10th Apr: Trader Tim’s Penny Stock Post – #MTFB #BOOM #SML

@TraderTim5BOOM, MTFB, SML0 Comments

Trader Tim’s Penny Stock Post analyses key RNS releases every morning. Not all releases can be covered, priority will be based on liquidity, significance and demand. To receive Trader Tim’s Penny Stock Post direct to your email box at 10am each morning, click here.

Morning all!

I hope you all had good weekend. I was up late watching the golf and very disappointed for Justin Rose, but you can’t begrudge Sergio a Major. A great tournament all around.

A 4-day week this week courtesy of the Easter weekend, and not a huge amount of news around at the moment. The markets appear to be quietening earlier than usual, particularly on the micro side of things. Small cap stocks do not seem to moving much of late, and newsflow is very quiet. One company that has done well for me in the last few weeks is Jersey Oil and Gas, which is now up around 50% on my original investment. Also, Victoria Oil and Gas is beginning to show some life too.

Motif Bio

Market Cap: £60m
Price: 31p
Spread: 2%

No news on this one, but another company really coming to life is Motif Bio, a former favourite among Private Investors. I picked up some more shares this morning, which makes the company one of my bigger holdings. I’ve been saying for a while that MTFB offers real upside potential. The AIM stock is in the process of seeking approval from the FDA on of iclaprim, the company’s novel antibiotic. In February, we had confirmation that last patient has finished the treatment phase in REVIVE-1. The data read-out for REVIVE-1 is expected this quarter.

It has fallen out of love with investors. MTFB had to raise a lot of cash for Phase 3 trials. It is now fully funded and well-underway with Revive-1. It has also recently listed on the NASDAQ in America to open up facilitate further opportunities, which came with delays and regulatory stumbles. The share price began last week at 25p. In August, the Motif Bio’s share price was at 63p. I think there is serious upside from here and that Motif Bio is very undervalued at present. The shares are currently trading at 31p, volumes really picked up last week. Investors are beginning to take notice and bracing themselves for the upcoming newsflow.

Audioboom BOOM 2.75 +0.12 +4.76%

Market Cap: £21.3m
Price: 2.375p
Spread: 12%

A former holding of mine, Audioboom, announce completed the exercise of the squeeze-out rights to finalise the acquisition of SONR. SONR offer natural language process algorithms and other algorithms to aid Audioboom’s ad-delivery platform.

Audioboom, the podcasting platform, hope that the onboard of this technology with help drive ad revenues and reduce expenditure. The reduction in cash burn is really what Audioboom investors are wanting to see. The AIM company has done well to show it can significantly grow its revenues over the last 12 months, but the question now is about sustainability. If companies continue to spend, they should be able to grow there revenues. This is obvious. What happens when the spending stops or slows? This is litmus test for Audioboom. They need to prove a sustainable business model.

Readers will know, I held these shares on the basis of a bit of a punt. The punt being that this year would be the year that Audioboom’s results indicated that company would be nearing a sustainable model. However, the recent £4 million placing killed of that dream and showed that BOOM were still reliant on outside cash to stay afloat, despite impressive revenue numbers. Investors – unless I’ve missed something – are still waiting official yearly results… where are they? It was suggested these would come early March.

I may revisit Audioboom, I think the platform is good. And I actually think a business will come of it, but it needs more time. Once it begins reducing its cashburn, I’ll revisit this one.

Strategic Minerals

Market Cap: £18.4m
Price: 1.5p
Spread: 6%

A decent mover this morning, this one, up 15%!

SML’s subsidiary, Southern Minerals Group, entered into a new contract on Friday 7 April with a private company for the supply of up to 400,000 tons of magnetite at a market based price over several years. This comes after a previous contract failed to meet all the prerequisites.

A good sized contract for the company, who have secured credible consideration also. There is no mention of who the buyer is. However, a $10,000 deposit on the Contract has been transferred to SMG’s bank account. And SMG have agreed that a security deposit of $250,000 is to be lodged into solicitor’s trust accounts by US close of business 14 April 2017. Strategic Minerals have said they’ll update the market once this is confirmed. It’s good to see safeguards in place. This goes a long way to installing investor confidence. Also, it is helpful for when a client does not wish to be identified.

The contract calls for a minimum purchase of 4,000 tons per month, which is to commence from 1 June 2017. The operating facility has a maximum capacity of 6,000 tons per month. This contract “is likely to more than double annual sales from Cobre (the company’s magnetite stockpile)”.

Management have a high confidence that this Contract will progress and note that it is, compared to the Agreement we have just terminated, for a greater total quantity and has doubled minimum monthly purchases … The impact of the Contract on the Company is not to be underestimated as it is likely to materially boost the expected profitability of the Cobre operation in 2017.

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