Best to be careful when investing on fleeting rumours

In February 1977, a couple of years before this columnist even existed, Fleetwood Mac released its 11^th studio album Rumours, which would go on to become one of the band’s most critically-acclaimed recordings and it left an indelible mark on the global music industry.

Spawning such hits as Go Your Own Way, Dreams and Don’t Stop, Rumours would become the group’s first No.1 album on the United Kingdom charts and also topped the United States Billboard 200. Early last year, it was revealed that 40 million copies of the record had been sold worldwide and it was also ranked seventh in Rolling Stone magazine’s 2023 list of the 500 Greatest Albums of All Time.

What does this have to do with listed companies and their recent performance on the ASX, you may ask? Well, that is quite simple – it leads us into this week’s instalment of the ever-anticipated Bulls N’ Bears Runners of the Week column.

That is because it appears that rumours can also have a major say in whether a share price shoots for the stars or tumbles to the ground. And Prodigy Gold is a prime case-in-point after it this week recorded a 125 per cent stock hike from 0.4c to 0.9c.

Yesterday, the company released an announcement to the ASX stating: “Prodigy Gold has become aware of false information circulating in the market consisting of statements on various trading platforms and on websites such as Intelligent Investor that the Company is intending to pay a dividend of $0.87 per share. The Company advises the market that it has no intention of declaring or paying a dividend. The Company is not aware of the source of this incorrect information.”

See? Rumours.

Prodigy went on to declare that the only source of correct information relating to the payment of dividends is information that is released by the company to the market, or which can be found in announcements on the ASX or on its website.

However, earlier this week, management released an exploration update for its flagship Tanami North gold project in the Northern Territory where it is planning an exploration blitz to build on an already healthy mineral resource of more than 350,000 gold ounces at its Hyperion and Tregony deposits. It says additional drilling is also being planned for the Boco, Mark’s Rise and Brokenwood prospects to increase the understanding of mineralisation in areas away from the company’s currently-reported mineral resources.

During last year’s drill campaign, Prodigy produced some excellent results including 40m grading a solid 6.5 grams per tonne gold from 60m at Hyperion and 6m going 15.7g/t from 91m including 1m at a whopping 92g/t from 92m at Tregony.

Who need rumours when you are pulling intercepts like that out of the ground?

The company also has its Buccaneer and Old Pirate projects that have a combined resource of more than 470,000 gold ounces nearby.

So ,while management probably felt the need to address the misinformation circulating around the traps, the company appears to be in a pretty good place with gold aplenty just waiting to be dug out. Perhaps it should take a leaf out of Fleetwood Mac’s songbook and simply go its own way.

And it leads us to thinking that once rumours begin, sometimes you may never break the chain. But Prodigy’s share price fell by 37.5 per cent yesterday, suggesting some previous buyers had stopped listening to the scuttlebutt.

American Rare Earths also saw its share price skyrocket this week, jumping more than 130 per cent to touch 37.5c after a previous close of 16c.

The sharp move appears to be another case of the market reacting slowly to a major announcement, with the stock lifting the week after the company delivered an astounding 64 per cent hike to the in-situ resources at its Halleck Creek rare earths project in Wyoming.

In fact, even the ASX may have even missed the announcement after it issued a “Please Explain” to start the week and the price continued to rise right up to today’s trading.

The resource at Halleck Creek is big. The latest update puts the figure at 2.34 billion tonnes grading 3196 parts per million total rare earth oxides (TREO), with an astronomical 1.81 million tonnes of magnetic rare earth oxides (MREO)

Management believes the project has the potential to become the biggest rare earths deposit in the US. And a quote in the resource upgrade announcement from chief executive officer Donald Swartz explains the reasons why it is so bullish about the operation’s potential.

“Typically, you’ll see the resource decrease as infill drilling takes place – instead we’re seeing the opposite, with only 25% of the project being drilled to this point,” he said.

Plus, apparently, the deposit remains open at depth and along strike, which puts Halleck Creek well on the path to fulfilling American Rare Earths’ claims. Watch this space.

Dateline Resources took out third place this week with a 100 per cent jump from 1c up to 2c after delivering a majestic 70.1m section going 6.53g/t gold including 25.9m grading 15.31g/t at its Colosseum project in California.

The figures come from a single diamond drill hole sunk to a depth of about 250m, with individual 1.5m assays showing a significant jump in grade from around the 117m mark. An outlying 1.5m section from 245.4m also returned solid results of 31.3g/t gold.

Management says the latest assays are in-line with previous drilling that returned similarly impressive intercepts including 100m grading 4.16g/t gold.

The Colosseum gold mine sits along the Walker Lane trend in Californian county of East San Bernardino. In 2022, Dateline announced that the operation holds a JORC 2012-compliant mineral resource estimate of 20.9 million tonnes at 1.2g/t for 813,000 gold ounces.

Not satisfied with a significant gold resource, management says it is progressing discussions with local, State, and Federal agencies with regards to implementing a rare earths program at the site. The company has consistently pulled wide assays from diamond drilling at Colosseum going back to June last year when it announced a 63.2m hit grading 10.28g/t gold.

Interestingly, Fleetwood Mac’s Rumours, which included the track Gold Dust Woman, was primarily recorded in California.

Coincidence? We’ll let you decide.

This week’s final runner goes to global fintech company Way2Vat, which enjoyed a price rise of more than 91 per cent to touch 2.3c from a previous close of 1.2c after it launched what it calls the world’s first AI-driven automated auditing project – dubbed “AI-AP Compliance”.

Wow – AI and auditing in the same sentence. That strikes a very real fear into a journalist’s heart.

Management says its new automated product is the first of its kind, building on the company’s existing technology platform to perform a full audit of all accounts payable and VAT/GST invoices for clients across 80 countries.

Importantly, the project creates a new revenue stream for Way2VAT based on a fixed fee per audited invoice and 20 per cent of unclaimed refunds.

According to its latest announcement, the company’s AI-AP Compliance operates at magnitudes quicker than manual auditing of spot invoices, reducing the time for processing from months to days. It says it significantly reduces risk by automatically ensuring all invoices are compliant with various VAT/GST rules and regulations and by verifying the correct amount of VAT/GST has been charged or paid.

The program runs automated scans and enrichment of submission reports, invoice and receipt images and checks against taxation and governance protocols. It also generates audit and discrepancy reports that verify proper submission of AP expenses, identifies wrongly submitted expenses, unpaid invoices or redundant VAT recovery, pinpointing errors and rectifications needed.

Good news for accountants, then!

Way2VAT says it will charge a standard rate per invoice and 20 per cent of reclaims, working with enterprise clients with at least 10,000 invoices to be audited.

So, to round out with the Fleetwood Mac Rumours theme of this week’s column, companies looking to streamline its auditing process could well be shouting, “Oh Daddy”, while those working in the financial sector might well be thinking, “I Don’t Want to Know”.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au