Upcoming Catalysts for some of our companies. Plus some lessons learnt.

Stocks are way more fun when the market is anticipating big news.

Small cap stocks need time (and money) to work on a project to a point where they are close to releasing some news that will hopefully move the share price.

(If the result of the work exceeds market expectations of course, which often it doesn’t)

Many stocks enter a “boring period” where they are doing work in the background to deliver some sort of big news announcement.

This boring period can last many months... or even years.

Usually the longer the wait, the more material the results that are expected.

Drill results, biotech trial results - the market wants to see something big that will prove a project and move the share price.

And with the trading year drawing to a close in a few weeks, we have identified a few stocks in our Portfolio that have guided the market to expect material results this month.

We have a loose tradition of doing this around the end of each year, and then looking back on which of the stocks delivered the best result and share price move post news.

Here is our list of stocks that have promised to announce material news in the next few weeks.

(This list obviously doesn't account for stocks that drop unexpected news, where the company has not guided the market to expect results.)

Lets see which of these manage to deliver the goods, and which will finish highest at the end of December (from where it sits as of last close, in no particular order):

• IVZ (17c) - Mukuyu-2 oil & gas sidetrack well and results
• NHE (19c) - 2x helium well results in Tanzania
• EXR (9.2c) - QLD appraisal well and results
• GGE (0.9c) - Assess and flow test previous helium well
• TG1 (8.3c) - Rock chip assays for lithium, in WA
• MAN (4.0c) - Lithium brines sampling and results from old O&G wells in USA
• TYX (1.9c) - First assay results from second ever lithium drill program in Angola
• SLM (18.5c) - Results from lithium drilling on new Brazil project
• PUR (0.9c) - Maiden drilling into Argentina lithium brines
• HAR (19c) - Results from drill program, Uranium in Senegal

The above companies (in no particular order) are expected to deliver material news this month, and should be interesting to watch.

On the flipside, we’ll finish today’s note with comments on a couple of our companies that have delivered very disappointing outcomes for us - TMR and BOD.

First (like we do every week) let’s start off with the oil & gas drillers, who have are all guiding the market to expect news on their results this month (hopefully before the holiday break):

For weeks we have been talking about our portfolio companies drilling oil & gas wells with results due shortly:

1. Invictus Energy (ASX: IVZ) - is currently drilling its Mukuyu-2 sidetrack well. IVZ has already managed to bring hydrocarbons to surface, but only from its secondary reservoir targets so far so they didn’t declare the official D-word. With the sidetrack well, we are hoping IVZ can bring a sample to surface from its primary target and officially declare a new discovery and some net pay numbers.
2. Noble Helium (ASX: NHE) - just finished drilling its second well at its helium project in Tanzania. Sampling is ongoing at the second well and results from the first well are en route to the labs for testing. NHE expects results from both wells in “Mid-December”.
3. Elixir Energy (ASX: EXR) - is currently drilling through its primary reservoir target at its gas project in QLD. We expect to see a “drilling at TD (Total Depth) announcement from EXR very soon.

We have been following the drilling programmes for these companies for months and even years.

And now with all three nearing the end of their drill programs, we are potentially going to see the results this month that could be material for their share prices (we were all expecting the results LAST month... so remember that more delays can always happen) .

Keep in mind these results are from high high risk oil and gas drilling events, which have binary outcomes.

Share price movements are also dependent on the market expectations BEFORE the drill results happen.

The results could be positive in which case we would hope the share prices for the companies increase BUT they could also come back with nothing which would have the opposite impact on their share prices.

Either way, it is an exciting time in the lead up to Christmas, and we are hoping that the market gods deliver us a discovery before the year is up.

New gas exploration program enters the arena

This week we had one more company in our Portfolio enter the arena with an “exciting pre-Christmas catalyst”.

Grand Gulf Energy (ASX:GGE) started mobilising a rig for its helium project in Utah, USA.

GGE isn't quite running a drill program but is re-entering the same well it declared a helium discovery back in June 2022.

In that well, GGE hit ~31m of net pay and helium grades of ~1% - the only thing GGE struggled getting was a flow rate.

(a flow rate is important because a discovery doesn’t matter if the stuff won’t actually flow out of the well)

Now by re-entering the well, GGE is looking to prove the well can produce a commercially viable flow rate and get its project into production.

GGE’s project sits right in the middle of existing pipeline infrastructure and a helium processing plant, so if the well comes in, it could start producing helium relatively quickly.

See our deep dive on GGE’s re-entry program here: GGE re-entering its USA helium discovery well - can it deliver a flow rate?

Companies rush to get announcements out by Year’s End

Stepping away from the oil and companies we are Invested in.

Like clockwork every year, there is a rush from companies in the small cap sector to get major catalysts finished and results out to the market before Christmas.

That is why every year, there is talk of a “Santa rally”.

(Source)

Companies looking to make announcements or publish results will generally have till around the 18th of December to get things done before people start to tune out of the market and volumes dry up.

It is a final sprint to the finish line, and lots can happen in a short space of time.

1. Tyranna Resources (ASX:TYX) - is drilling for lithium at its project in Angola. We have already seen visual spodumene in the drillcores from the first few holes... TYX expects to be releasing assay results from the drill program soon.
2. Solis Minerals (ASX:SLM) - has two drill rigs actively drilling across its Brazilian lithium projects. We are yet to see any news from SLM but are hoping the company can deliver visual spodumene in its drillcores and (fingers crossed) some decent assay results.
3. Pursuit Minerals (ASX:PUR) - was due to kick off its drill program in Q4 of this year. Next, we want to see PUR get all the permits for its drill program granted and hopefully see the company in the field as quickly as possible after that.
4. Mandrake Resources (ASX: MAN) - kicked off a sampling program across its US lithium brine project. The sampling results will be the precursor for a drill/re-entry program MAN is planning for Q1-2024. The target for MAN is to try and get an exploration target and a maiden JORC resource defined at its project in early 2024.
5. Haranga Resources (ASX:HAR) - is currently running a 20,000m drill program at its uranium project in Senegal. With the uranium price running (now at US$81 per lb), this one is one where any sniff of a high grade uranium could be a major catalyst for the company. Depending on Auger results HAR may even squeeze in some deeper RC drilling in this month.

WA lithium is a hot topic...

Some of the team couldn't believe the move in TG Metals' share price over the last month.

TG Metals (TG6) drilled under a lithium soil anomaly at its project in Lake Johnston and its share price 10 bagged.

Our investment TG1 (similar but different stock code) is following a similar exploration strategy.

Techgen Metals (ASX: TG1) has mapped out a giant pegmatite field and soil anomaly over an 800m x 400m area. TG1 is about to get on the ground for some rock chip sampling ahead of a drill program in Q1-2024. We are hoping to see assay results of the rock chips for % lithium content before the end of the year.

Usually, when companies find soil anomalies, we wait for the company to do some more work, including some ground mapping and rock chip sampling, before we look at the merits of a project.

With other WA lithium explorers trading at market caps in the $20-30-40M+ range we have started tracking these projects a lot earlier than we would have otherwise.

One example of how high market caps can go for the juniors aiming for WA lithium is Raiden Resources which traded at a market cap as high as ~$100M off rock chips alone...

Note: just because Raiden has performed well it is not an indicator that TG1 will perform the same way. Early stage exploration, especially by tiny companies, is high risk.

We are still looking at new Investments in the WA lithium space - if you know any and want us to take a look, just hit reply to this email.

Thanks to everyone who responded last week.

End of year also means a rush to close out capital raises....

For some companies, the end of year rush is to try to get major catalysts finished and announced to the market, as we touched on above.

For others, it is the last chance to raise some capital before the market shuts down (unofficially) until the start of February.

Some manage to get the cap raises done, giving shareholders something to look forward to in the new year (by using the money raised to hopefully deliver some good news...).

Others aren't so lucky...

Across our portfolio, LCL Resources (ASX: LCL) raised $3M at 1.9c per share - funding that it plans to use for a nickel-focused drill program in the PNG.

We covered the LCL news in the following Quick Take: LCL raises $3M - looking to drill in Q2-2024

88 Energy (ASX: 88E) also raised $9.9M at 0.45c..

We Invested in this placement. Next Cap Raise offered an allocation of the 88E placement to it’s s708 investors.

If you are a sophisticated 708 investor, and are interested in placements, sign up to Next Cap Raise.

With roughly $10M secured, 88E is now prepared and ready to conduct its flow test in the first quarter of next year - while working to develop its newly acquired onshore oil & gas project in Namibia in 2024.

The small cap market is risky, things do go wrong...

In the last few months two companies in our Portfolio have had disastrous results, Tempus Resources (ASX:TMR) and BOD Science (ASX:BOD).

BOD announced this week that it was unable to close out its $2M capital raise that it started and, after being in a trading halt for a few days, went into voluntary administration.

This came as a surprise to us... especially considering we committed to an Investment and transferred the first tranche of cash as part of this failed cap raise.

There isn't much to say here yet other than we will have to wait and see what the administrators have to say in the coming weeks/months.

Usually, when this happens, the administrators either look to sell off parts of the business to keep the rest of it alive OR they look to recapitalise the business with a capital raise from elsewhere (spoiler alert: the raise terms will likely be very favourable to the new incoming investors.)

It always hurts when one of our Investments fails, and we are usually prepared to have some losses as part of our diversified Portfolio approach to Investing in small caps.

BUT to see one of our Investments go into administration always stings that little bit extra.

Hopefully, the process isn't a long one, and we see BOD recapitalised and trading on the ASX again at some point.

For now, we have moved BOD to our Bottom Drawer Portfolio.

Another one of our Investments that has really hurt this year is TMR.

We first Invested in the company back in 2020 at 20c and have kept averaging down with follow on Investments in every placement all the way down to where it trades now at 0.6c.

We have not sold a single share of TMR during that time - it has certainly not been a good Investment, nor was holding on so tightly and not de-risking some along the way.

Our thesis with TMR was that it could take its historic gold resource, upgrade it by making new discoveries and then eventually put its project into production using its already owned processing plant on site.

Unfortunately, a few weeks back, TMR put out its maiden JORC resource and actually downgraded its resource - hitting our “bear case” scenario:

Even with the smaller than expected JORC we still think it’s a project that can make some good revenue if it’s brought to production, but it’s too small in scale for a listed company, and existing TMR shareholders probably won’t be willing to stump up any more cash for more drilling.

TMR also decided not to exercise the option on its lithium project, leaving the company without a major project for investors to get excited about.

A huge disappointment, especially considering all of the money put into the ground over the last few years and the multiple new discoveries TMR made along the way.

Earlier in the week, TMR launched a rights issue at 0.5c per share and the TMR board has gone through a lot of changes.

At this point, when a listed company has failed like this and is trading at a ~$2M market cap AND we already hold a lot of shares, we will probably end up taking up our full entitlement amount in the TMR entitlement offer (which is open to all existing TMR shareholders) and invest again in this recapitalisation raise, and see what kind of new projects the fresh TMR board will bring in to the company.

Before we decide we will watch TMR for the next few weeks and see where things go.

NOTE: this is NOT advice, it’s just what we are planning to do which suits our risk profile, and may not be right for everyone

For now, we have moved TMR into our Bottom Drawer Portfolio.

So as exciting it is to follow the companies that could be delivering “big news” in the next few weeks, it’s always sobering to take a cold shower by remembering that the small cap market can be a dangerous place, small cap stocks are high risk and can fail hard - which is why we maintain a diversified portfolio where no single stock makes up more than 5% of our total Portfolio.

What we wrote about this week 🧬 🦉 🏹

GGE re-entering its USA helium discovery well - can it deliver a flow rate?

Grand Gulf Energy (ASX:GGE) has spent the last few months with top tier US drilling experts and consultants to come up with a plan to extract maximum value from its 12.7 billion cubic feet prospective helium resource. The decision has been made to do a low cost ‘well re-entry’ on Jesse 1A, seal off that lower water bearing zone, and run a flow test on the upper zone.

USA lithium - MAN’s well sampling has begun

Mandrake Resources (ASX: MAN) started a six well sampling program where it is testing its old oil and gas wells for lithium mineralisation. Like energy giant Exxon Mobil, MAN’s plan is to take lithium brine assets, apply Direct Lithium Extraction (DLE) technologies, and produce battery-grade lithium products.

EMN pulls in US$100M in non-dilutive funding for high purity manganese project

Our high purity manganese Investment Euro Manganese (ASX:EMN) signed definitive agreements on Wednesday for US$100M in non-dilutive funding to help build a strategically important battery materials project in Europe.

Quick Takes 🗣️

IVZ locks in rig for another 2 years

LCL raises $3M - looking to drill in Q2-2024

HVY’s neighbour tipped for big sale

EXR with gas shows 38x background levels

IVZ’s sidetrack well being drilled now

KNI to focus on big nickel discoveries

Bite sized summaries of the latest mainstream news in battery metals, biotechs, uranium etc: The Future Money: https://future-money.co/

Have a great weekend,

Next Investors