June tax loss selling is behind us, KNI IPO expected in August
Published 26-JUN-2021 13:13 P.M.
10 minute read
Another week of June tax loss selling behind us and only a couple more days to go... it wasn’t as bad as we expected.
Visible strength in small cap share prices last week tells us that money on the sidelines may have jumped out of the gate early and is flowing back into the small end, perhaps to pick up some tax loss battered bargains before a bounce.
Last week was much more buoyant than almost every other tax loss June we have seen in the past, hopefully a positive indicator for the next few months.
We are hoping (and betting that) the world is at the start of a multi-year “commodities supercycle” as every country spends big to build infrastructure and switch to green energy to pull their economies out of the COVID slump - all at the same time.
Road, rail, buildings, electric batteries, powerlines, wind turbines and solar panels all need commodities to build them - and we have constructed our portfolio to be leveraged to this long term theme.
We continue to assess many new potential investments each week but are saying NO to almost every opportunity we see until the right one comes along. Before we even consider promoting a company we do significant due diligence and make a cash investment first.
We only write about the select few stocks we are invested in. Here is the latest investment we will make:
Kuniko IPO (ASX:KNI) - expected listing date August 23rd 2021
Many readers who are Vulcan Energy (ASX:VUL) holders have asked us about the Kuniko IPO that is spinning out of VUL - VUL was our 2020 Small cap Pick of the Year at 24c in Feb 2020 and is now trading at around $8.
We are long term holders in VUL and have held on to a nice big CGT discounted chunk since we first invested - as VUL holders we too have received the Kuniko IPO share offer.
YES - we will be investing in the Kuniko IPO and will be adding it to our Next Investors portfolio.
Everything about this investment is contained in the Kuniko IPO prospectus which can be found on the Kuniko website. We are investing but are told it’s in pretty high demand.
If you have an offer letter for the Kuniko IPO make sure you read the prospectus in full and consult your financial advisor before making any investment decision.
KNI won’t be listing till late August and we will provide our analysis and commentary when it lists.
So what else happened this week:
✅ Investment Milestones:
Over the past few weeks we have been rolling out our “investment milestones and company investment strategies” for each of our portfolio companies, currently we have shared ASX:ONE, ASX:BPM, ASX:EMN, ASX:PRL, ASX:VUL, ASX: VN8 and ASX: EXR, ASX: 88E, ASX: CPH, ASX: TMZ and ASX: LCL. We aim to have the rest of the portfolio done in the coming weeks.
📰 Here’s what happened this week on Next Investors
Tempus Resources (ASX:TMR) has just commenced a 6 month gold drilling campaign after a few months of hibernation and a 2020 season that was heavily impacted and delayed by COVID.
Two weeks into the new drilling season, TMR has just pulled up the first drill cores and sent them to the lab awaiting results. Photos of the drill cores confirmed more visible gold has been found. This is a good sign that assay results will provide us with gold intercepts.
If the drilling delivers above expected results we should see a rerate in the TMR share price - TMR only has ~113 million shares on issue so its share price can move quickly (up OR down).
TMR is one of our biggest positions that is currently still sitting around our average buy-in price of ~18c and after a false start in 2020 we are excited to be at the start of the 2021 drilling Canadian drilling season.
Read our full commentary here: TMR reveals visible gold, summer drilling campaign has begun
Los Cerros (ASX:LCL) continues to extend its very large, near surface, porphyry gold system in Colombia and intercept strong gold mineralisation in every direction tested, delivering ‘spectacular’ result after ‘spectacular’ result.
Some of the best drill results announced this week:
- 378m @ 1.03 g/tonne from surface, which included,
- 222m @ 1.51 g/tonne from surface, and,
- 59.5m @ 2.6 g/tonne from surface,
AND most impressively
- 36m at 3.31 g/tonne gold from surface
This is the highest grade intercept of significant width ever recorded at Tesorito.
You can read all about it here: LCL Delivers Highest Ever Grade at its Giant Porphyry System
Minbos Resources (ASX: MNB) is developing a phosphate (fertiliser) project in Angola with a 6 million tonne mining target and a 21 year mine life.
The higher the phosphate price, the higher the value of MNB’s project...
The phosphate price just surged above the highest contemplated case in MNBs scoping study.
We have invested twice in MNB over the last 10 months, once at 3c then again in the placement 8c - our average entry price is 5c. We have not sold. We are two months away from the 12 months capital gains discount on our first tranche. MNB has been beaten up by tax loss selling.
Read our full commentary here: Phosphate Price Surges above Highest Prediction in MNB Scoping Study- We’ll provide a full run down in July.
🗣️ Quick Takes - Our Other Investments:
Thomson Resources (ASX:TMZ) has received further strong tin results from the recent drilling program at the company’s Bygoo Tin Project, located in the Lachlan Fold Belt in New South Wales.
We are invested in TMZ for the silver, but are very interested in this tin project too.
TMZs tin teaser comes at a time when the metal is trading at near long-term highs, having just surpassed the US$31,000 per tonne high from February 2011.
TMZ’s latest results represent a major new tin discovery that lies 300 metres to the north-west of the main area of drilling.
88 Energy Ltd (ASX:88E, AIM: 88E, OTC:EEENF) has entered into an agreement that will facilitate the sale of it’s Alaskan Oil and Gas Tax Credits for US$18.7 million cash.
Transfer of the certificates and payment of the proceeds is anticipated to occur within the next few weeks, subject to Alaskan Department of Revenue approvals and processes.
For those who invested in 88E during 2020, the current share price remains up over 200% since its pre-drill average of around 0.8c for most that year. This month we increased our position at 2.5c and are patiently waiting for the next drill season next year.
Advanced Human Imaging Ltd (ASX:AHI) opened in positive territory after the company provided clarity on its US $3.8M binding term sheet with Nexus-Vita, a Singapore-based health monitoring and management technology company.
This binding term sheet was originally signed in October 2020 has seen a couple of mutually agreed extensions to the completion date - We are happy with the newly announced completion date of August 31st 2021, especially given that Nexus-Vita last week also agreed to pay for $500k of integration services to AHI, which in our opinion shows strong commitment to getting the US $3.8M deal done.
Our AHI deep dive analysis coming in July.
Elixir Energy Ltd (ASX:EXR) has reported very thick total coals in the West Yangir-1 well and Manlai-1S didn’t reach target depth due to tech issues.
New well Kingston-1S has just spudded and ALREADY is showing coals.
Aside from the tech issues on one well we thought this was a very solid update from EXR and were going to write a note when the announcement was released but decided to hold off until July as we believe there is still some tax loss selling left to wash through from the 36c SPP prior to June 30th.
Province Resources Ltd (ASX:PRL) speaking of tax loss selling, our 2021 Small Cap Pick of the Year has seen some share price pressure from a couple of factors, including tax loss selling after spending some time above 20c in April combined with digestion from a recent $18M placement at 15c.
We are really excited about PRL and are waiting for the current selling to wash out before our next note and reminder that PRL is our 2021 small cap pick of the year. Remember for every seller there is a buyer. We just happily hold and watch the ups and downs as we count down to the 12 months CGT discount.
We also noted in the media this week that the government rejected plans for the Asian Renewable Energy Hub (a $36 billion wind, solar and hydrogen project in the Pilbara) on environmental concerns.
PRL is working very closely with all stakeholders and all levels of governments to ensure all approvals are met. We think this news is a net positive as it increases the value of any hydrogen projects that DO gain approval in Australia.
Vulcan Energy’s (ASX:VUL) Australian business has now been certified as carbon neutral by Climate Active.
VUL is intent on driving systemic change and will be participating in advancing projects and initiatives around battery materials traceability and transparency that will shape the industry.
Being certified by Climate Active gives VUL even more credibility in its aim.
Climate Active is a partnership between the Australian Government, and Australian businesses, to encourage voluntary climate action.
We continue to be excited about VUL - right company, right place, right time.
Creso Pharma Ltd (ASX:CPH, OTC:COPHF) announced that it plans to merge its business with Red Light Holland Corp (CSE:TRIP, OTC:TRUFF) to become The HighBrid Lab.
Following much shareholder speculation, Bruce Linton, strategic advisor for Creso Pharma, spoke to The Dales Report to explain the reasoning behind the decision and the multitude of opportunities the merger will uncover.
Then on Friday CPH went into a trading halt pending the announcement of a “material sales and revenue announcement”
This sounds promising, and as always we will write commentary on CPH (and all our investments) if we think the announcement is material. We’ve also been looking more into the proposed CPH merger and it’s definitely growing on us. We continue to hold.
GTI Resources Ltd (ASX:GTR) has started the second phase of uranium exploration after it received approval from the state of Utah to go ahead with results due in July.
Invictus Energy (ASX:IVZ) updated the market on its progress including that their recently appointed 2D seismic survey contractor has received work permits for their expatriate staff and have begun mobilising personnel to Zimbabwe to commence.
IVZ is a great example of a company that has long quiet periods where short term holders may get bored and sell to chase the next shiny thing. These types of companies get exciting when you least expect it.
🦉In our other portfolios 🏹
While it was quiet on the Catalyst Hunter front this week, Wise-Owl was in the action.
Auroch Minerals (ASX: AOU) confirmed that it will drill deep under a historically producing nickel mine in a few weeks’ time.
AOU will be chasing extensions to the existing nickel mineralisation – 3,000m of drilling will take place – large, high grade nickel intercepts should be positively received by the market.
AOU’s nickel mine stopped producing back in 1987 when the nickel price dropped to below US$4,000/tonne – this is not the case now. Nickel is currently trading at around US$17,000 per tonne, almost doubling since March 2020.
This is one of the big events that we have been waiting for since we first invested in AOU at 20c in March.
🦉Read our update here: AOU to Drill for Nickel Underneath Historic Nickel Mine
🌎 Relevant Mainstream Media:
EV Europe (VUL, EMN)
Intelli News - Volkswagen in negotiation with Czech government on building e-car battery plant
Auto News Europe - Skoda wants VW battery plant in Czech Republic
Bloomberg - Volkswagen CEO Sees Autonomy Transforming Cars More Than Electrification
Bloomberg - Porsche to Make High-Performance Battery Cells in Germany
Bloomberg - A Mining Startup’s Rush for Underwater Metals Comes With Deep Risks
Renew Economy - WA slams feds “premature” rejection of Pilbara renewable hydrogen hub
Business News Australia - Challenger telco Pentanet to raise $20m to level up cloud gaming
Bloomberg - China Giant Ganfeng Says Lithium Could Return to Boom-Time Highs
Have a great weekend,
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