There was a slight problem for those looking to pick the winners for 2022, this time last year. At that point, hardly any of the black swans that we are now all too familiar with, war, inflation, rising interest rates, and ultra-high taxation, were on the horizon.
10) Firering (FRG): 8.5p Target 25p
In case anyone is wondering why Firering is one place above Premier African (PREM) in the list of stocks for 2023, the reason is that in terms of lithium intercepts for H2 2022, FRG is at 8 and PREM at 10. In fact, our friends at Atlantic Lithium (ALL) are up at 4 in the hit parade, while AfriTin (ATM) stood at 6. Of course, all of these companies look set to be winners, it is just a matter of which ones offer the greatest upside, share price growth from current levels / market cap. In the case of Firering, the company knocked the ball out of the park with its November update in which it revealed 64m, grading 1.24% Li2O, what it described as “exceptional and amongst the best intercepts recently reported by our global peers.” This should have been enough to deliver a significant re-rate for the shares, and it did until this month’s final set of results from the Atex Project of 25m @ 1.39% Li2O. Perhaps it was because this was revealed just before Christmas, but the market gave a rather curmudgeonly response second time around. However, as the data above has underlined, FRG is rubbing shoulders with world class peers, and unlike the names mentioned above whose market caps are towards £100m and above, FRG is only standing at £7m. So the upside seems to be primed, especially given the way that company received an $18.6m investment to advance its lithium projects through to DFS Stage. This underwriting of cost is certainly not be sniffed at, and therefore makes this relative market newcomer the play to look at, especially for those who feel that they may have missed the boat in other sector peers.
9) Galileo Resources (GLR): 1.3p Target 2.5p
Given how many companies that Colin Bird is on the board of, it would have been churlish not to include one of them in the line up for 2023. While it was a close run thing between Galileo and African Pioneer, the mantra of cash is king won the day. This refers to October’s announcement of the company electing to receive its share of the Glenover Consideration as £5.2m in cash rather than Afrimat shares. Although, the shares are currently up one third on the year, the news in the autumn would have perhaps been greeted with rather more enthusiasm if we were in more “normal” stock market conditions. Looking to the future though, there are plenty of fresh fundamental drivers to anticipate in 2023. For instance, earlier this month GLR found evidence for historic and current gold mining along a 7 kilometre-long outcropping greenstone trend at the Bulawayo gold project in Zimbabwe. In November we heard news of the completion of drilling at its Luansobe Copper Project in Zambia. At the time the company said the Mineral Resource Estimate will provide the information required to progress towards a potential open pit mine plan. So we have GLR fighting on multiple fronts, and with Glenover reminding us that when appropriate it is happy to cash in for a considerable sum, something that more than justifies not only the present £15m, but considerably more.
8) URA Holdings (URAH): 1.35p Target 3p
One of the rules we were reminded of this year as far as small caps, is that it is not necessarily how good the news a company releases that determines the stock market reaction, but when. For instance, releasing a knock out update in the middle of a bear market can be as bad as simply not releasing anything at all. In the case of recent stock market entrant URA, we were treated to a lesson in just how such a scenario can pan out. URA came to the main market of the LSE back in March with a market cap of just £3.2m, quite a result given the new rules regarding a £30m market cap floor. Taking advantage of this, and with this being a plus for investors, the company led by CEO Bernard Olivier of Lexington Gold (LEX), ticked all the right fundamental boxes from the get go. This included purchasing the Gravelotte emerald mine in South Africa, historically one of the largest emerald mines in the world and was operational from 1929 to 2002. As if this was not enough, last month the company revealed a total Independent maiden JORC (2012) Mineral Resource Estimate of 29 million carats of contained emerald. You do not have to be an expert in the gems space to work out that not only is this a big number for any company, but for a minnow such as URA is concerned, it is transformational. The estimated value of 29 million carats is as much as $261m. If small cap investors had even a modicum of enthusiasm they would have jumped on the URA bandwagon. As it is we would assume that during the course of 2023 the value that the company is sitting on will be more fully appreciated.
7) Emmerson (EML): 5p Target 15p
While URA can certainly be regarded as a microcap and perhaps not everyone’s cup of tea, even though it is on the main market, a larger company which also apparently has everything stacked up is Emmerson. This year was a big one for the Morocco focused potash play, with this all the more impressive given the way the such projects as it is involved with are typically a tangled web of red tape and bureaucracy. The pivotal news came in September was that Emmerson was fully funded after a £6m equity investment from Global Sustainable Minerals Pte Ltd at 6p per share. The company added that this cash would be enough for it to complete basic engineering work, permitting and project financing processes through to a construction decision for Khemisset. This was finessed last month with the announcement that the company had signed a non-binding MOU relating to the offtake of potash and salt to be produced. The benefit of this is as EML said that it would de-risking the development for debt and other financiers. All of this suggests that we are well advanced on the runaway to create Africa’s first much needed commercial potash mine. With the shares now near 5.4p it would appear that a floor is in place for the stock to move up to a more realistic level that takes into account all the hard work done to date by CEO Graham Clarke and the team.
6) Lifesafe (LIFS): 48p Target 100p
Another of the rather elite breed of IPOs for 2022, fire safety group seems destined to deliver as a leader in its chosen field. The strategy here was sound in that the company chose to lead with exploiting the domestic consumer regarding its StaySafe 5-in-1 fire extinguisher which can extinguish electrical, paper, textiles, cooking oil, petrol and diesel. The added plus is that it does this in an eco friendly way, something which has made the product a best seller on Amazon Prime. With this “every home should have one” product, Lifesafe has a solid revenue generating base to expand the footprint into the industrial area, as well as offering more products across the board for the domestic market. However, LIFS is doing well enough even with the present offering, with the upwardly revised its expectation of FY22 revenue to between £3.5m and £3.8m versus the previous £3m announced early this month. However, the big leap from the group for 2023 is going to be the newsflow associated with expansion into the wholesale and industrial areas. The big prize would be progress in the lithium-ion area, where as things stand when such batteries catch fire, the results can be disastrous. One only needs to think of laptop or EV fires to understand the scale of the problem and the unique position the company is to address a massive addressable market. Of course, investors in 2022 have not exactly been keen to give the benefit of the doubt to new concepts, even one as strong as next generation fire extinguishers. This is even though given how horrific EV fires can be one would imagine that fire extinguishers that can put them out would be mandatory as soon as they were produced. We are on the runway for such a scenario as earlier this month LIFS announced that it had made patent applications for a new fluid to extinguish lithium fires in lithium batteries. One would assume that Tesla’s Elon Musk, amongst other EV manufacturers will be taking note. In the meantime for 2023, with StaySafe 5-in-1 continuing to fly off the shelves and with the prospect of an expanded product roll out their appears to be little reason for LifeSafe shares to be trading below their 75p IPO price. Indeed, with only 22 million shares in issue it will take very little for the stock to squeeze back up from whence it came and beyond.
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The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.
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