Weekly Small Cap and IPO Wrap: Local shares spike as Albo’s off to be the Wizard of Oz in Asia
Politics was the winner in another week of predictable uncertainty across global money markets.
Pretty much… pic.twitter.com/htaDiPb9JM
— MajorHedgeFund (@MajorHedgeFund) November 10, 2022
Although a wonderfully depressed read on Aussie consumer sentiment didn’t rate a mention here at Stockhead Central earlier this week – and it doesn’t deserve one now – no matter how much Westpac reckons it might highlight the impact of declining real income and higher interest rates. Your income is not real and they’re not interested in your rates, no matter how high they get.
The Westpac-MI Consumer Sentiment survey reported a sharp decline in confidence, the headline index says your confidence is down 6.9% in November.
“It’s clear that inflation, having reached 7.3% yr at September 2022, and interest rates remain the key issues weighing on the minds of consumers. At 78.0, the headline index has sunk below GFC-era pessimism, suggesting that the cost-of-living pressures facing households will have a material impact on real spending capacity into year-end,” Westpac’s rates whisperer Bill Evans says.
Those ludicrous weekly-weekly, feely-feely reads from the major banks about how you might feel when out and about shopping, spending, consuming or working mean absolutely nothing other than making sure you hear their names on a semi-nightly basis when you’re sad and alone, perhaps feeling overly-sentimental when making dinner for one in front of the ABC news.
In contrast to your feelings on the matter, local markets – where money actually is – has gleefully struck out at half-year highs following a jubilant Wall Street on a quasi-hysterical, nigh-ecstatic surge of market confidence, all off the back of a better-than-dreaded Stateside CPI print and the confusing, discombobulating kinda-neutral-rain-stopped-play outcome of US mid-term elections which we’ve been saying were The Trumpmeister’s to lose.
The benchmark ASX 200 jumped 2% at the outset clocking 7,100 before lunch, with traders placing bets on a slowing rate of monetary tightening over at the US Fed. The emerging companies (XEC) index also shot higher.
These US midterms – as history proves – were an absolute shoe-in for the opposition Republican Party and while we’re waiting on the probably rigged final votes confirming the make-up of the US Senate, it seems clear now no one knows what’s happening, what they’re talking about or why they’ve been telling everyone.
When Democratic Rep. Abigail Spanberger was reelected in Virginia’s 7th District, all I could think while lying in bed at 2am Batemans Bay time sad and alone, perhaps feeling overly-sentimental and listening to the BBC was ‘only in America’ could an ex-CIA operative called Spamburger kill it in Kongress.
I mean. FFS America:
Anyway. After checking my insanity at the door, I Googled the central Virginia district where SpannyB was running in and lo and behold it’s considered a litmus test for how Democrats might do as they chucked their keys in the midterm bowl for swinging districts which in this election cycle, I’ve been telling everyone historically pleases the ‘publicans.
SpannyB wooed and apparently won moderate Republicans and indy voters, while trying to get the hell away from anything touched by the Democratic Party and its President.
Following the (smiling as I write) 7% kick on the Nasdaq overnight, is it surprising that the S&P Global Investment Manager Index says US equity investors see politics as less of a hassle than monetary policy and the global macroeconomic environment?
“(These) remain the two biggest factors weighing on equity market performance in the near-term and it is not hard to see why that is so,” the non-ratings agency part of S&P said in a note.
The other ratings agency looking to trim a few basis points of your sentiment today is the appropriately named Moody’s which promises that the global economy is on the “verge of a downturn amid extraordinarily high levels of uncertainty.”
Try this then:
“We expect real GDP growth of the G20 economies to decelerate to 1.3% in 2023, significantly lower than our previous estimate of 2.1% and down from an estimated 2.5% growth this year.”
Moody’s says it’s lowered those baseline economic expectations even further, “due to persistent inflation, monetary policy tightening, fiscal challenges, geopolitical shifts and financial market volatility.”
Meanwhile, JPMorgan’s latest Global Composite PMI this week, had global economic activity contracting for a thirrd straight month on weaker demand.
Meanwhile, there is indeed the sulphuric whiff of KordaMentha Restructuring about the imploding crypto-businesses FTX Australia today (and its wholly-owned subsidiary FTX Express). A scent which rises thickly upon the air when a formerly okay-looking organisation collapses into the quivering heap we call voluntary administration.
That’s our situ on Friday, after the FTX rival/saviour Binance walked away from the saviour part of that sentence, thus sentencing FTX Australia and its parent, FTX Trading to a really solid KordaMentha Restructuring.
On a happy note then: Funny nation fish farmer – New Zealand King Salmon (ASX:NZK) – says it’s all green lit to farm the first open sea finfish farm in the funny country next door.
Six whole years in the making, (the share price is up about 12% on Friday), acting chief executive Graeme Tregidga told the local bourse that ocean farming is a big part of the NZK long-term strategy, but inshore farming remains the bread and butter.
“We’re pleased our plans to farm in the open ocean have been given the go ahead. This is a first for New Zealand and is a significant decision for the aquaculture industry,” Tregidga said.
Still on the political front. Our Albo is off on a 9 or 10 day jaunt around the region for various APEC, ASEAN and G-1,000,0000 meetings. He’ll do well to avoid Chinese leadership, and unless something really catastrophic happens, he should be able to. China, for its part says it wants to ramp up some ASEAN wheeling and dealing – but Albo’s having his little legs pulled if he really thinks China sees us as anything other than an outlying US province which keeps getting sent the wrong invitations. APEC: ditto.
Ah. More inflationary trains leave the local APAC region station, with Jakarta and Manila’s central banks (Bank Indonesia and Bangko Sentral ng Pilipinas) updating their monetary policy setting with further rate hikes expected. This is as Indonesia hosts the G20 meeting with various world leaders in attendance.
US and Chinese retail sales and industrial production figures. GDP data from the eurozone and Japan will also be expected in addition to inflation data from Canada, the eurozone and Japan. Meanwhile, central banks in Indonesia and the Philippines will update their monetary policy decisions with further rate hikes expected.
There’ll be US retail sales and Chinese industrial production to chew over, while Japan releases third quarter GDP alongside some further inflation data out of Japan and India.
IPO: $10m at $0.20
Taiton’s delayed IPO features projects that include the Lake Barlee gold project in WA, the Highway polymetallic project in SA, and the Challenger West gold project also in SA.
The company believes its dominant land holding at the Highway Project will allow it to potentially uncover the next elephant deposit in Australia.
Taiton will be undergoing a series of grassroots exploration and also several walk-up drilling targets.
Listing: 14 November
IPO: $8m at $0.20
Tiger Tasman Minerals has projects in WA and QLD focused on copper, lithium, nickel, manganese, silver, gold, base metals and industrial minerals (DMM) essential to the global clean energy transition, decarbonisation and a more sustainable future.
The projects are in proven and prospective jurisdictions including Paterson Province, Fraser Range, Earaheedy Basin, Ashburton and the Townsville region.
The Iron Skarn silver-copper-lead-zinc project (QLD), the Copper Canyon copper-gold project (WA), the Fraser Range lithium-nickel-copper project (WA), the Mt Minnie manganese project (WA) and the Crater copper-zinc-lead-silver-gold project (WA).
Listing: 15 November
IPO: $6m at $0.22
This company develops and sells Unmanned Aerial Vehicles (UAVs) or drones for commercial applications – and there’s a bunch of them.
NGL says its tech has applications across solar farms, ports, O&G facilities, critical infrastructure like dams and power stations, in construction, border patrol, securing pipelines, fire and oil spills along with search and rescue, crowd control and for prisons.
Basically, the drones can respond to a threat; when a security alarm is triggered the system automatically dispatches a drone to the alarm location and streams live video to the security team.
Listing: 15 November
IPO: $12m at $0.20
DeSoto holds the Pine Creek project in the Northern Territory’s prolific Pine Creek gold and pegmatite province.
The company’s six granted licences will cover 1,467km2 and three licence applications cover 420km2.
Historical drilling has identified gold mineralisation hosted but there has been no lithium exploration conducted in the Project area – which DeSoto sees as a “significant” opportunity.
It also takes encouragement from the fact that Core Lithium (ASX:CXO) recently acquired ground adjacent to the Pine Creek Project and is now exploring for lithium across the Project area.
Listing: 16 November
IPO: $32.5m at $0.20
This resources player is focused on developing a gold platform in West Africa.
The company is primarily focused on the development of the Kobada Gold Project in Southern Mali, which has a global resource base of over 2.3 Moz of gold and the potential to produce more than 100,000 ounces of gold per annum.
Listing: 16 November
IPO: $7m at $0.20
SC1 provides a scientific provenance verification service for agriculture, seafood, mining and resource sectors.
SC1 says scientific analysis of physical product samples allows clients to mitigate risk, validate digital data, protect their brand and support transparency within their supply chains.
The company’s origin verification solution is able to identify the mine, farm, fishery or plantation from which a product originated.
Listing: 22 November
IPO: $7m at $0.20
This explorer is focused on high-demand battery minerals including lithium, nickel, cobalt, copper and PGEs, with four project areas in WA.
Its main focus are the Dundas licences – in particular the Dundas South project which is in close proximity to Alliance Mineral Assets’ (ASX:A40) Bald Hill lithium and tantalum project, Greenstone Resources’ (ASX:GSR) Mt Thirsty cobalt-nickel project and Liontown Resources’ (ASX:LTR) Buldania/Anna lithium project.
Listing: 29 November
IPO: $6m at $0.20
Orpheus was established to explore for and discover greenfield uranium deposits in South Australia and the Northern Territory at economic grade and scale.
And the focus is exploring around approved and operating (or recently operating) uranium mines because these are also the jurisdictions considered to have high prospectivity for economic uranium deposits and have the regulatory systems at both state and federal level supportive of the development of new uranium mines.
They have four projects in the NT – Woolner, Ranger North-East, Mt Douglas and T-bone – and two projects in SA – Frome and Cummins.
Here are the best performing ASX small cap stocks for November 7 – November 11:
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Bevis is saying that the payoff has arrived for Invictus Energy (ASX:IVZ) and its shareholders with the announcement that its Mukuyu-1 well had confirmed a working hydrocarbon system in Zimbabwe’s Cabora Bassa Basin, sending its shares soaring 157% to 27c.
There is good reason for this outperformance, Bevis reckons.
“Mukuyu-1, the company’s very first exploration well to test this highly prospective gas play, reported fluorescence and elevated gas shows of up to 65 times above background levels in the Upper Angwa primary target from a depth of about 3,070m.”
For the uninitiated, that’s a pretty good sign that gas is present in the reservoir, though how much and how well it can flow are questions for drill stem or flow testing.
“And Invictus might only just be getting started. Gas shows were not measured at depths shallower than about 2,820m, which pretty much includes the Dande, Forest and the majority of the Pebbly Arkose horizons, due to multiple equipment failures,” he adds.
“With elevated gas shows and resistivity detected in the shallower Pebbly Arkose formation, there’s a very real chance that gas shows were also present in these three shallower areas, the company simply couldn’t tell because its equipment decided to flake out.
“It gets better. Those background gas readings? They have been increasing with heavier hydrocarbon components observed as the well gets deeper following the repair of the mud gas chromatograph system.”
Mukuyu-1 is currently at a depth of 3,086m, giving it another 414m to go before it reaches its planned total depth of 3,500m.
“Should this increase in background gas readings continue, we could be looking at some pretty hefty levels of gas saturation and possibly hydrocarbon liquids or condensates that are almost always welcome given they are a valuable product as well,” B Yeo, the little legend over in WA says.
In lithium land, Argonaut Resources (ASX:ARE) is also up triple figures this week.
ARE says it has received applications for new shares which will raise approximately $1,400,000 before costs.
Capital raised will be used to fund lithium exploration at the Darson pegmatite swarm near Higginsville in WA, efforts to restore the Lumwana West licence in Zambia, and company overheads.
Here are the least performing ASX small cap stocks for November 7 – November 11:
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