This week’s Bulls N’ Bears Runner of the Week is … Alto Metals, after it revealed high-grade gold rock chips – and then also confirmed a takeover bid by Brightstar Resources. There is obviously a fair bit to unpack there, but we will do just that and also look at other companies that ran hard this week, including African Gold, Appen and Atomos.
Could the old brokers’ superstition that a market recovery always starts with stocks beginning with the letter “A” be starting to ring true?
Well, if this edition of the esteemed Bulls N’ Bears Runners of the Week is anything to go by, there will be plenty of hands being rubbed together down on Perth’s St George’s Terrace and others like it around Australia where stockbrokers gather to ply their financial trade.
Now, we hope our throng of avid readers don’t suffer from that sometimes debilitating phobia of alliteration – if indeed there is such a thing – but this week’s Runners make up our new A-Team. Alto Metals, African Gold, Appen and Atomos filled this week’s list, with gold rock chips and a takeover bid taking centre stage, while tech stocks were back on the menu for ASX punters after a raft of quarterlies.
So, it was advanced gold explorer Alto, which claimed this week’s gong after it oversaw an eye-popping 100 per cent share price increase, jumping from last week’s close of 3.1c to a high of 6.2c.
The company could hardly sit still all week, pushing out interesting gold rock chip samples from its Lightening and Bollinger prospects in Western Australia’s Mid West region on Tuesday, then a quarterly on Wednesday and finally, yesterday receiving a proposal from Brightstar Resources to buy 100 per cent of its shares.
Unwrapping the news, the Bollinger and Lightening targets, both part of Alto’s flagship Sandstone gold project, threw up high-grade samples from ground reconnaissance including 151 grams per tonne, 130g/t and 113g/t. The quarterly, meanwhile, discussed the prospects of six further exploration targets at Sandstone, which currently hosts a resource of 17.6 million tonnes running at 1.5g/t for 832,000 contained ounces.
But the real “bell-ringer” for Alto was yesterday’s revelation that Brightstar has proposed a deal to buy the company in a scrip offering of four of its shares for every Alto share. The deal gives an implied value of 6c for each Alto share.
The rationale behind the offer, which has been unanimously recommended by the Alto board, is that in conjunction with Brightstar’s concurrent bid to buy Gateway Mining for $14 million, the whole Sandstone region can be consolidated into one company with a single focus of exploring and producing gold in an expedited manner, to capitalise on the lofty gold prices that are today sitting at nearly $3780 per ounce.
The second half of the year is likely to prove to be a busy one for Alto as it completes the expected merger with Brightstar and gets stuck into further soil sampling and at least 10,000m of rotary core drilling on its the six regional targets at Sandstone to increase the resource.
African Gold shook ASX punters out of their slumber early this week as its share price also hooked up 100 per cent, rising from 2.2c to 4.4c on Tuesday. Notwithstanding the fact that it put out a quarterly on Wednesday, it was a resource update announcement on Tuesday that really created the noise.
The company reported a maiden resource of 450,000 ounces of gold running at 2.9g/t at its Didievi project in Cote d’Ivoire. Still at an early stage of development, the project has received more attention recently as the yellow metal price continues to gather pace.
As a shallow, high-grade deposit perfect for open-pit mining, capital expenditure will likely be modest if African Gold eventually decides to press the button to get into production. While any final investment decision is still likely to be at least two years off, the company still has plenty to be getting on with on the exploration front, with an estimated target that could triple the existing resource to some 1.5 million ounces.
African Gold is clearly in a hurry to capitalise on the lofty gold prices as it sets about pushing the rigs out to work on a 2000m program starting this month.
Appen just ‘appens to be (see what we did there) a company that provides language technology data and services using AI into the business sector. And it delivered a cracking quarterly that put the doomsayers firmly back in their box.
The perennial black sheep of the tech sector that hit a lofty share price high of $38 in 2020, finally had some good news to tell … and the news clearly found some willing ears as the stock jumped 96.5 per cent from 44c to touch as much as 86.5c during the week.
The company’s revenues jumped significantly for the quarter by 16 per cent to $55 million, despite it losing its lucrative Google account.
Appen’s $21 million revenue for the month of June alone showed that its positive trend has continued, putting it on target for a $60 million-plus September quarter. Its biggest growth market remains China, which has become a significant adopter of AI and management believes that will drive its next wave of revenue growth.
Suffice it to say, Appen has now finally started to show some profit before tax clocking in, with a positive $600,000 for the three months to June. A $60 million cost-cutting exercise during the past year has also helped with the numbers and certainly put some green on the screen for long-suffering shareholders.
Finally, we turn to Atomos, which designs hardware devices for monitoring and recording as well as easy-to-use software tools. The company reported a $1 million uptick in quarterly sales to $9.7 million, which the market may have interpreted as a turnaround signal.
After a challenging four years affected by COVID, supply chain issues and a writer strike, the share price had suffered badly from a 50 per cent reduction in sales to $40 million and an EBITDA that plummeted from an $8 million profit to a $25 million loss.
But in efforts to stabilise the business, management first undertook a 50 per cent reduction in fixed costs and a drop in headcount from 150 to 70 personnel last year. Next, in efforts to recapitalise the balance sheet, it completed a $16 million capital raising in May that paid off its remaining debt of $8.3 million and reduced inventory by 62 per cent – bringing in further much-needed cash.
With two new products to roll out that haven’t kicked in any revenue yet, hopes may be running high that the worst is now in the rear-vision mirror and that green shoots have started to appear. The company’s share price reacted in that vein this week, jumping from 3.5c to 5.8c at its highest point – a leap of nearly 66 per cent
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
