th June following which it started the rise which had it reach 30p on the 8th July. It had a month in the low 30p area before it had a surge reaching 37p on the 27th of August. Since then the sp went into a decline closing at 23p on Monday. The first drill assays were very good so there seems no good reason for the decline in the share price unless there was some profit taking with a number of investors sitting on short term gains of over 100%.

It is therefore good to see the rise of 21% since Tuesday, which should see us back above 30p next week,when we would expect to see further assay results. The broker target of 88p released this week wil also have boosted confidence.

It must also be the case with the escalation of global conflict in which the US is heavily involved that the strategic importance of US produced Tungsten becomes greater with every day that passes. In the next few days a very large amount of Tungsten is going to be landing on Iran in addition to that currently raining down on Lebanon in addition to the Ukraine/Russia conflict. The US grant needs to be granted as a priority.

A very quiet day at POW with just 6 trades for a total volume of 1452. Both GMET and FCM are up. Clearly investors are waiting for news that the Uranium JV admin has been completed. As the RNS on Monday said completion was imminent I was expecting it to have happened by today. It must be highly likely that the RNS will come on Monday or at least early next week.

IC Buy rating in tomorrow’s magazine:

Bango’s discount rating is primed to narrow

Simon Thompson: Strong demand for Bango's payment service from content providers and telecom companies

Simon Thompson

18 per cent higher first-half revenue of $24.1mn

Annual recurring revenue (ARR) up 130 per cent to $12.9mn

Adjusted cash profit of $4mn reverses loss of $0.2mn

As content providers look for new ways to attract, engage and monetise their subscribers, bundling with telecom services is increasingly the answer. For telecom operators, offering subscription bundles increases the value of their network services, reduces churn rates and enables customers to manage their subscriptions in one place, too.

These dynamics explain the bumper annual recurring revenue growth reported by Aim-traded mobile payment platform provider Bango (BGO:115p). Specifically, its digital vending machine (DVM) service enables customers of telecom companies to manage and pay for all their subscriptions in a single place and on one bill.

In the first half, Bango signed four new DVM contracts, including one with a Latin American bank, extended an existing contract with a European telecoms operator, and added 13 subscription content providers to its DVM service to take the total past 100 for the first time. Ultimately, DVM exists to allow content owners to grow and expand, hence why it is increasingly the platform subscription content providers are choosing. For instance, the international taxi group Uber joined the Bango DVM to help drive the adoption of its Uber One subscription service (food delivery, taxi rides).

Growth from the group’s DVM enterprise-grade solution explains Bango’s 159 per cent net revenue retention rate – a measure of the retention and expansion of revenue from existing customers – from a high-margin business segment that boasts a gross margin of 95 per cent and is becoming an increasingly important part of the group.”

Hefty second-half weighting

True, there is a heavy second-half weighting to forecasts as Bango’s first-half cash profit of $4mn (£3mn) accounts for only a quarter of Singer Capital Markets maintained full-year estimate of $16.8mn, up from $6.4mn in the 2023 financial year.

Analyst estimates are based on 16 per cent higher full-year revenue of $53.5mn, implying revenue of $29.4mn is needed to deliver $12.8mn of cash profit in the second half. That may seem a stretch, but the business has relatively flat operating expenditure and is highly operationally geared. It means that the drop-through of incremental gross profit to cash profit is accentuated in a strong revenue cycle and one that will benefit from an increasing contribution from the DVM high-margin business.

The directors have confidence in hitting analysts’ full-year pre-tax profit estimate of $5.2mn, which underpins their earnings per share (EPS) forecast of 5.9¢. Expect second-half cash flow to drive down net debt from $5.1mn to $2.9mn by the year-end, too. On this basis, Bango’s enterprise valuation to cash profit multiple is only 7.3 times, or less than half that of peers (Boku (BOKU), Fonix Mobile (FNX) and Eagle Eye Solutions ( EYE)).

So, having upgraded my recommendation at the annual results (‘Why Bango’s share price is set to recover strongly’, 8 April 2024), I see the profit taking since the pre-close trading update (‘This payment business's re-rating has further to run’, 16 July 2024) as a repeat buying opportunity. Buy.

Continuing the IC article below:

“ IC article valuation table

Tekcapital's portfolio fair value estimate

Portfolio company Carrying value 30 June 2024 Estimated carrying value on 25 September 2024 Value per share

Guident $18.1mn $18.1mn 6.8p

Innovative Eyewear $2.6mn $2.6mn 1.0p

MicroSalt $38.9mn $22.8mn 8.6p

Belluscura $2.2mn $1.4mn 0.5p

GenIP $0.2mn $0.2mn 0.1p

Smart Food Tek $0.0mn $0.0mn 0.0p

Guident convertible loan notes $4.3mn $4.3mn 1.6p

TekEurope $1.2mn $1.2mn 0.5p

MicroSalt convertible loan notes $2.0mn $2.0mn 0.8p

Portfolio fair value $69.5mn $52.6mn 19.8p

Cash $0.3mn $0.3mn 0.1p

Total NAV $69.8mn $52.9mn 19.9p

It doesn’t copy toowell but you should be able to work it out such that although the value of the portfolio has fallen from $69.8 million in June to $52.9 million on 24th September due to the fall in SALTs sp the NAV per share is 19.8p compared to todays closing price of 6.1p.

The final part of the article:

“ Shareholders in Tekcapital should note that portfolio company GenIP (GNIP:39p) raised £1.75mn in an IPO on London’s junior market on 2 October 2024. The company provides generative artificial intelligence (GenAI) analytic services to help companies, research institutions and venture funds assess and commercialise new discoveries. GenIP combines expert human technical review with GenAI algorithms to provide insightful and verified services.

The holding in GenIP had a £0.2mn carrying value in Tekcapital’s interim accounts, but the company’s retained 62.8 per cent stake post IPO is worth £4.3mn (2.15p), which boosts Tekcapital’s spot NAV to 22p a share. On this basis, the investment company’s share price is trading two-thirds below book value.

Poor sentiment towards micro-cap companies and Aim companies explain part of the discount, as highlighted by the 29 per cent reversal in the FTSE All-Share Total Return index since I included Tekcapital’s shares in my 2022 Bargain Shares Portfolio. However, the level of risk aversion is extreme and completely ignores the multiple short-term catalysts that could narrow the share price discount to NAV. Recovery BUY”

Article in IC today:

“ IPOs set to drive a rerating of an unloved investment company

Spin-offs of an AI analytic services company and a developer of software that improves the safety of autonomous vehicles could drive a material re-rating

Says Simon Thompson.

Further extracts:

“ MicroSalt’s shares listed at 43p in an IPO earlier this year and the price doubled to 92.5p at the half-year-end. The holding accounted for 55 per cent of Tekcapital’s NAV of $69.8mn in the company’s interim results. Although MicroSalt’s share price has subsequently succumbed to profit-taking, the equity stake is still worth $22.8mn (8.6p) and accounts for 43 per cent of my spot net asset value (NAV) estimate of $52.9mn (19.9p). Tekcapital also holds $2mn (0.8p) of convertible loan notes (CLNs) that are very conservatively valued in its accounts.”

“ So, with Tekcapital’s 69 per cent stake in MicroSalt and the CLNs cumulatively worth 34 per cent more than the investment company’s market capitalisation of £14mn, you are effectively getting a free ride on the rest of the investment portfolio, which has a valuation of $28.1mn (10.5p).”

“ Free ride on multiple investments

The largest investment is a $18.1mn (6.8p) equity holding in Guident, a developer of remote monitoring and control software (RMCS) that improves the safety of autonomous vehicles and delivery robots. Tekcapital holds $4.3mn (1.6p) of CLNs in the company, too.

Guident has constructed a state-of-the-art RMCS centre in Boca Raton, the largest office complex in Florida and a premier technology and life sciences hub. It has also incorporated the technology into AuVe autonomous shuttles and entered a strategic partnership with Star Robotics, a leading Spanish security robotics company. The plan is to integrate Guident's teleoperation solution into Star Robotics' products and provide an autonomous security surveillance solution with a human-in-the-loop capability.

To date, Tekcapital has funded investment in Guident from its own balance sheet. However, with market conditions improving, the directors now see the opportunity to crystalise the material balance sheet value held in Guident by seeking a private investment round ahead of a likely IPO. Guident has been investing in the fabrication and testing of regenerative shock absorbers for prospective clients in the automotive industry. It has a proof of concept agreement in place with an undisclosed tier-1 tyre manufacturer for the patented technology.”

2 weeks on from the last Pilot Mountain RNS on 18th September it’s probably worth revisiting Oliver’s comments in the RNS:

“ Guardian Metal could not have asked for a better start to the Pilot Mountain drilling programme with the significant assay results achieved in the first drill hole PM24-001. The results demonstrate three distinct strongly mineralised tungsten-silver-zinc-copper intervals with the deepest interval remaining open at depth.

"Drilling has been ongoing since May and we are currently partway through the 21st hole, with drilling continuing at pace.

"The coming weeks and months will undoubtedly be the busiest period for Guardian Metal to date and we are looking forward to providing the market with commercial/technical updates, including further assay data and interpretation, as results continue to flow in from the laboratory.

"With Guardian Metal's investment in exploration and development and with the outstanding Project findings to date we consider Pilot Mountain to be a uniquely valuable strategic asset which we believe can contribute to various U.S. national security objectives, especially as, currently, there is no domestic production of tungsten, a much-needed critical defence metal."

A very positive statement which should have sent the sp up rather than the fall we saw which this week is finally starting to reverse. As we are promised regular updates the next assay results interpretation should be imminent. If we could also get news on the grants that would also provide a good boost. The rapidly increasing global tensions put even more pressure on the US Government to secure their tungsten supplies. A grant will enable GMET to accelerate the move to production without going to the market or strategic investors for further funds.

A late reported trade of 199333 shares at 21.925p from 16.37 yesterday has just been posted. Full ask yesterday as today was 22p so definitely a buy.

Yesterday’s volume of 1.3 million, nearly all buys, was the highest volume for 4 months. Interest clearly returning as a deal is clearly getting closer. It could come any day now. 4 months ago when the volume exceeded 2 million the sp was 35p and a return to that level as we await news would seem entirely appropriate.