Primorus Inv. Regulatory News (PRIM)

Primorus Investments plc

("Primorus" or the "Company")

Quarterly Investor Update

Primorus Investments plc (AIM: PRIM, AQSE: PRIM) is pleased to provide the quarter ending 31 March 2020 ("Q1" or the "Quarter") investor update regarding its current holdings and activities acquired and managed as per its investing policy.

Executive Director's Quarterly Comment - Alastair Clayton

It seems prudent, in the current environment, to publish our Quarterly Investor Update much sooner than is typical. We, like all companies, are of course affected by the current situation caused by the COVID-19 pandemic. The ability for us to make comments on the timings and pricings of investment exits is always tricky and currently near impossible. We do, however, see a significant amount of resilience and dare we say it, opportunity within the portfolio as events play out around us. Many of our investments are expected to take short-term hits to revenue lines (where applicable) but we actually hope to see many of them emerging from this crisis in a position of strength that may well actually improve our investment outlook in the medium term. Some of our investments are powering ahead regardless. We will explain in more detail below.

For a moment, I'd like to reflect on the crisis as we see it, as it is important in understanding how we intend to move forward from this and what upside and downside influences may come to bear on our portfolio.

We now find the broader economy (high street Britain) almost totally shut down and whilst we are in no doubt that global stimulus through Quantitative Easing and M3 monetary expansion will reflate global stock markets and thereby reinvigorate larger corporates, it's the lives and livelihoods of ordinary people we worry about. Generations of business owners and workers risk having their life's work destroyed and yet little thought has been given to ramifications of this dangerous precedent. Being honest about the cost trade-offs made every day in public health may have been a better place to start the public policy response to this particular emergency as we now look for a medical and political way out of hibernation.

In a way, we also view the current predicament as the bookend of the 2008 financial crisis. Many unworthy businesses propped up by lose monetary policy for the last decade or so will finally hit the wall and those that don't will only accelerate their business process transformation. In this light we hope to see the likes of Engage, Fresho and Zuuse flourishing even more once the short-term disruption is over. Furthermore, our exposure to the gold sector has proven its worth and continues to underpin virtually our entire portfolio valuation. We have always avoided massively capital consumptive growth companies as we saw flaws in this model. We believe higher costs of scarcer capital will finish many of these unworthy ventures off. Probably not before time. Sadly, many good businesses will also disappear because they are small enough to fail and not big enough to bail. We predict the large banks will once again prove to be tone deaf and default on their promise to assist small business. Plus ca change.

In this investment environment, Primorus sees both resilience and opportunity in its portfolio but cautions that despite the rhetoric, we fear it is once again the everyday people of Britain who will pick up the tab.

Highlights

· Greatland Gold Plc share price up over 261% for the Quarter and 355% year to date. further spectacular drill results from Havieron. Newcrest Mining ("Newcrest") completes Stage two of the Farm-in process and moves immediately to Stage 3, many years in advance of what is contractually required.

· Fresho Gross Order Volume over A$2 million per day through the platform before wholesale food trade impacted by venue closures. At request of suppliers, launches "Fresho for home delivery" and signs up over 25,000 customers in first weeks. Exciting new high-margin B2C business evolving to complement current B2B business.

· TruSpine Technologies ("TruSpine") moving toward IPO with investment from and proposed appointment of Annabel Schild (£409m Huntleigh Technology takeover) as a non-executive director .

· SOA Energy advises that drill plans for the Ofek oil discovery remain on time with expected spud date expected to be in May.

· The Company finishes the Quarter debt-free and the Board still foresees no short to medium term need or intention to raise capital.

Update on Investments

Fresho is a business that we first invested in back in 2017. It has since then developed a business to business ('B2B") platform for wholesale suppliers to seamlessly fulfil many thousands of fresh food orders a week across Australia, New Zealand and now the UK. The key point of Fresho is it allows many large and highly sophisticated businesses and less sophisticated ones in the supply chain to interact and trade via a single source and neutral platform. This platform generates huge efficiencies for all participants by reducing manual inputs, integrating with accounting and stock management systems and invoicing and generating sales tax reconciliations. Since we invested, the upward trajectory of gross order volumes has been impressive and the company finds itself in a strong financial position having reached a position where it could be EBITDA positive if it chose to spend less on growth.

Clearly the current crisis has and will significantly impact the volume of B2B business with restaurants and venues closed and or heavily restricted. As a result, several key suppliers asked if Fresho could be spun around to allow sales direct to customers like you and me, business to customer ("B2C").

Out of crisis often comes real opportunity. In the week or so since Fresho began turning B2B suppliers into B2C vendors, demand has exploded. At the time of writing and solely by word of mouth over 25,000 households in Australia and New Zealand have signed up to Fresho order-for-your-home.

Whilst B2C was always on the roadmap for Fresho, the strategy had been to continue to focus on the extraordinary growth in the B2B business. Since the world changed overnight, Fresho now finds itself on a potentially game-changing path with both business streams growing in parallel.

Significantly, Fresho has continued to add a number of large food wholesalers for its B2B business as well. It is likely that many of these have been spurred to make real business process change in light of the current crisis to ensure they are competitive when the world returns to normal.

Fresho has significant cash reserves to weather the current dip in B2B business and so, despite an inevitable short-term hit to gross order volume and revenue, we believe Fresho will emerge as a significantly stronger and more financially diverse business. Given sectoral valuations of B2C businesses are often higher than those of B2B (owing to higher margins in the former compared to the later) we also believe the potential exit for us as shareholders may be much higher should the B2C business continue to grab customers.

Greatland Gold Plc ("Greatland") began the Quarter at 1.80p and closed on March 31 at 4.70p representing an increase of some 261%. At the time of writing the share price was 6.40p representing a year to date gain to date of over 355%.

By any measure this is an outstanding performance and in the current environment even more so. Remarkably our Greatland holdings represent over 65% of our entire market capitalisation at the time of writing. This implies virtually no value is being attributed to cash and other investments.

Since our last Quarterly update, the Havieron Joint Venture (now standing at Greatland Gold 60%, Newcrest Mining Ltd 40%) has reported further outstanding drill results. Furthermore, Newcrest have highlighted the significance of a new type of high-grade breccia mineralisation.

Newcrest recently completed Stage 2 of it's farm-in agreement with Greatland and in so doing moved to a 40% ownership. The pace at which this has been done is years in advance of the minimum Farm-in contractual requirements. We believe this speaks volume about the size and potential of Havieron and the surrounding region.

Having reviewed in some detail many sources of publicly available data it is clear the drilling footprint has expanded dramatically in the WSW and SW, SE and N of the existing Havieron drilling grid. Why that should be we can only speculate, however there is the possible conclusion that Newcrest have discovered significantly more mineralisation outside the previously defined limits. This could have a huge impact for the valuation of Greatland.

Our view on the end-game (exit) for our investment in Greatland is very simple. In our opinion Newcrest Mining will seek to acquire the entire share capital in Greatland in the near future, possibly just post a maiden resource estimate for a small part of the overall mineralised system. We expect this maiden resource in late Q2 to early Q3 of this year.

The reasons for these convictions are again simple. Telfer is 100% owned by Newcrest, as are all their Australian operations. We can't see any reason for Newcrest to maintain a minority partner at production level and the market capitalisation of Newcrest at some circa A$24 billion and with billions in cash and at call liquidity, it is easily capable of swallowing Greatland. The only question left in our mind is what price will they pay?

Therefore, we will continue to hold our shares for that possibility and believe the best share price appreciation for our investment is still in front of us. Perhaps large UK institutions will take notifiable interests in Greatland soon, but they have been conspicuously and inexplicably absent to date. In our opinion Havieron is shaping up as a once in a generation discovery in a gold bull market. What is not to like?

The news at TruSpine Technologies ("TruSpine") is also encouraging. Shareholders may recall that despite significant interest over the past few years, a natural strategic investor had not materialised, until recently. following her investment, Ms Annabel Schild has agreed to be appointed to the board as a non-executive director as part of the TruSpine IPO on the Aquis Stock Exchange.

Ms Schild and her family have a strong and well publicised history in Med-Tech investments, the Schild family listed on the AIM in 1999 and then sold Huntleigh Technology PLC in 2006 for a total consideration of over £409 million. The addition of Ms Schild to the board of TruSpine will be a huge endorsement of the potential of TruSpine's suite of products, and given her and her family's history of listing, operating and selling medical technology companies, it is clearly a coup to have her imprimatur as the IPO approaches.

We understand TruSpine is advancing its listing documents and we await our copy of the final document when considering any follow-on investment. Clearly current events may or may not change the current timetable (we must remain realistic) however, it is very encouraging to have the Schild family's support and as long-time investors we welcome them to the register. 

Engage Technology Partners ("Engage") is a key investment for us and in an effort to expedite this document we have not waited for our formal update to all Engage shareholders. We have, however, been in regular contact and will provide a more detailed update when we receive it in the coming weeks.

SOA Energy have already advised shareholders that drill plans at the Ofek oil discovery remain on time with expected spud date expected to be in May 2020. This is great news and we await notification of formal Spudding of the well.

Elsewhere across the portfolio our investee companies have yet to report so we may consider a further update to wrap up these outstanding matters as we receive information.

Summary

The message to shareholders is that, despite the tumultuous events of recent weeks, our principal listed investment has had a stellar performance and this has continued into the current period. Many of our core investments in the technology space, whilst taking some short, sharp pain are designed to thrive in a post-crisis world. These companies are at the vanguard of business process change and require little or no additional capital. We feel this is an enviable position for Primorus Investments to find itself in and we look forward to another successful Quarter ahead. The Board still sees no requirement to raise any capital in the short to medium term and would like to thank shareholders for their continued support.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

Forward Looking Statements

This announcement contains forward-looking statements relating to expected or anticipated future events and anticipated results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, competition for qualified staff, the regulatory process and actions, technical issues, new legislation, uncertainties resulting from potential delays or changes in plans, uncertainties resulting from working in a new political jurisdiction, uncertainties regarding the results of exploration, uncertainties regarding the timing and granting of prospecting rights, uncertainties regarding the Company's ability to execute and implement future plans, and the occurrence of unexpected events. Actual results achieved may vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors.

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