ONDO, GGP, KOD, MARU, EDL, PREM, BRES & SAV all sport potential near-term catalysts. Investors are waiting for that next step up.
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As a long-term investor, I tend not to worry too much about the day-to-day share price movements of some of my favourite ventures. As regular readers will know, I usually base my buy-in points at times of maximum fear in cyclical small caps including mining and biotechs. I then wait both through the dips and the spikes, until the recovery comes, and often for years.
However, some of these spikes are actually fundamental re-rates. I have covered the following eight shares in-depth, both at Share-Talk and elsewhere, and all eight could be ripe for the next move upward.
Let’s dive in.
Eight summer small caps
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ONDO
Ondo InsurTech is fast becoming one of my favourite long-term holds — it’s developed the ‘LeakBot,’ a patented tech designed to dramatically reduce water damage and therefore decrease insurance payouts and premiums.
It’s signed a ‘go-to-market channel partnership to accelerate LeakBot deployment in North America and worldwide’ with $3.6 billion WNS, as well as a deal with US insurer Mutual of Enumclaw to install 10,000 systems in Washington state.
After a recent £815,000 placing the company is looking de-risked — and recent results from its Portsmouth Water trial showed that homes fitted with the device see a massive 60% reduction in leaks after six months. This could hugely help in Ofwat’s goal to save 36 litres of household consumption per day, with data showing that 30% of homes already have a pre-existing leak equivalent to 40 litres per day.
The result could see Ondo win the full £100 million of available Ofwat funding to install LeakBot in 3 million UK homes — and this, or a huge angel investor, is the catalyst I’m waiting for.
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GGP
Greatland Gold continues to defy shareholder expectations, remaining stubbornly below where many might consider its intrinsic value. The gold explorer recently signed over operating control of the Juri JV to Newcrest. And it’s entered into an enviable farm-in and JV with Rio Tinto concerning 1,884km² of highly prospective tenure close to flagship Havieron.
The company is backed by Wyloo Metals, and will soon be in a JV with a Newmont-Newcrest hybrid, which will be the largest gold miner in the world. Further, it’s actively pursuing an ASX listing, and has recently been sent a letter of support regarding its previously agreed AU$220 million debt commitment letter derived from a consortium of leading AUS banks.
The catalyst investors are waiting for is the finalised Havieron Feasibility Study in late summer, though with the company rubbing shoulders with mining elite, anything could happen.
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KOD
Kodal Minerals investors got pretty excited when the initial >$100 million funding package with Fosun subsidiary Hainan Mining was announced in mid-January. But fast-forward to mid-June and the contract is yet to be signed after several delays.
I’ve noted before that a similar deal at Goulamina next door experienced similar delays a couple of years ago — this is the nature of mining in Africa. However, setting and then missing unnecessarily self-imposed arbitrary deadlines is a choice — and it would be far better if CEOs would simply level with shareholders that these things take time.
However, the new deadline of 30 June I think will be comfortably met, given that both remain fully committed to the deal and the Chinese regulators have cleared it for approval. Enthusiasm will only have been spurred by recent and extremely positive new drilling results.
While CEO Bernard Aylward had previously blamed the delay on the required restructuring process, I was fairly confident that no deal would be signed until Fosun had sorted out its finances, which it now has. Indeed, the CEO now only notes that both parties ‘continue to work together to finalise all conditions precedent for the completion of the funding package.’
When the cash lands this summer, the share price will soar.
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MARU
Marula Mining boasts various battery metals projects across Africa, but the flagship remains its 100%-owned Blesberg Lithium Project — where Southern Jade Resources Pty Limited, a South African-based subsidiary of global commodity group Traxys SARL, recently advanced $5 million against first sales from existing stockpiles — which have commenced.
Marula is also a beneficiary of Q Global Commodities Group, whose CEO billionaire Quinton van der Burgh believes in the company’s ‘potential.’ Q Global is subscribing for up to £3.75 million through the issue of up to 100,000,000 new ordinary shares across five equal traches of equity investment, and van der Burgh is now Marula’s Chairman. Mining luminary Jason Brewer stands as CEO.
The near-term catalyst is the delayed FTSE AIM IPO. MARU is currently listed on the AQSE, and many investors will not invest in MARU until this goal is achieved.
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EDL
This month, Edenville Energy announced that both Brewer and van der Burgh would be taking charge; the company is changing in name to Shuka Resources and is raising close to £1.5 million in investment from the pair through their investment vehicles.
EDL’s current flagship is the Rukwa coal mine, and while there are some legacy issues including poor coal production, moisture concerns, licence problems, and an £180,000 debt owed to the company, its figures of 2,000tpm of production at $55 net per tonne yields a potential $110,000 of monthly revenue for a company with a £2 million market cap.
I have no idea what the catalyst will be but am happy to put my faith in the Brewer magic to make the share price go up.
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PREM
Premier African Minerals investors have been right alongside KOD investors during 2023’s wild goose chase. Of course, there are huge differences in the investment cases, but PREM has missed a couple of contracted deadlines to deliver Spodumene to partner Canmax.
At this point, it’s not worth assigning blame — Canmax, PREM, and plant builder Stark all know that there are always delays when you switch on a metal production plant, and there is now a solid, and very specific timeline to get production going. PREM now expects to be generating 4,471 tons per month from December as Stark optimises the plant, and CEO George Roach has intimated that much higher production is possible through 2024.
Investors are waiting for the RUS, wider EPO licence, and a new deal with Canmax — which is planning to provide short-term funding and sign a new upstream lithium hydroxide revenue-sharing agreement.
This major de-risking deal is expected to be signed this month, and the share price will react accordingly.
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BRES
Blencowe Resources hit my radar in mid-January, and the opportunity just keeps getting better. Unlike more popular shares, BRES is seemingly not on the radar of many investors, and it’s hard to understand why.
The company’s Orom-Cross graphite project is playing both sides of the Pacific, having sent multiple samples to China for testing and also having passed a key project screening test set by the US International Development Finance Corporation to gain funding assistance to bring the project to production.
Potential terms of a binding grant agreement would include DFC funding 50% of DFS costs, $4.5 million in funding, and DFC getting right of first refusal on debt finance for the full project implementation. This solution would also leave BRES with 100% of the asset, with the current JORC resource currently only 2% of the total possible deposit.
Bulk sample results are due back shortly, with the company needing to find £62 million and several years to develop the mine. The company has also raised £635,000 in a recent placing.
A further DFC announcement or quality sampling results could send its share price higher.
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SAV
Savannah is the 100% owner of the Barroso Lithium Project in Northern Portugal, 145km northeast of the City of Porto and the industrial port of Leixões. The project is widely regarded as Western Europe’s most significant spodumene lithium project, with Barroso ‘the closest European analogue to the successful Australian hard-rock lithium projects.’
The company recently received the long-delayed Positive Environmental Impact Statement from Portuguese Environmental regulator Agência Portuguesa do Ambiente. This ‘key positive decision’ has unlocked the next steps: to complete the project’s final design, to progress to the RECAPE stage of the environmental licencing study, and to finally finish the much-awaited DFS.
On 12 June, Savannah reported its new scooping study results, whereby it demonstrated ‘outstanding economics,’ — post-tax NPV of $953 million, IRR of 77% and a payback of just 1.3 years. It predicts life of mine revenue to be $4.2 billion, EBITDA of $2.8 billion, and the project itself is considered ‘by independent consultants to be of low technical risk.’
It still needs to work out the financing, but its physical location is essentially perfect. The project is scheduled to come online in mid-2026, but the initial $236 million of capex will need to be found.
I can only speculate, but a JV with an American lithium major could be in the offing.
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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 investing decisions made using the information provided.
Further, it is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
