Wednesday, September 27th 2023

Does lower inflation mean better times ahead for small cap investors?

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Will the latest inflation data open the way for speculative small caps to come roaring back amidst the gloom of the past couple of years?


“…A return to a low inflation, low interest rate environment, would of course help these kind of value small caps to do even better. And, above all, they tend to be overlooked by analysts, with share prices that can be grossly inaccurate relative to their earnings potential…”


With so many companies at exceptionally low valuations, the time may be right to look again at micro cap stocks that have the potential to supercharge portfolio performance. Below we pick out a 15 small cap companies worth watching :




Times have been tough for all of the world’s markets over the past couple of years. The performance of the British economy and its exchanges has been particularly laboured, generating increasing concern that UK is becoming something of an outlier. But the unexpected dip in the rate of the inflation announced last week may prove a welcome turning point for investors in London markets.

The UK economy is still 0.5pc smaller than it was before the onset of the pandemic. Despite everything, the US economy has grown by 5.6pc and the eurozone by 2.2pc since Q4 2019. The FTSE performed decently last year, its weighting towards value stocks ensuring it fell somewhat less than the global market. But this year it has again fallen behind, and by quite some way: the S&P 500 and the Stoxx 600 have climbed 18pc and 9.3pc since January, compared with the FTSE 100’s 2pc rise.

“…But, more significantly, there are clear signals that UK inflation might have at last have peaked. The most recent figures reported a rate of 7.9pc in June, still well above the Bank of England’s 2pc target, but an unexpected – and sharp – drop from the 8.7pc reported for the previous month….”


The Bank of America’s most recent survey of fund managers found a net 21pc have a smaller allocation to UK stocks than benchmarks would suggest: the US is underweight by 10pc and the eurozone by just 1pc. UK stocks have been extremely cheap for a long time, with a price-to-earnings ratio of 9.7 – as against 13 in the eurozone and 24 in the US – but buyers have been reluctant to bite.

Nick Train, manager of the £4.4bn Lindsell Train UK Equity fund, fears that ‘markets can stay frustratingly cheap for a very long time’. Though noting that the FTSE’s low valuations offer opportunities to snap up ‘wonderful companies that are wrongly priced’, Train remains wary: ‘I am cautious because I know that one person’s ostensibly low valuation is another’s moribund value trap.’

As TMS readers well know, the withdrawal of the supportive low interest rate environment that prevailed after the financial crisis and through the pandemic, has been particularly hard on small cap growth stocks. To briefly recap, the Numis Smaller Companies Index, which has tracked the bottom 10pc of the UK market by value since the mid-1950s, fell by 16.3pc last year, and the AIM All-Share plunged by by 31.1pc. Tom Slater, manager Scottish Mortgage Investment Trust, itself still in the doldrums after falling from the skies last year, said that 2022 was the worst start to a year for growth stocks since the Great Depression.

The City’s long term underperformance – Apple is now worth more than the FTSE 100 combined – prompted Chancellor Jeremy Hunt to use this month’s Mansion House speech to announce proposals for reinvigorating UK markets. Pensions savings will be channeled towards potentially higher growth, smaller funds will be encouraged to consolidate, and analyst research on smaller companies will be made more widely available to retail investors.

Not surprisingly, then, recent signs of brighter economic weather ahead have been seized by markets. The UK recorded a better-than-anticipated economic performance in the three months to May, powered by strong retail sales, leading the consultancy EY to upgrade its UK economic growth forecast for this year to 0.4pc from 0.2pc.

But, more significantly, there are clear signals that UK inflation might have at last have peaked. The most recent figures reported a rate of 7.9pc in June, still well above the Bank of England’s 2pc target, but an unexpected – and sharp – drop from the 8.7pc reported for the previous month.

The figures offer hard evidence that the UK isn’t suffering some sort of exceptional, structural inflation problem relative to the rest of the world, encouraging markets to scale back their expectations of where interest rates might peak. Last week UK stocks staged their biggest rally since early January, the FTSE All-Share index surging 3.1pc. Speaking to the Financial Times, Neil Birrell, chief investment officer at Premier Miton said: ‘I wonder whether we’ll look back at that June inflation print and think that was the day, that was the catalyst for a turn.’ Noting that even good UK-listed companies are 20 to 30pc cheaper than their rivals overseas, he argued that although ‘there’s a malaise hanging over the UK … I think it’s got to a stage now where the out-and-out value that exists here in the stock market is at a level that’s not been seen before.’

FT commentator Katie Marin pointed out that lower inflation has the crucial knock-on effect of reducing the value of Sterling, which fell 1pc after the news. A strong pound weighs heavily on UK-listed stocks, two-thirds of which generate revenues outside the UK. When the pound fell in 2016 after the Brexit referendum, the FTSE was up by a quarter by the end of the year. Although foreign exchange markets are notoriously hard to read, Marin ventured that ‘it does seem plausible that a meaningful patch of sterling weakness lies ahead, either because the inflation rate floats lower, taking the pressure off the BoE to push interest rates beyond 6pc, or because the Bank tips the country into serious pain.’

All of which is particularly good news for the speculative end of the small cap market. 

As previous articles by TMS have noted, there is a well documented ‘small company effect’ that can shield well established micro stocks from the periods of turbulence that beset the wider markets. Because their value is more closely correlated to the quality of their operations, many need only increase their market share at the margins to secure decent growth. They are nimble, able to respond to changing market conditions more quickly. Those in niche markets can continue to thrive during global recessions. In summary, the best demonstrate the qualities of ‘anti-fragility’ defined in Nassim Nicholas Taleb’s influential book, growing stronger when exposed to volatility. And, above all, they tend to be overlooked by analysts, with share prices that can be grossly inaccurate relative to their earnings potential.

These and other qualities account for much of the well proven capacity of micro caps to outperform the wider market over time. A return to a low inflation, low interest rate environment, would of course help these kind of value small caps to do even better. But it would also open the way for speculative small caps to come roaring back. Amidst the gloom of the past couple of years it is easy to lose sight of how well micro caps were doing until the downturn: AIM had enjoyed six years of gains, performing particularly strongly in the wake of the pandemic, more than doubling in the 18 months to September 2021.

With so many companies at exceptionally low valuations, then, the time may be right to look again at micro cap stocks that have the potential to supercharge portfolio performance. Here are a few worth considering, all of which have been covered in more detail on TMS over the past six months.

Ascent Resources


Ascent Resources (AIM:AST), an oil and gas exploration and production company focused on onshore European production and interests in South America and Africa, is positioned to move beyond contractural disputes that have checked the development of its Slovenian operations.

The company’s current operations focus is its 75pc interest in the Petišovci gas project in north-eastern Slovenia on the borders with Hungary and Croatia. An independent volumetric assessment of the field estimated P50 contingent gas resources of 456 bcf, and a 8.8 MMscf test result has been recorded.

AST’s strategy to unlock the project’s full potential has two phases. The first, the export of untreated gas to Croatia from two wells, has been executed. The second is to lever increased production from the field’s tight rock reservoir through hydraulic re-stimulation. This would allow the re-entering and deepening of existing wells, and the construction of a processing plant to treat the gas for injection into the Slovenian national gas network, the channel most likely to secure the highest price.

Implementation of the second phase was stalled last year when the Slovenian government imposed a blanket ban on fracking. AST immediately began arbitration proceedings against the Republic, with a monetary damages claim of of up to €656m. The first procedural hearing is due.

While working to resolve the disputes AST’s ongoing operations at Petišovci have continued benefited from Europe’s strong gas market. The company is also pursuing ore processing initiatives beyond Slovenia, identifying Peru, currently the world’s second largest copper and silver producer, as a primary target: the company has announced an intention to bid for ownership of Amur Minerals Corporation.

With a set of producing wells benefiting from high European gas prices, evolving ore processing and secondary mining recovery prospects, the ongoing recovery of revenues due from a joint venture partner, and the possibility of a significant settlement payment with the Slovenian state for lost earnings, AST is one to watch. At the time of writing AST’s share price was 3.38p and its market cap £4m.

Block Energy


Block Energy (AIM:BLOE) continues to roll out its multi-tiered strategy to unlock the full potential of a now extensive portfolio of oil and gas assets in the country of Georgia.

The company was founded to bring cutting edge drilling technology to a geology that has offered rich indications of its potential since the Soviet era, and thereby serve a Georgian energy market almost completely dependent on imports from neighbouring countries.

BLOE joined AIM five years ago with a set of fields on the outskirts of capital city Tbilisi, notably West Rustavi, which produced 50 Mbbls of light sweet crude during the late 20th century, with contingent resources of 38 MMbbls oil and 608 BCF gas in the Middle, Upper and Lower Eocene formations. In 2020 BLOE’s acreage multiplied more than 30 times when the company acquired assets adjacent to West Rustavi from departing operator SLB, opening new development opportunities including Block XIB, a prolific producer which has yielded 180 million bbls of oil from the Middle Eocene reservoir, rates peaking in the 1980s at 67,000 bopd. The new assets increased the company’s 2P reserves of oil and gas by 64 MMboe, 2C contingent resources by 29 MMboe, and prospective resources by 245 MMboe.

BLOE’s strategy is organised into four projects. Project I seeks to develop the Middle Eocene layer in the West Rustavi/Krtsanisi field. Project II focuses on infill development at the Middle Eocene oil reservoir in the Patardzeuli oil field in Block XIB. Projected funds from Projects I and II will anchor Project III, a longer term venture to appraise and develop the extensive natural gas resources that BLOE’s analysis indicates is present in the Eocene layer under the former SLB Blocks XIF and XIB. Project IV is a farm-out agreement with Georgia’s national oil company for a work programme on areas of the XIB licence not previously covered by the strategy. 

The primary focus in recent months has been drilling progress at Project I, which has allowed BLOE to deliver record production with an average rate of 664 boepd. A third Project I well was spudded earlier this summer.

With a clear strategy to serve a well defined market, BLOE is best viewed as a longer term hold. The company has made solid progress over the past few years towards establishing itself as a major player in the Caucasian energy market. BLOE’s share price at the time of writing was 1.2p and its market cap £8.3m.

Contango Holdings


Contango Holdings (LON:CGO) passed a watershed earlier this summer with the opening of its coking coal mine in Zimbabwe..

CGO has a 70pc interest in the Muchesu (formerly Lubu) Coal Project in the Karroo Mid Zambezi coal basin in Hwange, a well established Zimbabwean mining district. Estimates indicate a resource of some 1.25 billion tonnes, with 702 Mt Indicated and 510 Mt Inferred.

The Project’s high grade 28CV metallurgical coal – which can be ‘cooked’ to produce the coke used by steel and ferro-alloy makers – is being marketed to producers across southern Africa. The company says the well defined southern African markets it is targeting, and Zimbabwe’s regulated market price, will shelter it somewhat from the the inherent volatility of the coking coal sector, which ebbs and flows with the health of the global economy.

Production of washed coking coal at Muchesu got underway in May, with the current price set at $120 per tonne. In July CGO announced an offtake arrangement with TransOre International FZE for the sale of up to 20,000 tonnes per month of washed coking coal. The deal complements an expected offtake arrangement being finalised with an as yet unspecified multi-national company. CGO has longer term plans to expand its processing facilities to 300,000 tonnes per annum, funded through internal cash flow.

With the opening of its Muchesu mine CGO has gone beyond many of its small cap natural resources peers in turning aspiration into reality. Offtake agreements are in place, and the foundations have been laid for new business. With a producing mine, cash in the bank, and a favourable market for coal CGO is one to watch. The company’s share price at the time of writing was 4.19p and its market cap £20.3m.

Empire Metals


The value of exploration and development company Empire Metals (AIM:EEE) skyrocketed this summer with the confirmation of a major titanium discovery at its Pitfield Project in Western Australia.

Exploration at Pitfield, one of three major projects acquired last year, got underway last June, geophysical surveys confirming strong magnetic stratigraphy and alteration within the licence area. A review evaluating recent geophysical surveys and the historical exploration database at the project confirmed the field has ‘all the hallmarks of a “Giant” copper mineralised system, potentially containing multiple sediment-hosted stratabound copper deposits’ – globally significant geological systems which deliver around 20pc of the world’s copper production and are often very large and high-grade deposits.

Studies this year confirmed the presence of ilmenite, a titanium-iron oxide mineral, which is highly valued as a source for titanium oxide and which accounts for over 85pc of the feedstock for the entire titanium industry. Titanium is on the strategic critical minerals list in many countries including the US, the EU, Japan and Australia. The dominance of ilmenite and hematite within the samples studied, along with only the minor presence of magnetite, could be highly beneficial from an economic perspective. 3D magnetics modeling demonstrates the exceptional depth of the 40 km by 8 km magnetics anomaly, which extends at least 6 km below surface. Future drill programmes currently funded, including both diamond core and additional RC drilling, will be carried out along the entire length of the magnetics anomaly to confirm the system’s scale.

Though Pitfield is the priority, EEE is also advancing its Eclipse-Gindalbie Project in Western Australia, prospective for high-grade gold and kaolin, which is used extensively in a number of industries, and considered to be a desirable feedstock for the production of high-purity alumina – an essential component in lithium-ion batteries. The company has two further exploration projects in Australia; the Walton Project in Western Australia, and the Stavely Project in the Stavely Arc region of Victoria.

EEE’s share price has surged more than 300pc over the past few weeks. Should there be more good news from Pitfield this stock may rise further. At the time of writing EEE’s share price was 4.66p and its market cap £22.8m.

Helium One


Helium One (AIM:HE1), which holds licences in Tanzania highly prospective for helium, one of the world’s rarest and most important commodities, has long tantalised the markets. But with drilling due to start this September, this prospect has shifted sharply into focus. 

The company holds 18 fully-owned prospecting licences covering more than 4,512 km2 in three project areas at Rukwa, Balangida and Eyasi. Rukwa is currently the most significant, with a Best Estimate Un-risked Prospective Resource of 138 Bcf, potential outcomes ranging from 30 Bcf to 521 Bcf. Helium concentrations of up to 10.6pc have been recorded in the field’s surface seeps, well above the grades of around 0.1 to 0.3pc yielded when helium is produced as a byproduct from hydrocarbons. Eyasi and Balangida are at earlier stages of development.

HE1 says Rukwa’s P50 resource of 138 Bcf has the potential ‘to supply the entirety of global demand for over twenty years, or 10-15pc of global demand for more than a century’, a projection backed by academic research drawing on sample data collected from all three project areas. The study indicated that the ‘Tanzanian East African Rift contains most, if not all, of the prerequisites for an economic helium province’. Helium is essential for a wide range of cryogenic, scientific and manufacturing processes.

HE1 began its maiden exploration programme at Rukwa in 2021, drilling carried out on the field’s Tai prospect indicating ‘a working helium system’, with quality reservoirs, thick sealing units, and helium gas shows at multiple prospective intervals. But in July HE1 supercharged its prospects – and share price – with the successful acquisition of a drilling rig. The rig, which is currently being mobilised, will be used to drill Rukwa’s Tai-C well with September as a target spud date. Rig ownership provides a platform that will enable the company to move quickly into an appraisal phase, which if successful will allow accelerated exploration on the Rukwa, Eyasi and Balangida projects.

Despite Rukwa’s evident promise HE1 has long been something of a speculative venture. But with the mobilisation of a rig the company is now a prospect which can be measured by something other than aspirations. HE1’s fast evolving story is well worth following this year. The company’s share price at the time of writing was 8.74p and its market cap £72m.

Hemogenyx Pharmaceuticals


Hemogenyx Pharmaceuticals (LSE:HEMO), a biopharmaceutical company pioneering new therapies and treatments for blood diseases, may be close to gaining permission from US regulators for Phase I clinical trials of its HEMO-CAR-T therapy, a groundbreaking treatment for acute myeloid leukaemia.

The company has also advanced its proprietary Chimeric Bait Receptor (CBR) platform technology, which uses synthetic biology and artificial intelligence to program immune cells to eliminate viral infections by destroying the viruses that cause them.

HEMO’s research focuses on the development of accessible treatments for blood cancers, severe autoimmune diseases like multiple sclerosis, aplastic anemia, and systemic lupus erythematosus. The company is developing proprietary HEMO-CAR-T immune therapy, a treatment in which a patient’s own immune cells are modified to recognise and kill cancer cells. Use of these cells eliminates the need for chemotherapy or radiation and their toxic side effects. The company is seeking permission from the US Federal Drugs Administration (FDA) to proceed to Phase I clinical trials for both the HEMO-CAR-T and CDX antibodies. The company is currently responding to an FDA request for amendments to the treatment.

While pressing ahead with HEMO-CAR-T the company has made significant progress towards developing its CBR technology. The platform was evolved in the course of HEMO’s cell cancer research, which indicated how cell therapy approaches might be used to treat major existing and emerging viral infections. CBR identifies protective cells and molecules including macrophages and interferon that can be activated to kill virus infected cells and protect against viruses including SARS-CoV-2, Dengue, Ebola, Marburg, Zika and Chikungunya.

HEMO has also continued developing its other major pipeline asset, the CDX antibody the company hopes will provide an alternative means of treating leukaemia and of conditioning patients for bone marrow transplants. Early last year it entered into a service agreement with Selexis to develop a ‘master cell line’ that will be used to produce CDX antibodies for future clinical trials and patient treatments.

HEMO’s road to getting the green light from the FDA has been a long one, but the company remains confident it can satisfy the regulator’s requirements. HEMO’s proposal is a compelling one, but as with all biotech innovators, patient is the watchword for investors. At the time of writing the company’s share price was 1.5p and its market cap £17m.



hVIVO (AIM:HVO), a biotech small cap specialising in vaccine and antiviral testing using ‘human challenge’ clinical trials, continues to build its client base.

HVO was one of the cluster of biotech small caps to make headlines through the first months of the pandemic, working with the UK’s vaccines task force to organise the first Covid human challenge trial, in which volunteers were inoculated under controlled conditions with a version of the virus to test its impact on the immunity system. The trial helped HVO develop an infection challenge model able to serve as a ‘plug and play’ platform for testing new Covid variants.

Covid is just one of the infectious diseases the company is working to combat. The pandemic highlighted the world’s chronic neglect of investment in fresh treatments for continually evolving respiratory and infectious diseases such as the common cold and influenza. Chastened by the pandemic, governments and pharmaceuticals companies are sinking billions into new drugs generating a market forecast to expand from $20bn in 2019 to $250bn by 2025. HVO is working to establish itself as an indispensable partner to Big Pharma by rolling out a suite of human challenge trial services for diseases including Covid, Respiratory Syncytial Virus (RSV), influenza, asthma, human Rhinovirus hRV, and malaria.

HVO now offers 11 human challenge models, with others under development, which together test a broad range of infectious and respiratory disease products. The company runs challenge studies in London from its quarantine clinic and on-site virology and immunology laboratory.

Recent contracts include a £13.1m contract with a top five global pharmaceutical client to develop an Influenza B human challenge model, and an agreement with a North American biopharmaceutical company researching hMPV viruses.

These and other new contracts have helped the company report impressive revenue growth, its most recent trading update stating H1 revenue growth of £27.3m, up 52pc. HVO’s share price has also risen steadily over the past few years: the company’s current vector suggests more value will be generated. HVO’s share price at the time of writing was 16.5p and its market cap £113m.

Jangada Mines


Jangada Mines (AIM:JAN) continues to explore financing options for its highly prospective Pitombeiras Vanadium Titano-Magnetite (VTM) Project in South America.

JAN is working towards a production decision at the fully-owned project, which covers just over a thousand hectares in north-eastern Brazil. Exploration to date indicates the potential for vanadium mineralisation analogous to that of the Bushveld Complex (South Africa), the Skaergard Intrusion (Greenland), and the Kachkanar massif (Russia). Vanadium is a key material for emerging storage battery technologies with the potential to compensate for the intermittency of renewable power sources, allowing power grids to go fully green.

The Project’s VTM mineralisation extends over a structural trend underlying three targets, Pitombeiras North and South, and Goela, a Total Mineral Resource Estimate reporting a deposit of 8.26 Mt, with 62pc of the resource classified at the higher confidence Measured & Indicated Mineral Resources category.

A Technical Report published last year forecast a ‘robust economics’ encompassing a 100.3pc post-tax IRR, a $96.5m post-tax NPV, CAPEX of $18.45m, and a payback time of 13 months. It estimated annual production of 186,000 tonnes Fe/V2O5 and 66,000 tonnes TiO2 at a production/processing rate of 600,000 tonnes per annum. Mine life of approximately nine years would generate an estimated $415.2m gross revenue.

JAN continues to evaluate financing options to progress development. No plans have yet been finalised, but the project’s potential was further elaborated earlier this year, the processing of Fe2O3, TiO2 and V2O5 samples reporting excellent recovery and purity rates, the highest recovery rates being 86.73pc TiO2, 91.19pc Fe2O3, and 95.88pc V2O5.

JAN is a slow burner, but the potential prize is big. The company’s share price at the time of writing was 2.3p and its market cap £4.65m.

Landore Resources


Landore Resources (AIM:LND) continues to delineate the potential of its flagship Junior Lake Property gold resource, which is also prospective for nickel, copper, cobalt and other battery metals.

Junior Lake (100pc owned), together with the contiguous Lamaune Iron Prospect (90.2pc owned), covers a 30,507 hectare site in the Canadian province of Ontario, with ready access to Thunder Bay, the main supply hub for the region’s miners. The Property’s known mineral resources and prospects are located within an Archean-age greenstone belt some 0.5 to 1.5 kilometres wide and 31 kilometres long.

LND’s most recent drilling has focused on Junior Lake’s key asset, the BAM Gold Deposit, situated within a 2.7 kilometre geophysical anomaly midway along the belt. The latest Mineral Resource Estimate (MRE) stated an in-situ resource od 49,231,000 tonnes at 1.0 g/t for 1,496,000 ounces of gold. The estimate includes 30,965,000 tonnes at 1.0 g/t for 1,029,000 ounces gold in the Indicated Category and 18,266,000 tonnes at 0.8 g/t for 467,000 ounces of gold in the Inferred Category.

Though Junior Lake is best known for its gold prospects, the property has always been prospective for other metals. Historic drilling at the licence’s B4-7 Nickel-Copper-Cobalt-PGE Deposit and Alpha Zone, some 600 metres southwest of the BAM Gold Deposit, has found polymetallic nickel-copper-cobalt-platinum-palladium-gold mineralisation, the most recent resource estimate stating 3,292,000 tonnes at 1.20pc Nickel Equivalent (NiEq) in the Indicated category and 568,000 tonnes at 1.26pc NiEq in the Inferred category for a total of 46,661 tonnes of contained metal. The VW Nickel-Copper-Cobalt Deposit is estimated to offer 1,084,000 tonnes at 0.71pc NiEq in the Indicated category, and 180,000 tonnes at 0.68pc NiEq in the Inferred category for a total of 8,920 tonnes of contained metal.

This year the company has focused on advancing the BAM Gold Project towards a two-million-ounce resource estimate, and completing a pre-feasibility study. LND plans to further define the potential of its strategic metals deposits and other highly prospective occurrences towards resource status.

LND’s most recent Strategic Review considered the potential sale of the Junior Lake Project, potential joint venture arrangements and strategic partnerships. Further news on that front may be the most immediate catalyst for the company’s value. LND’s share price at the time of writing was 9.5p and its market cap £11.6m.

Lexington Gold


Lexington Gold (AIM:LEX) continues to make robust progress towards its goal of opening up US gold rush mines with contemporary drilling technology.

LEX is developing four majority-owned gold projects across a 1,675 acre section of the Carolina Super Terrane geological feature running through North and South Carolina. The 179.66 acre Jones-Keystone-Loflin (JKL) Project combines the Jones-Keystone and Loflin Properties mined by small prospectors during the 19th century until the outbreak of the Civil War, and again up to the Great Depression. Pits, trenches, shafts and glory holes at several workings offer evidence of widespread gold mineralisation, with historic grades ranging between 0.5 and 2.5g/t. The Carolina Belle Project, in Montgomery County, just north of Candor, North Carolina, produced 50,000 ounces of gold until a 1916 dispute between the neighbouring mines ended further exploration and production. The Jennings-Pioneer Project, part of the Barite Hill Gold district in South Carolina, offers several greenfield exploration prospects with well-articulated and potentially continuous zones of gold and base metal mineralisation identified from historic mines and surface workings. The Argo Project in the northwest corner of Nash County, north of Nashville, was last mined in 1894.

Early assay results from the JKL Project indicated broad unbroken zones of shallow gold mineralisation. A JORC Resource estimate was published last autumn, stating a resource of approximately two million tonnes at 1g/t gold for 65,000oz of contained gold, and highlighting the potential for additional discoveries.

LEX went on to publish an updated JORC Mineral Resource Estimate for the Loflin prospect stating a Total Inferred Resource of 2,596,000 tonnes at 0.99 g/t gold for 82,700 oz of contained gold, 27pc up on the previous estimate. There was also encouraging progress at Carolina Belle, with final assay results of exploratory drilling at the prospect exceeding expectations.

This May LEX announced a substantial development in the form of the proposed acquisition of 76pc of White Rivers Exploration (WRE), an exploration and development company with significant gold assets in the Witwatersrand gold fields in South Africa. WRE’s current tenement interests contain non-code compliant potential resources of more than 37 million ounces of gold. WRE’s tenement interests includes a joint venture with Harmony Gold Mining Company which has defined a non-code compliant independently estimated resource of 6.02 million ounces of gold at an average grade of 6.47 g/t.

LEX has ambitions to follow in the footsteps of fellow Carolina Super Terrane explorer Romarco Minerals, which was acquired by ASX-listed OceanaGold after delineating a resource estimate of 4.5 Moz at 1.8g/t. The company’s share price at the time of writing was 5.4p and its market cap £18m.

Oxford Cannabinoid Technologies


Oxford Cannabinoid Technologies (LON:OCTP) has continued to progress towards regulatory approval for its flagship cannabinoid-based pharmaceutical candidate, getting the green-light for Phase I clinical trials earlier this summer. 

OCTP is focused on cannabinoid-based pharmaceuticals rather than commercial medical cannabis products, aiming to develop prescription medicines cleared by rigorous clinical trials set by regulators. The reward for doing so would be market exclusivity for effective treatments for those suffering chronic pain, following the example set by another UK-based cannabis biochemistry company, GW Pharmaceuticals, which was sold to US drugmaker Jazz Pharmaceuticals in a multi-billion deal. Unlike natural cannabis treatments in which the plant is simply ingested, licensed drugmakers of precision-tested, medically-proven cannabinoid derivatives qualify for a period of market exclusivity of up to 20 years in recognition of their investment.

OCTP plans medicines that would relieve inflammatory and autoimmune disorders like rheumatoid arthritis, systemic sclerosis, fibromyalgia and osteoarthritis, and debilitating neurological and neurodegenerative disorders including multiple sclerosis, Parkinson’s, Alzheimer’s, and epilepsy. The company is also researching the potential of cannabinoids to alleviate cancer symptoms, and even treat their underlying causes.

Following the successful completion of extensive pre-clinical work on OCT461201, OCTP submitted a combined clinical trials application for the programme to the UK Medicines & Healthcare products Regulatory Agency (MHRA) and the Wales Research Ethics Committee in January, securing approval in May. Phase I first-in-human clinical trials are now underway, in which healthy volunteers submit to a single ascending dose protocol intended to demonstrate the drug’s safety and tolerability, and to provide pivotal information on its pharmacokinetic profile: OCTP expects the trial to be completed ‘during Q3 2023’. This month the first dose of OCT461201 was administered to a healthy volunteer.

OCTP is also progressing a second lead candidate, OCT130401, a drug-device combination that delivers phytocannabinoids to patients suffering from trigeminal neuralgia (TN) with a pressurised metered-dose inhaler. TN causes debilitating and excruciating pain, can take hold with unexpected speed, and is difficult to treat with conventional systemic medicines. Pre-clinical work on OCT130401 has been completed, with the candidate now ready for Phase I trials.

Earlier this month OCTP said it was formally expanding its research and development strategy into oncology having identified a potential ‘first in class’ immunotherapy agent for the treatment of solid tumours.

Today, OCTP announced a First Dose Administered in Phase I Clinical Trial RNS for Lead Drug Candidate OCT461201 and the Appointment of internationally recognised Pain Specialist Dr Farquhar-Smith

OCTP has continued to move smoothly past landmarks along its roadmap, achieving regulatory approval as forecast for its flagship candidate. Prospective investors should look out for the next major stage in the company’s journey, the completion of Phase I trials in later this year. At the time of writing OCTP’s share price was 1p and its market cap £9.6m.

Panther Metals


Panther Metals plc (LON:PALM) continues to define gold, copper, nickel and Platinum Group Metals (PGM) prospects across a cluster of Canadian and Australian assets.

PALM went public with two prospects in Western Australia, the Marrakai and Annaburroo Gold Projects, covering a total area of 160 km2. Both are situated within the Palaeoproterozoic Pine Creek Orogen,host to more than 250 gold occurrences and several operating gold mines, including the Rustlers Roost deposit containing 51 Mt at 1.0g/t Au (1.6 Moz). PALM went on to acquire the Merolia Gold Project, its first post-discovery opportunity in the region, a 145 km2 tenement package close to the prolific Granny Smith, Sunrise Dam and Wallaby gold mines, which together have produced nearly 20 Moz gold. Merolia is also prospective for nickel-cobalt sulphide mineralisation: a JORC Exploration Target sets a tonnage range of 30-50 Mt at 0.6 to 0.8pc nickel and 400 to 600 ppm cobalt. Last year PALM listed the company’s Australian operations as Panther Metals Ltd – to be referred to for everyday purposes as ‘Panther Australia’ – on Australia’s ASX, a move designed to delineate PALM’s respective operations in Australia and Canada. PALM continues to hold a 36.6pc stake in the subsidiary.

The company significantly expanded its Canadian portfolio by taking a near exclusive exploration holding over the Obonga Project, also in the Thunder Bay region, prospective for gold, copper, lead, zinc, silver, and PGM deposits. Phase 1 drilling last year at Obonga confirmed the discovery of a volcanogenic massive sulphide (VMS) mineral system at the Project’s Wishbone Prospect. PALM has also gained access to another Ontario greenstone belt through an agreement to buy the Shear Gold/Manitou Lakes Project encompassing the West Limb and Glass Reef gold properties on the Eagle-Manitou Lakes Greenstone Belt – an immediately adjacent project owned by Manitou Gold was sold for CAN$7m.

Back on the other side of the globe, Panther Australia defined a JORC Exploration Target for nickel and cobalt at the Coglia Nickel/Cobalt Project on the southernmost area of the Merolia project tenements, with a tonnage range of 30 to 50 Mt at 0.6 to 0.8pc nickel and 400 to 600 ppm cobalt.

The company went on to report ‘very high grade gold drill intercepts and visible gold in reverse circulation drilling chips’ at shallow depths at the Burtville East Gold Project and Eight Foot Well prospect in Western Australia, paving the way for a follow-up programme, including both diamond core and reverse circulation drilling, which has returned further high-grade gold drilling intercepts.

PALM continues to developed the business to a point at which the portfolio may be rapidly commercialised. This January the company announced further VMS drill intercepts at Wishbone confirming this system carries grade at a level that is mined commercially. It also discovered a second VMS at Survey on Obonga, confirming Obonga, widely thought to be the sister greenstone belt to Sturgeons Lake. The Awkward target at Obonga produced a discovery of graphite that alone is very encouraging, and this entire system requires more extensive work. At the Manitou Lakes a gold bearing structure over a 700 metre strike length extension proceeding north from an historic gold mine has been identified. PALM also has a 20pc stake in Fulcrum Metals (AIM:FMET), pursuing a host of highly prospective projects in Ontario. FMET has reported a significant increase in targets defined at its Big Bear Project.

PALM is a prolific generator of value opportunities: prospective investors should make sure to review the company’s busy news feed. At the time of writing PALM’s share price was 3.4p and its market cap £3.16m.

Poolbeg Pharma


Poolbeg Pharma (AIM:POLB) continues to make quiet progress towards defining three new candidate biotechnologies, as well as pursuing an array of other initiatives.

From the same stable of companies as HVO, discussed above, POLB aspires ‘to become a “one-stop shop” for big pharma to find Phase II ready products for development and commercialisation’. POLB aims to commercialise HVO’s extensive clinical data repository, developed through 20 years of challenge trials testing how the body’s immune system can be boosted to overcome influenza, RSV, HRV, and now SARS-CoV-2.

POLB 001, the company’s flagship candidate technology, is a ‘Phase II-ready p38 MAP Kinase inhibitor’ offering an effective treatment for inflammation suffered by patients with severe influenza. Influenza still infects some 12pc of the world’s population each year, responsible for nearly 10 million hospitalisations and 500,000 deaths. Severe manifestations of the disease trigger ‘cytokine storms’, violent whole-body responses to the infection that can generate serious complications including sudden, serious cardiac events, tissue damage, pneumonia and sepsis. Current treatments disrupt viral replication, but POLB 001 directly addresses hyperinfammatory episodes. If licensed the inhibitor would offer potential for applications beyond influenza, including certain covid cases.

POLB 001 has passed Phase I trials confirming its safety for human use, and patents for both the European and US markets have been secured. Significant progress has been made towards Phase II trials, after which POLB would be able to begin the licensing process.

While progressing POLB 001 the company has advanced POLB 002, a novel, ‘first-in-class’ RNA-based immunotherapy for respiratory virus infections spun out from research at the University of Warwick. POLB has secured an exclusive licence to the dual antiviral prophylactic and therapeutic candidate, which is at a late-pre-clinical development stage, and which targets pan-respiratory virus infections, which could include influenza, respiratory syncytial virus, covid and others.

POLB has also signed an Option Agreement with University College Dublin to licence POLB 003: MelioVac, a vaccine for melioidosis, an infectious disease commonly found in the soil and surface groundwater of tropical and subtropical regions.

Last month POLB reported significant breakthroughs through an AI programme run in partnership with tech innovator CytoReason. Disease progression data from POLB’s influenza human challenge trials, analysed using CytoReason’s industry-leading AI platform, had facilitated the discovery of multiple novel drug targets for the treatment of the disease, over a period of just 15 months.

With multiple lines of research POLB is a biotech worth watching. At the time of writing the company’s share price was 7.41p and its market cap £37m.

Power Metal Resources


Power Metal Resources (AIM: POW) continues to sharpen its focus on a cluster of gold, nickel, copper and uranium prospects.

POW pursues precious, base and strategic metal exploration in North America, Africa and Australia, with interests encompassing projects at greenfield and drilling stages. The company develops prospects internally or through joint ventures until ready for disposal through outright sale or IPO. POW’s extensive portfolio covers uranium, gold, silver, nickel, copper, rare earths and base-metals.

The wholly-owned Tati Gold Project within the Tati Greenstone Belt near Francistown, Botswana, is a key priority, drilling undertaken last summer yielding compelling evidence of gold. The first set of assay results reported near-surface gold mineralisation in the first three holes, including a ‘bonanza grade’ result.

The company has also posted highly encouraging results from its Molopo Farms Complex Project, a nickel, copper and Platinum Group Element (PGE) metals prospect in Botswana. POW now has an 87.71pc interest following an agreement with project partner Kalahari Key Mineral Exploration Pty Limited. Preliminary survey results from two ground-based electromagnetic geophysics surveys conducted last year highlighted a large shallow dipping magnetic conductor.

POW has assembled a considerable uranium portfolio, principally consisting in a set of 100pc-owned properties covering more than 800km2 of the Athabasca Basin, in Saskatchewan, Canada. Assay results have noted multiple locations of anomalous radioactivity across three properties so far, with rock sample assay results currently awaited. The company has negotiated the conditional disposal of the its interests in the Basin’s E-12 property to Uranium Energy Exploration.

Key recent developments include the completion of exploration programmes at Molopo Farms, the Victoria Goldfields in Australia, and geophysics and trenching at the Tati project. All three have delivered positive exploration results, allowing the company to proceed to next stage exploration with potential partners. There have also been significant corporate developments, including pre-IPO preparations for Golden Metal Resources PLC, First Development Resources PLC and Uranium Energy Exploration Ltd, and the listing of Golden Metal Resources PLC on the LSE in May, with POW’s holding valued at £4.4m.

POW’s portfolio is crammed with catalysts for sparking value. At the time of writing the company’s share price was 0.74p and its market cap £15.3m.

URA Holdings


South Africa-focused URA Holdings (LON:URAH) made waves earlier this year with the unexpected acquisition of the Gravelotte Emerald Mine, once the largest in the world.

Since the purchase the company has sustained its momentum through the publication of a promising maiden Mineral Resource Estimate (MRE), and a fund injection from Andrew Austin, the oil and gas dealmaker known for his successful iGas Energy and RockRose Energy ventures.

URAH joined AIM in March 2022 with two exploration licences in Zambia prospective for graphite, coltan, niobium, lithium and rare earth elements, all ‘strategic minerals’ as defined in the US ‘final list of critical minerals’. The 1,284 km2 area covered by the licences includes the well known Njoka graphite deposit, defined through continued exploration since the 1930s. The prospects are analogous to mines in neighbouring Malawi and Mozambique, with deposits located at or close to surface, promising cost effective operations.

Located in South Africa’s Limpopo province, Gravelotte was operational from 1929 to 2002, with a total historic emerald production of nearly 113 million carats. Employing more than 400 sorters, it was considered the largest emerald mine in the world during the 1960s. The mine’s Cobra open pit was the biggest single emerald producing open pit in the region, its production touching 21 million carats at its mid-1960s peak. Gravelotte is close to other world-class mining operations including the Consolidated Murchison Mine, the oldest known antimony deposit in the world, and the Phalaborwa Copper Mine and refinery.

URAH has spent the past year beginning the process of upgrading the site’s historic infrastructure, but expects that only modest investment will be necessary to bring the mine back into production, the major requirement being the purchase of optical sorters to replace the labour-intensive hand sorting of the past. The company also commissioned a maiden MRE, which reported a total formal estimate of 29 million carats of contained emerald, more than three times higher than anticipated. The MRE indicated the site’s Cobra Deposit at 1.2 Mt @ 6.4 g/t for 19.4 million carats of contained, and its Discovery Deposit at 0.7 Mt @ 5.7 g/t for 9.6 million carats. It went on to identify 12 additional JORC exploration targets totalling between 168 million carats and 344 million carats.

Using the average price of $9 per carat achieved by Gemfields (AIM:GEM) in September 2022 for their lower commercial grade emeralds, URAH indicated the total contained in situ JORC resource – excluding the 12 additional targets – could have an estimated value of around $261m. URAH hopes the restarted mine will significantly broaden the world’s supply of emeralds, 75pc of which are currently mined in Zambia, Columbia and Brazil. 

Though URAH expects ‘to return to working on [the company’s] Zambian licences once the resuscitation of Gravelotte has been completed’, Gravelotte is clearly the focus right now. After reviewing the company’s smooth progress so far towards re-opening the mine, investors looking for natural resources opportunities may feel this is a small cap worth well watching this year. The company’s share price at the time of writing was 2.5p