Too soon to throw caution to the wind

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Too soon to throw caution to the wind

I’m quite a cautious girl, and I’m careful and well researched when I do my live broadcasting and event hosting.

My preference is certainty, but as the markets have taught us repeatedly there’s nothing more certain than uncertainty, and on February 15th I told viewers; “In the last hour Russia’s defence ministry has announced some of its troops on the border with Ukraine are returning to their bases after completing their drills.”

I added. “It’s just a game as we know, and markets are trying to stage a recovery on that news there’s a de-escalation in the so-called drills.”

I then went on to reference stocks that had operations in the FSU – the Former Soviet Union, those with Russian domicile and those with Russian patronage or provenance. Two months on I continue to do so.

Is it FU to the FSU?

Since the invasion of Ukraine, I’ve had frequent conversations with Chaarat Gold (CGH). It operates in Armenia and Kyrgystan, two areas which like Ukraine became independent from the USSR in 1991. It’s a bit more complicated than that, however we’re talking stocks not the minutia of post-Soviet history.

Chaarat’s new chief executive Mike Fraser is not concerned about legacy Russian influence.  I was convinced his opinion doesn’t stem from new boy bravado, but from a position of wisdom that knows the Kyrgyz government is very keen to see the development of the gold sector and “westerners” are welcomed as development partners.

Chaarat bought its ‘cash cow’ Kapan mine from Polymetal (#POLY) in 2018 and is looking to develop other assets in its portfolio subject to finance.

Polymetal. A once-in-a-lifetime opportunity?

Subject to invasion-related punishment is St Petersburg-headquartered Polymetal International. Until recently it was a FTSE 100 constituent supported by ‘blue blood’ institutions in the city of London, but a Putin-politicised market saw its stocks decimated from 1097p to 92p within the first two weeks of the invasion. And despite positioning itself as location-agnostic, the gold producer suffered the added bother of cyber crime in extremis with its website under relentless Distributed Denial-of-Service (DDoS) Attacks. Polymetal’s stock has had a miserable time, but in early March renowned tipster Doc Holliday told me “Five years down the track Polymetal will be seen to be a once in a lifetime opportunity.”

Polymetal’s corporate influence is widespread. It was and remains a successful business, and recognises potential success in others such as Chesterfield Resources (#CHF). It’s a 17.9% shareholder in the Cyprus and Canadian focused explorer and isn’t likely to jettison its stake.

Chesterfield chairman Martin French too doesn’t see the relationship with Polymetal a risk. He stresses the relationship has been very constructive and non-intrusive. And for investors who might be fretting it can’t sell shares in Chesterfield, or increase its position by more than 1% for the first three years of the relationship without permission of the company.  That relationship started in November 2020.

Slipstreaming SPACs

The invasion frustrated the timings of initial public offerings with regulators demanding that share registers were not just oligarch, but almost entirely Russia-association free. Another layer of administration for those ready to list, and no doubt after recent news this forensic examination of registers will extend to non-doms and green card holders.

I do worry though registers this year will become middle class grey suit and investor bases will lose some diversity.

The trend for cannabinoid-related listings has been replaced by the slipstreaming of SPACs – special purpose acquisition companies.

They have mainly been green in nature in terms of sustainability and not inexperience of the board.

More Acquisitions (TMOR) came to market on March 4th raising £1.2 million pounds in a listing described by director Charles Goodfellow as ‘egalitarian’ with management, institutions and retail investors all given the same first-day-of-dealing trading terms.  Everyone paid a penny, though the returns, Goodfellow hopes, will be more-than-a-penny as it looks to buy businesses which are developing or supporting the energy transition to renewable sources such as wind and solar and lithium-ion batteries. 

Similarly the remit of Aura Renewable Acquisitions (ARA) is not too dissimilar in terms of being in alignment with investors and purpose.

Suresh Withana and his Harmony Capital is the founding shareholder and keen to caveat Aura’s difference. “We are the only global renewable energy SPAC focused on the supply chain, and I would challenge anyone to tell us there’s an analogue to us on the London market because we know that’s not true as of today.” 

And then there’s Ajax Resources (AJAX) under the chairmanship of Metal Mike, aka Michael Hutchinson, the former chairman of Bluejay Mining. He and chief executive Ippolito Cattaneo are looking for an onshore, low risk target in a stable jurisdiction that has a clean history. Like their peers they want a swift transaction that can be developed, monetised and create shareholder value.

Ajax’s caveat? It wants to be the operators of whatever it buys because Cattaneo told me he doesn’t believe in remote email management and doesn’t want to delegate to distant management teams. While ‘operatorship’ is a key ingredient for Ajax, so is the experience of the board. ‘Metal Mike’ has mining in his veins. Cattaneo and his CFO know oil and gas.

Energy security

And while solar, wind and others are the poster children of green energy, gas as a clean fuel has its place which is music to Longboat Energy’s (LBE) investors.

It’s in the final stretch of its seven well exploration campaign with five down, three discoveries and two wells to go.

The focus is now on those final two. Hammer describes them as exciting. They are very big. If they come in they will be incredibly significant for us.”

He’s referencing the Cambozola and Copernicus wells. Cambozola says Hammer “could be a tcf of gas. It could be a company maker and likewise with Copernicus.”

Dirty Dozen

After developing a passion for showering in abrasive hand sanitizer and elbow bumping till I’ve chipped my humerus (and believe me there’s nothing funny about that), I’ve returned to hosting live events with real people not too close and respectfully distanced.

I was very pleased with the turnout at this March’s Master Investor show and the quality of the speakers and the questions asked from the floor. It was also a delight to preside over Proactive Investor’s return to its Chesterfield Hotel haunt in Mayfair.

I enjoy the unexpected off the cuff commentary from the speakers and the audience. That to me is the magic that’s missing from the virtual events.

As I walked across the hotel lobby, one chap confided that his entrepreneurship and business ventures had been thwarted by not one but 12 black swan events.

Had he told me this before the Proactive event, I would have barred entry, sent him to another location, locked him in the left luggage cupboard and found an excuse for him not to be there.

That may sound extreme but those twelve black swan events had one thing in common. Him. And I wouldn’t have wanted a thirteenth black swan event to scupper an event just as they are re-emerging.

It’s good to be back.


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