ShareHub Hotlist 2019 Review – Week 25

A significant run on Gold prices has given many smallcaps and mid tier gold producers a bit of renewed interest after a period of neglect. Crypto’s are also back in demand which is unusual as many market pundits had written them off months ago. It seems a resurgence in the neglected is upon us. It sometimes pays to keep your head down avoid the limelight and hope all has been forgotten when it comes to past disasters or bubbles bursting. It tends to allow for the initial recovery phase to go unnoticed. A tactic equally beneficial and often used by ‘has-beens’ to relaunch careers? Certainly something Boris seems to be deploying of late. Every word that seems to come out of the man’s mouth forms some kind of overpromise or headline that you know will never be met. That’s the trend with Mr Johnson. He says a lot but actually delivers zero. Heathrow? Brexit bus adverts? Foreign policy? The very fact that the Conservative party have arrived at a situation whereby Mr Johnson is their leading prospect just about seals the deal and places the last heavy nail in a political party coffin that needed banging in a year ago. Brexit has exposed all that is wrong with UK politics. It’s a sad story and Boris is far from being a fresh face with new ideas. He’s just a continuation of the same old, same old establishment that has thus far got us no where fast. Not only did the Conservatives come up with the idea of Brexit, they then fumbled their way through delivering the basics. Remarkably, the Markets seem to have become punch drunk to risk events and seem to be complacent with what awaits around the corner. Brexit has more unknowns attached to it than an MP’s expense account.

It’s time for change. And the biggest problem is that Labour under Corbyn are certainly not the answer. In fact, the answer is ‘no-party’. None of them are fit for purpose. Now is the time to look at a different model. A different electoral system would be a start. More ‘people voting’ processes now technology is advanced enough. Who knows, policy’s could be voted up or down and beamed live across the country in a Britains got talent style format? Sarcasm aside, we do need to relook at the electoral system and how the country is currently run. It’s been a shambles. Even as we head into the summer months, MP’s are booking their vacation breaks. It’s diabolical. I don’t think Mr Churchill went on a weeks jolly to Magaluf while the country was in dire straits.

Moving on… Week 25 was a record breaker for the DOW hitting new highs on rate cut optimism and better vibes from China trade talks.

The ShareHUB top picks were boosted from SOLG’s news that a peoples case seeking a referendum to ban mining in specific regions of Ecuador was struck out. SOLG rose from 28p to 37p before cooling off a little. Another fillip came via Hummingbird Resources which has bounced strongly with higher Gold prices moving from 13p to 18.75p. Heading in the opposite direction are SXX. The stock was 24p 3 months ago but is now trading at 14p after hefty fundraisers. Petra Diamonds continues to tip toe its way back to a recovery level in the mid 20’s. At present the stock is lacking in catalysts and requires a good results update and successful June sales tender to get new investors interested. At 20.4p, Goldman’s recent 32p price target is over 50% away. If or when the good news flows, PDL should be moving back to high 20’s / early 30’s. The second half of 2019 is expected to be especially strong for Petra, so the worst really should be behind them now. Another slow burner is CERP. Investors still await confirmation of the company’s summer drill plans. If or when this gets communicated properly, interest should grow and the share price will take care of itself. Finally, Amerisur Resources seems like it is stuck in quicksand. Despite the company making production gains, the exploration drillbit has been a let down. The market has virtually written off the Occidental deal as an event for next year. Success at Indico-2 (the next well in the drill plan) is much needed. It is an appraisal well, so the odds on finding oil are almost a given (although this still carries operational risks and mechanically, things can go wrong and they often do). The question the market wants to know is how large is the oil column, where is the OWC and at what rate does it flow? Gaining key data like this is essential to determining the resource size and agreeing the final field development plan which like many things operationally… requires significant capital expenditure. That said, AMER’s 30% stake means they should be able to pay their way providing their partner ONGC does not accelerate the infrastructure works (pipes/roads) and development plan too fast. Being onshore, each development well pays back on capex very quickly which is a bonus to a small player like AMER. However to an Indian national oil company like ONGC, they need not tread carefully on a financial basis and may step up the pace to a ‘oil major’ level if they like what they see from future drills over the next 6 months. That could place pressure on AMER’s cash resources and may explain the rather stagnant share price of late. Roll on week 26! Plenty of catalysts await in H2.

TheIndependent top picks 2019 – week 25
TheGuardian top picks 2019 – week 25
TheShareHUB top picks 2019 – week 25