5 top FTSE AIM stocks with near-term catalysts to watch for Q2 2023
The FTSE AIM market has fallen by 4.4% year-to-date and by 23% over the past year.
Indeed, the junior index has fallen from 1,310 points at the start of September 2021 to just 801 points today, meaning it has lost all of the gains brought about by pandemic-era ultra-loose monetary policy, and is now even below its pre-pandemic crash value.
But the wider index fall speaks to the investing strategy required when dealing with small caps. Investing in indices with larger, well-capitalised businesses — such as the FTSE 100 – is easy enough. Simply buy an index tracker and let the dividends or capital gains pour in over time. Picking individual large-cap stocks is neither easy nor preferable, with countless research articles showing that index investing beats individual stock picking.
But the FTSE AIM market is different, as the index is filled with many quite frankly terrible companies. However, the growth opportunities of the best FTSE AIM stocks mean that some genuinely ridiculous returns are possible with the right timing.
Of course, small caps are by their nature more volatile, and much riskier than their older brothers. This makes every step of the investing journey harder, especially as few are widely covered by analysts.
One key problem is keeping the faith through the dips. This isn’t hard if you have done the research, but it’s important to remember that volatility swings both ways.
But there are diamonds in the rough. And these five are awaiting near-term catalysts.
5 best FTSE AIM stocks for Q2 2023
- Premier African Minerals (LON: PREM)
Premier African Minerals is tantalisingly close to production. I have been invested in the lithium explorer — soon to be a producer — since September 2019, speculating based purely on respect for CEO George Roach’s ability to bounce back from adversity.
Those in the stock long enough have certainly earned the rewards of 2023. True to its AIM roots, PREM has enjoyed a volatile few years on the rollercoaster up the mountain.
But it’s in the endgame now. The miner owns a 100% interest in the Zulu Lithium Project in Zimbabwe, which could well prove to be one of the largest and highest-quality reserves in the world.
PREM’s production from its ‘pilot’ plant is either beginning in days or has already begun. Dividends are forthcoming, the plant will be expanded soon, and a second plant is planned. And the miner has also filed a mining licence application for the wider EPO.
But I have long speculated that offtake partner and strategic investor Suzhou (recently renamed Canmax Technologies) will buy out the entire company long before these new and exciting developments come online.
Canmax Chair and multi-billionaire Pei Zenzhue — who also owns a 5.8% stake in CATL — visited the site in early January and left with a strongly positive view.
I have previously predicted a buyout of 3p per share and continue to hold this view. Short-term lithium price headwinds are nothing to Chinese long-term supply gap issues.
But if they want this bargain price, they need to make an offer soon.
- Power Metal Resources: (LON: POW)
Power Metal shares are down by 39% year-to-date to 0.87p. I haven’t covered the stock before as I considered that its popularity left it overvalued compared to fundamentals. Ironically, the opposite now seems true — and now could be an excellent entry point for investors with a reasonable risk appetite.
CEO Sean Wade enthuses that ‘the company has an excellent resource asset set that is yet to be recognised by the wider market…there has been particular interest in a well-planned, well communicated and well-executed expansion of the company’s uranium exploration activities.’
POW now has direct and indirect exposure to multiple strategic resources across North America, Africa, and Australia, but there are two projects to keep an eye on for near-term catalysts.
The first is that drilling has been completed at brownfield site Berringa, where Wade notes that ‘4 of 6 drill holes encountered visible gold including a significant 30-metre-wide mineralised quartz vein in the final hole complete.’
The second is the company’s 100% interest in a 967 square kilometre uranium project footprint in the Athabasca Basin area of Saskatchewan, Canada, where it owns over 16 properties ( though two are under disposal agreements).
POW is a long-term hold for its massive portfolio of projects, any one of which could send the share price soaring.
- Mkango Resource (LON: MKA)
Mkango is planning to create a global Rare Earths Elements recycling and refining portfolio, but the near-term catalyst to watch is the world-class Songwe Hill Rare Earths Project in Malawi.
A July 2022 definitive feasibility study estimated a post-tax net present value (NPV) of $559 million for the project, with post-tax life-of-operations nominal cash flow of $2.1 billion, and with upfront capex costs of $311 million.
Songwe has already received approval of its Environment, Social and Health Impact Assessment, and awaits approval of the mine development agreement, the last key step toward project financing and development.
However, despite professing a desire to develop this REE asset, MKA has a £31 million market cap. There is no way for it to develop Songwe without either a massive share placement or entering a one-sided agreement with an outside investor.
The most probable scenario in my view is that Songwe will be sold — likely for multiples of MKA’s entire current market cap — with the profits fed into MKA’s recycling and refining portfolio across the UK, Germany, Poland, and the US.
- Angus Energy (LON: ANGS)
Angus Energy may be the marmite of FTSE AIM picks, but those who timed their trade right are up 20% in the past month. And jam tomorrow may soon be jam today.
In early March, ANGS provided a welcome update on its Saltfleetby flagship project; SF7v drilling was successfully completed, the second compressor was installed, and a new CEO had been appointed in the form of Richard Herbert, with predecessor George Lucan appointed Executive Chairman. While Herbert is in charge of the day-to-day, Lucan runs the wider strategy.
Importantly, the group has had an ‘offer received from a group of core shareholders to provide a junior debt facility to cover any drilling programme overruns as well as diligence costs with potential acquisitions, as an alternative to a dilutive placing.’ Another placing would not be welcome by investors and would likely see a large sell-off.
Then 8 March, the company announced that the second compressor was fully commissioned, and that ‘well completion continues on the sidetrack well SF7V with clean-up work awaiting coiled tubing due late March.’
Investors wait with bated breath as the coiled tubing mobile unit is now on site.
- Marula Mining (LON: MARU)
Marula has not yet launched its listing on the AIM market, but it may as well have already been welcomed into the dysfunctional family — with a listing almost a certainty in the near future.
For clarity, the miner is moving from the AQSE market, so there should be no dilution or other unwanted side effects from the listing.
CEO Jason Brewer thinks it has been ‘a great start for us in 2023…(given) the rapid progress we’ve made at Blesberg, the support we’ve received from major global trading groups and from one of South Africa’s most dynamic and entrepreneurial mining groups in Q Global Commodities.’
Q Global Commodities CEO Quinton van der Burgh is a billionaire, and recently noted that ‘Marula has potential, and we intend to assist the Company in meeting its growth targets.’
MARU’s flagship remains the 100% owned — and already producing — Blesberg Lithium and Tantalum Mine in South Africa, which has seen a $5 million advance from an agreement with Southern Jade Resources Pty Limited, a South African-based subsidiary of global commodity group Traxys SARL.
But Brewer hopes MARU will have ‘very quickly another producing mine at our Kinusi Copper Project’ in Tanzania. And there’s also graphite and REE projects in the development pipeline.
Looking at the constant updates on social media, Brewer seems to be onsite at multiple projects simultaneously. Shares have risen dramatically in recent months, but the AIM listing could see further rises soon.
Full original comments from MARU CEO Jason Brewer and POW CEO Sean Wade are below:
‘It certainly has been a great start for us in 2023, both in the market with the record high share price and also with our projects, each of which we continue to advance towards development. I’m confident that the rest of 2023 will be equally as successful for us and part of that will be down to what our AIM listing will bring to us. I’m sure it will raise our profile in the market, provide increased interest to investors in the many opportunities and give us that platform that we are truly deserving of now. We are able to progress this move to AIM on the back of the rapid progress we’ve made at Blesberg, the support we’ve received from major global trading groups and from one of South Africa’s most dynamic and entrepreneurial mining groups in Q Global Commodities. On AIM we will now be bringing a producing mien at Blesberg and I hope very quickly another producing mine at our Kinusi Copper Project. This coming week I’m on site at our Nyorinyori Graphite Project with the Takela Mining team and I’m very excited at what that visit will demonstrate and I look forward to confirming the potential that we’ve already seen there.’
- Jason Brewer, CEO Marula Mining plc
‘I am very pleased to be appointed as CEO to lead Power Metal. In my view, the Company has an excellent resource asset set that is yet to be recognised by the wider market and thus fairly reflected in the market capitalisation of the Company. The exciting challenge of unlocking this inherent value will be addressed in part by the completion of the disposal transactions and focusing our business operations on advancing the key exploration interests in Africa, potentially with strategic partners. In addition, and notably, there has been particular interest in a well-planned, well communicated and well executed expansion of the Company’s uranium exploration activities. I firmly believe that Power Metal is in a great position to advance its projects and continue to gain recognition in the wider mining community and with recognised sector focused investors.’
- Sean Wade, CEO of Power Metal Resources
This article has been prepared for information purposes only by Charles Archer. It does not constitute advice, and no party accepts any liability for either accuracy or for investment decisions made using the information provided.
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