What Happened This Week? July-3rd-2021
7 minute read
The new financial year certainly came in with a bang.
We had been counting down to July 1st - waiting for the pressure of “sell in May” and of “June tax loss” selling to finish.
The new FY delivered what we were hoping for with many of our long term portfolio companies reclaiming some lost ground in a suddenly buoyant again small cap market.
If the first two days of the new FY are anything to go by we should be in for a bull market in the lead up to the Christmas break - at least we hope so.
We continue to have our fingers crossed for a multi year commodities super-cycle as the world builds and spends its way out of a COVID slump while also switching to green energy.
We have constructed our investment portfolio to be heavy in battery metals, green energy, healthtech and precious metals - trends we think will dominate the next decade.
The small cap market this week feels a lot like it did in the first couple of weeks of January when it came roaring back after the Christmas and New Year shut down.
We are hoping there will be even more to come in a few weeks time when more investors return from school holidays (we mean the parents, not the Reddit crowd).
What happened to 88E on Friday?
In the last 9 trading sessions 88E has shot up from 2c to 4.5c and on huge volume - that’s a 125% pop in a very short time.
Frankly we have no idea why 88E is going up.
We added more 88E at 2.5c in the first week of June expecting a long, patient wait till Alaskan exploration season starts in 8 months time and the share price runs up in the lead up to expected drilling (like it usually does) where we would look to free carry into the result (as we usually do with explorers).
This week’s 88E win was pure luck on our part and certainly did not fall into any strategy we had in place - Occasionally the small cap gods smile on you (...most times they prefer to kick you in the teeth).
After the last 88E price spike in April, 88E has become a heavily followed stock (especially in the USA where the number of investors is mind boggling) and no doubt there will be more twists in the 88E story over the next few days...
We will be closely watching the 88E price action on the UK and US markets as well as the ASX - 88E finished up 21% in the US overnight.
Congrats to anyone who has been holding 88E for a while and executing a good top slicing strategy on it.
If you got burned trying to trade the 88E spike last time please be careful and remember the lessons learned this time around if 88E does continue spiking next week.
We are not short term traders so can't comment on short term momentum trading - our "less exciting" strategy is to patiently hold a stock before it spikes rather than trying to chase momentum trades.
In general please always remember to invest only what you are comfortable to lose and don't try to trade small caps on borrowed money - make sure to read our ebook on how we invest in small cap stocks if you are new to investing.
📰 Here’s what happened this week on Next Investors
Province Resources (ASX:PRL) is aiming to develop Australia’s first truly “Zero Carbon” Green Hydrogen project.
PRL is one of our biggest holdings - it is our 2021 Small Cap Pick of the Year.
Over the last two months the PRL share price has drifted while the company has been quietly executing on its next batch of newsflow after raising $18M at 15c.
Following this share price consolidation, we think PRL should return to an uptrend in this new financial year as news gets closer.
Find out why ...
Read our full commentary here: An Update on PRL: Our 2021 Small Cap Pick of the Year
We took a closer look at our latest investment BPM Minerals (ASX:BPM) and its key projects this week. BPM is trying to emulate a nearby $325M lead zinc discovery, but also has two other projects that have near term catalysts.
We think these two “side-bets” could accelerate share price activity prior to the main drilling event we invested for in late 2021.
Our “Big Bet” in BPM is for its lead zinc drilling expected in late 2021 - $14M capped BPM is drilling near and along strike (40km) to Rumble’s $325M discovery.
BPM Side Bet #1 is BPM’s WA Gold Project which is drilling in coming weeks.
BPM Side Bet #2 is BPM’s Nepean Nickel project where it is currently chasing EM targets for RC drilling - 2km from a historic nickel mine.
BPM is an early stage exploration investment where our strategy is to invest very early (way before the key drilling event) and wait patiently for what we hope will be a share price rise on speculation in the lead up to drilling. Our aim is to free carry into the result, which is still 6 months away.
You can read all about it here: BPM’s Big Boots Bet Boosted by Bullish Baby Bets
Creso Pharma Ltd (ASX:CPH | OTC:COPHF) this week confirmed two consecutive quarters of record revenue growth, posting $1.71M revenue this quarter - up from $1.38M in the previous quarter - that’s 24% growth. Revenue is up 451% compared to the same quarter last year.
CPH releases a lot of announcements, but this one was material as it is actual revenue generated from business activities.
Read our full commentary here: CPH releases material announcement
🗣️ Quick Takes - Our Other Investments:
It was a quiet week leading up to the end of the financial year, however we expect to see a flurry of news in the coming weeks as exploration ramps up, deals are done and quarterlies are lodged.
This week LCL major shareholder and renowned geophysicist Dr Minlu Fu exercised 12.5 million options at 10c a share, paying LCL $1.25M. These options were due to expire 6 April 2022 - so he has done it 10 months ahead of schedule. It’s always a good sign when major shareholders continue to support a stock...
This week MNB approved the purchase of two long lead items for the Cabinda Phosphate Plant, by locking in the equipment pricing and expediting the project timelines they de-risk the project’s CAPEX against fluctuating commodity prices.
GAL’s drill rig is prepared to mobilise from Kalgoorlie, in order to run a 1,000m diamond drilling campaign across two highly conductive nickel targets in the Fraser Range.
TMR released a new Investor Presentation that gives a pretty good overview of the company plans.
EMN also released a new Investor Presentation that gives a great overview of its EU manganese production plans.
We have been holding AHI for over a year now and it has been an excellent performer - we are happy to see clarification last week on their US $3.6M Nexus-Vita deal, which has now been extended to complete on August 31st 2021, with an extra $500k of integration development paid to AHI as part of the extension deal.
This week AHI also provided an update on a US $1.5M convertible note that was supposed to convert into shares if AHI listed on the NASDAQ by June 30th BUT had to be repaid to noteholders if it didn’t... AHI announced this week that the noteholders agreed to extend the maturity date to September 31st 2021 - our read on this is that AHI is confident it will list on the NASDAQ within 3 months, before the new note maturity deadline.
🦉In our other portfolios 🏹
FYI Resources (ASX: FYI) has just been awarded “Major Project Status” from the Australian Federal Government, having been endorsed as a project of “National Significance”. This means FYI gets direct access to the very top tiers of the Federal Government – the Minister.
FYI will go straight to the top of the queue when it comes to permitting and approvals – as it is effectively ‘pre approved’.
This endorsement from the Federal Government will also open up financing options significantly as well as regulatory risk is vastly reduced.
🦉Read our update here: “FYI’s Project of National Significance” Says Australian Federal Government
🌎 Relevant Mainstream Media:
Commodities / Resources
Mining.com - Tin price on a tear as demand soars
Energy in Africa (IVZ)
Have a great weekend,