Traders Cafe with Zak Mir: Ascent Resources, Bacanora Lithium, Supply@Me Capital, Tern, Xtract Resources

One of the best, and sometimes the worst aspects of the small cap market, something which has over the years become synonymous with AIM, is rumour and gossip. Of particular interest are those situations where there is a large percentage rise in a stock without news. Normally, this gets hit by a cooling RNS, where the company in question says it knows no reason for the rally in the shares, and the rally reverses. However, just now and again there is a positive acknowledgement of the news the buyers were hoping for. In the case of Ascent Resources (AST) traders have been wishing on a further update on news from the company at the end of last month. At the time it said it is advancing towards initiating international arbitration proceedings against the Republic of Slovenia Ascent also signed up Enyo Law LLP, a specialist arbitration and litigation legal firm, to pursue the Company's claims on a fully contingent basis through a damages-based agreement. Clearly, some in the market think that Enyo would not have stepped into the fray if it did not think there was a decent chance of winning. The 25% rise in Ascent shares will most likely mean the company will have to explain itself soon one way or the other via a RNS.

It can be a tough job being a stock market darling, and even tougher when some of the shine gets eroded by delay or the vagaries of events. Nevertheless, it would appear that inventory monetisation play Supply@Me Capital (SYME) has still been given the benefit of the doubt by the punters, both in the wake of the recent £5.6m convertible loan notes, and in the wake of Annual Report and Consolidated Financial Statements for the Year Ended 31 December 2020. This revealed a loss of just under £3m. But of course, what is such a sum when you are poised to initiate a strategy for supply chain finance in a $17 trillion market (according to McKinsey’s figures).

Also with its audited financial results in focus for the 12 months ended 31 December 2020 was mining group Xtract Resources (XTR). On the operational side the company said that a major step was the acquisition of the Bushranger Copper-Gold project in NSW, Australia in late October 2020. The Directors were extremely encouraged by the results of the initial programme and are planning a second drilling programme to commence early Quarter 3, 2021 for at least 20,000m. Xtract also said the Racecourse Project in the Lachlan Fold Belt has well surpassed its expectations, and it is looking forward to phase 2 of the drilling programme. Elsewhere, in Zambia the period commenced with reconnaissance drilling and the results were extremely encouraging at Eureka.

A stock which has been attacked by the bears, although with progressively less effect, has been internet of things specialist Tern (TERN). Here the shares broke out through the top of their previous 15p range high at the beginning of last month, and unlike previously, have progressively gained momentum. The reason for this is that at long last Tern is starting to realise the value of its portfolio, something which its shareholders have been wanting for years. The latest update has been regarding its Wyld Networks Offering in connection with its IPO on NASDAQ First North. Wyld Networks is to start trading on NASDAQ First North on 2 July 2021, with Tern and its shareholders set to benefit from any future share price appreciation – something which will no doubt disappoint those who may be short of Tern stock.

There are situations when the stock market provides intrigue, and the present set up with reference to Bacanora Lithium (BCN) is one of them. Despite a massive surge for the underlying commodity since the pandemic, the offer from Ganfeng is alleged by some shareholders to be way off the market. Indeed, it is around half where the shares peaked a couple of years ago. Set against this is the way that no one else has come in with a counter offer, perhaps deciding that discretion is the better part of valour in a management backed situation. It is also interesting that shares of Zinnwald Lithium (ZNWD), in which Bacanora has a significant stake have been soaring of late. But even this has not fed through to the BCN share price, yet. It may be that some in the market are wishing that the disclaimer in the latest Bacanora EGM RNS, “There can be no certainty that a firm offer will be made even if the pre-conditions referred to above are satisfied or waived,” may come to pass.