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THE SUNDAY ROAST: The ASX small caps that lit a fire under Stockhead’s experts this week
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Who wants to invest with integrity?
Maybe don’t answer that and we’ll just assume it’s a resounding “ME” from everyone reading.
In 2021, the ASX let listed companies know it takes the integrity of unaudited reports released to investors seriously. Recommendation 4.3 took effect, stating that:
“A listed entity should disclose its process to verify the integrity of any periodic corporate report it releases to the market that is not audited or reviewed by an external auditor.”
A year later, a research paper prepared by Deakin University found more than a quarter of a sample group of 240 largest ASX-listed companies made… wait for it… no effective disclosure in relation to the ASX Recommendation 4.3.
Okay, you could read that as the majority of ASX 300 companies made efforts. But the level and quality of those responses to Recommendation 4.3 varied wildly. And just 25% of the sample were rated as providing clear and comprehensive descriptions of the processes they used to ensure the integrity of their unaudited periodic corporate reports.
Two, however, did so well that Deakin singled them as particularly conscientious in their response to Recommendation 4.3.
SCA Property Group (ASX:SCA) has clear verification protocols undertaken by management that include an internal annual review of disclosures. SCA directors are then provided with the opportunity to provide input on the relevant announcement and finally once verified, all announcements are reviewed by the CEO, CFO and General Counsel of the company.
29 Metals (ASX:29M) scored highly according to Deakin for following similar protocols to SCA where it conducts verification by “ticking-and-tying” back to source documentation derived from the company’s information management systems.
Real estate and mining. Faith in humanity restored.
Guy Le Page
RM Corporate Finance
Dr Copper’s diagnosis on the global economy is in, and it’s along the lines of “sick”.
The red metal barometer hit a nine-week low of US$3.30lb last week, while LME stocks hit 129,000 tonnes. That’s a more than 25% rise in a fortnight. Not a good look for the metal hailed as the indispensable saviour for our transition to a low emissions future.
It is, however, a great time to buy stocks in the metal hailed as the indispensable saviour for our transition to a low emissions future, and Guy Le Page can’t find anything wrong about American West Metals (ASX:AW1) right now.
It listed on the ASX in December 2021, with key projects in Utah and Northern Canada. It’s that second one – the Storm/Seal project – pulling interest after releasing some high-grade near surface copper results from recent drilling campaigns.
We won’t bore you with the numbers. Le Page read through the company’s September presentation and his view is that with “an enterprise value of around $24 million, I don’t think you could go too far wrong picking up the stock under 15-16 cents given the near certainty of delivering more eye-watering drilling results”.
“This one won’t disappoint…”
Barry FitzGerald
Garimpeiro is also happy to remind anyone still listening that the world is facing a copper supply cliff by 2025. It’s pretty simple – we’re using more than we’re finding, and we’re not investing enough to find more.
Looking for some cheap exposure? It “should come with a long mine life in a Tier 1 location,” Fitz says, “and without the need to spend hundreds of millions of dollars on power supplies and infrastructure”.
ASX options on that front are “limited”. But they do exist.
Caravel Minerals (ASX:CVV) has a namesake project in WA’s central wheatbelt region that was discovered in 2010 and now stands as a 2.84 million tonne copper resource. It currently sits on sale at 22c per share for a market cap of $92m.
Why? Gareimpo says it’s low-grade stuff. But only by Australian standards, and the market can’t seem to look beyond that right now. It’s actually on par with the average North American grade… and by 2025, we’ll all probably just be grabbing whatever we can.
And there are some caveats, like a $1.2bn cost to get it into production. But even a US50c increase in copper price would add $1bn to the project’s net present value.
The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.
