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#TM1 Technology Minerals – £4 million convertible bond facility

Technology Minerals Plc (LSE: TM1), the first listed UK company focused on creating a sustainable circular economy for battery metals, is pleased to announce that it has entered into a £4.0 million convertible bond facility (the “Facility”) with Macquarie Bank Limited (“MBL”) and Atlas Capital Markets LLC (“ACM”).

 

Use of Funds

 

The Facility would be used primarily to enable the Company to:

 

·Ramp up of the first phase of operations at the Tipton lead-acid battery recycling plant and prepare to commence industrial-scale processing through an automated plant following approval from the Environmental Agency

·Support operating costs and capital expenditure required to accelerate the Company’s twin-track growth strategy to create a circular economy for battery metals to capture the industrial scale opportunity for recycling Lithium- ion and lead-acid batteries

 

Details of the Proposed Facility

 

Under the Facility, MBL and ACM will provide a £4.0 million convertible bond facility with a coupon of 5% per annum over the SONIA rate, payable quarterly in cash or in shares at the Company’s discretion. The Facility can be drawn in eight tranches of up to £500,000 with each tranche being called at Technology Mineral’s discretion once the previous tranche has been fully converted and subject to certain conditions. MBL and ACM will purchase the convertible bonds at a fixed price equal to 95% of the principal amount. MBL will purchase the first tranche, and each subsequent tranche will be purchased by MBL or ACM pursuant to the terms of the subscription agreement among the parties.

 

MBL and ACM can convert the convertible bonds to Technology Minerals shares (“Shares”) by issuing a conversion notice with the price set at 90% of the 3-day Volume Weighted Average Price of the Shares, where the 3 days may be consecutive or not and are selected by MBL or ACM (as applicable) from the 20 days prior to the issue of a conversion notice by MBL or ACM. The convertible bonds shall have a maturity of two years from issuance.

 

The Company will pay a transaction fee equal to 3% of each tranche (the “Commission”). The Commission is payable in cash, and may be deducted from the amount payable by MBL or ACM (as applicable) to Technology Minerals for each tranche.

 

In addition, warrants amounting to 30% of each tranche will be attached to each tranche of the convertible bonds. The warrants will have a strike price fixed at 30% premium to the Volume Weighted Average Price of the Shares for the 5 consecutive days prior to the issue date of each tranche. The warrants will expire two years after issuance.

 

The convertible bonds would be capable of redemption at any time by the Company with 60 business days’ notice at par plus 10% premium of the principal amount remaining.

 

MBL and ACM would be unable to convert the convertible bonds to Shares where such conversion would mean that it would become interested (as defined in the City Code on Takeovers and Mergers (the “Takeover Code”)) in shares that in aggregate carry more than 29.9 per cent of the of the voting rights of the Technology Minerals.

 

Shareholder Approval

 

The Company will seek shareholder approval should this be required in order to issue the convertible bonds in accordance with the tranches which may be drawn under the Facility.

Alex Stanbury, CEO of Technology Minerals, said: “We are delighted by the confidence Macquarie Bank and Atlas Capital Markets have shown in us and look forward to working with them closely as we turn our focus to scaling operations domestically and overseas. The £4.0m convertible bond facility complements our fundraise in November and strengthens the Company’s position as we look to ramp up our operations at Tipton and progress with our twin-track growth strategy to create a circular economy for battery metals.”

Enquiries

Technology Minerals Plc

Robin Brundle, Executive Chairman

Alexander Stanbury, Chief Executive Officer

+44 (0)20 4582 3500

Oberon Investments Limited

Nick Lovering, Adam Pollock

+44 (0)20 3179 0535

Arden Partners Plc

Ruari McGirr

+44 (0)207 614 5900

Gracechurch Group

Harry Chathli, Alexis Gore, William Dobinson

+44 (0)20 4582 3500

 

 

Technology Minerals Plc 

 

Technology Minerals is developing the UK’s first listed, sustainable circular economy for battery metals, using cutting-edge technology to recycle, recover, and re-use battery technologies for a renewable energy future. Technology Minerals is focused on extracting raw materials required for Li-ion batteries, whilst solving the ecological issue of spent Li-ion batteries, by recycling them for re-use by battery manufacturers. With the increasing global demand for battery metals to supply electrification, the group will explore, mine, and recycle metals from spent batteries. Further information on Technology Minerals is available at www.technologyminerals.co.uk  

 

Macquarie Bank Limited

Macquarie Bank Limited (ABN 46 008 583 542), a corporation constituted with limited liability under the laws of the Commonwealth of Australia and authorised to carry on banking business in, amongst others, the Commonwealth of Australia, and the United Kingdom. Macquarie Bank’s expertise covers asset finance, lending, banking and risk and capital solutions across debt, equity and commodities.

 

Atlas Capital Markets LLC

Atlas Capital Markets (“ACM”) is an investment company based in London, founded in 2012. ACM is managed by a team of experienced professionals that has originated, structured and managed over $10bn in special situation financing and asset-orientated investments globally. ACM takes pride in the relationship fostered with each portfolio company and the added value we bring in expertise and strategic introductions in addition to our invested capital. ACM’s management has decades of experience and has executed numerous deals across the world successfully.

#TEK Tekcapital PLC – Change in Accounting Reference Date

Tekcapital plc, (AIM: TEK) the UK intellectual property investment group focused on creating valuable products from investing in university technology that can improve people’s lives, announces that it is changing its accounting reference date from 30 November to 31 December.

As a result of the change of accounting reference date, the Company’s reporting calendar will be as follows:

·    Publication of audited accounts for the 13 month period to 31 December 2022, no later than 31 May 2023

·    Publication of unaudited accounts for the 6 month period to 30 June 2023, no later than 30 September 2023

·    Publication of audited accounts for the 12 month period to 31 December 2023, no later than 30 June 2024

 

For further information, please contact:

 

Tekcapital Plc 

Via Flagstaff IR

Clifford M. Gross, Ph.D. 

SP Angel Corporate Finance LLP

(Nominated Adviser and Broker)

+44 (0) 20 3470 0470 

Richard Morrison / Charlie Bouverat (Corporate Finance)

Rob Rees (Corporate Broking)

Flagstaff Strategic and Investor Communications

           

+44 (0) 20 7129 1474

Tim Thompson / Andrea Seymour / Fergus Mellon

 

 

 

About Tekcapital plc

Tekcapital creates value from investing in new, university-developed discoveries that can enhance people’s lives and provides a range of technology transfer services to help organisations evaluate and commercialise new technologies. Tekcapital is quoted on the AIM market of the London Stock Exchange (AIM: symbol TEK) and is headquartered in the UK. For more information, please visit www.tekcapital.com.

Clean Energy Metals – Dealing with the Supply Squeeze

#TM1- Technology Minerals

 

Clean Energy Metals – Dealing with the Supply Squeeze

Critical window of opportunity to create a circular ecosystem for battery metals

The failure of national governments to reach a major agreement at the COP27 Summit this year underlined the difficulty and urgency in reaching net zero. The lack of progress from the governmental side means that it falls to the private sector to provide meaningful solutions. Resource efficiency, energy, and mobility transition are crucial strategies to mitigate climate change. The focus is on reducing the consumption of resources, especially energy and raw materials.

While raw materials are the basis of our material world, their excessive consumption over recent decades has also contributed significantly to climate change. However, raw materials, and, in this case, especially metals, play a key enabling role for climate protection technologies, such as electro mobility, the hydrogen economy, and solar and wind power plants, and also for digitalisation. It is now vital to make the use of raw materials much more resource-efficient and to use them as purposefully as possible.

Source: https://link.springer.com/article/10.1007/s13563-022-00319-1

Source: https://www.alliedmarketresearch.com/battery-recycling-market

There is overwhelming evidence to show that advanced circular economy systems and sophisticated recycling technologies can build the backbone for the development of a resource efficient and sustainable society. Closed metal cycles are a key part of this equation, securing relevant parts of the raw material supply for high-tech products and reducing CO2 emissions in their production at the same time.

Many mineral-producing countries that supply critical minerals are politically unstable, making them risky to invest in and to rely on as a source. This underscores the importance of developing sources of domestic supply, which offers greater political stability, greater safety for workers, and can provide a pipeline of young talent. These provide a foundation for the sector to build innovative solutions in response to the demands of the green transition.

The sources of many critical minerals for energy use are much less diversified than for hydrocarbons and sometimes concentrated in geographies that are highly problematic from an environmental and social perspective, such the Congo. The Congo accounts for almost 80% of the global supply of cobalt, much of which comes from so called ‘artisanal mining’ with its attendant exploitative labour conditions and environmental degradation.

 

The Delivery Challenge

To deliver on the green revolution and minimise emissions that contribute to climate change, industries will need access to significant quantities of critical minerals.

If you can’t make it or grow it, you have to mine it, so there will be an inevitable growth in the mining of critical raw materials, such as lithium-containing minerals. Source: https://britishlithium.co.uk/lithium-market/

 

Source: https://www.alliedmarketresearch.com/battery-recycling-market

The production of lithium in 2030 will need to be 60 times the market size of 2015, if production of the internal combustion engine becomes a reality within the 2030 to 2035 timescale. Electric vehicles are the primary driver of lithium demand and given lithium’s unique properties of light weight and high energy storage potential, it is highly likely to remain the material of choice in non-stationary batteries, whether in wet electrolyte or solid-state form.

The sustainable supply of the battery metals cobalt, nickel, lithium, manganese, and copper is a decisive factor for the success of electro mobility. Given the current global availability of resources and the imminent tsunamic surge in demand to sustain surging production levels recycling and reuse of batteries represents an increasingly important component of the future raw material supply. An effective circular economy for batteries can only be achieved if—in contrast to the current situation with many consumer goods — spent batteries can be fed into a comprehensive, technically advanced recycling network to re-enter the supply chain.

 

 

Source: https://www.alliedmarketresearch.com/battery-recycling-market

A London listed company Technology Minerals (LON: TM1) is seeking to meet these challenges head on. Billed as the UK’s first stock market listed ‘circular economy’ company, Technology Minerals combines a fast-growing lead acid and lithium-ion battery recycling network through its wholly owned subsidiary Recyclus Group with a series of battery metal mining projects sited strategically around the globe. Technology Minerals Chairman Robin Brundle explains: “The strategy of Technology Minerals is to build out its IP protected battery processing capacity in Europe while evaluating its portfolio of early-stage critical minerals projects. The current European market for Li-ion and lead-acid batteries totals 1.2mte pa of which some 72% are lead-acid and of which the automotive market consumes 70%. Within automotive, Li-ion currently accounts for just 10% but that is set to grow exponentially in line with increased EV penetration.”

The global recycling batteries market size was valued at $11.1 billion in 2020 and is expected to reach to $66.6 billion by 2030.

While EVs don’t emit CO2, lithium-ion batteries are made from raw materials, including lithium, cobalt, and nickel. With the coming supply squeeze, the mining of many of these materials can also raise ethical and environmental concerns.

Currently, there are very few lithium-ion battery recycling centres, due in part to lithium-ion batteries being both costly and difficult to recycle. According to some estimates, the current recycle rate is less than 5%. According to a recent Wired article, “While you can re-use most parts in EVs, the batteries aren’t designed to be recycled or reused.” And if the batteries are disposed into landfill sites, the battery metals can contaminate both water and soil.

Source: https://www.alliedmarketresearch.com/battery-recycling-market

 

The Size of the Problem

  • Global stock of electric vehicles (EVs) could reach 245 million units by 2030, according to the International Energy Agency.
  • While EVs emit less CO2, their batteries are tough to recycle.
  • Ming cobalt, lithium, and nickel can raise ethical and environmental concerns.
  • Creating a circular supply chain by recycling the batteries’ raw materials will be vital in reducing their environmental impact.

Source: https://www.weforum.org/agenda/2021/05/electric-vehicle-battery-recycling-circular-economy/

Lithium-ion batteries are also used for 90% of grid energy storage around the world, especially for wind and solar energy. Initiatives such as the EU’s plan to reduce its dependence on Russian natural gas by two-thirds, which relies in part on accelerated generation of renewable energy, will significantly increase demand for battery storage.

Source: https://www.bcg.com/publications/2022/the-lithium-supply-crunch-doesnt-have-to-stall-electric-cars

The sustainable supply of battery metals such as lithium, cobalt, nickel, manganese, and copper is a decisive factor for the success of electro mobility and clean technologies. The current targets set by governments at home and abroad for the switch to EVs and clean technology leaves recycling and reuse of batteries as the only practical step available to meet demand based on current forecasts for sourcing new battery metal production hubs. This circular economy for batteries can only be realised if—in contrast to the current situation with many consumer goods—there is a global network to collect spent batteries allied to large scale, high-quality recycling facilities.

 

Does the UK offer practical battery metal / clean-tech project opportunities?

Accelerating the shift to zero-emission vehicles is a key element if the 68% reduction in carbon emissions targeted by the Government by 2030 is to be achieved. The UK’s EV market is growing rapidly, with EV registrations increasing by approximately 173% from 2019 to 2020.

Current projections state that approximately 1.4 million EV battery packs will be coming to the end of their “useful life” every year by 2040. This roughly equates to 203,000 tons of batteries for recycling annually (based on a 60% recycling rate) at that point.

The UK currently lacks industrial capacity for lithium-ion battery recycling, resulting in the current costly reliance on mainland Europe when supplying batteries for material recovery after their useful life. With the average value of materials contained in an end-of-life automotive pack in 2018 being £1,200 for Battery Electric Vehicles (BEVs) and £260 for Plug-in Hybrid Electric Vehicles (PHEVs), there is a huge opportunity in the UK to recycle lithium-ion batteries.

Source: https://hvm.catapult.org.uk/news/automotive-battery-recycling-an-opportunity-the-uk-cant-afford-to-miss/#

Technology Minerals Chairman Robin Brundle comments; “The automotive sector is doing its part to pivot to all-electric, but it needs an effective and competitive ecosystem that will be largely self-sustaining, with job creation, skillset expansion and support for COP27 goals, both domestically and abroad, coming to the fore. This way, our automotive industry will continue to advance our extraordinary UK R&D and engineering skillsets so that they are fit for purpose well into the next sustainable decade.  Recycling is forecast to only be able to provide 22% of the supply that’s needed to power the transition. 78% will need to be extracted or brought in from elsewhere and each continent is facing this challenge – with many places creating barriers to export.”

 

Right Under Our Feet?

The UK has a rich history of mining, yet exploration and mine development have been neglected since WWII, with no new metalliferous mine being successfully built for 45 years.

Large-scale mining and modern processing can extract minerals that were not previously economic, safely, and with improved protection of the environment and community. New deposits could be found near old, narrow-veined, high-grade mines or in unexplored areas. Modern environmental controls, surveys, management, and remediation techniques can ensure that mineral production limits environment impact.

Technology Minerals Chairman Robin Brundle points out that the markets are very much aware that recycling alone will not generate sufficient raw materials and believes an ethical mining programme is critical: “We were once a prolific mining nation and those mines are still there – dormant, but in 2022, many appear to be economic once again due to the advancement in technology and commodity prices.”

Some steps have already been taken in this direction. After listing on London’s AIM market, Cornish Lithium #CUSN has assembled a large portfolio of mineral rights in Cornwall and has begun exploration for lithium-rich geothermal fluids.

 

Gigafactory Investment is Coming to the UK

There is progress in at least one area of the electro mobility and clean-tech supply chain: the British government is in talks with several companies to build gigafactories in the UK. Envision AESC has announced a new gigafactory next to its facility in Sunderland, while AMTE Power has also announced plans for a megafactory in Dundee. Further gigafactory and several supply chain announcements are expected in the coming months.
These developments are vital in maintaining a strong and prosperous automotive industry in the UK. On top of the global challenges from the COVID-19 pandemic, the war in Ukraine, and the rising costs of living, the challenges facing the UK automotive industry are very real and specific. 

“We all need not one but several gigafactories in the UK,” said Brundle. “Not having the ability to create batteries at home puts the future of the UK automotive sector in jeopardy—and the 823,000 direct and indirect jobs that go with it.  We need to secure more lithium for the UK and Europe, to create a flexible, sustainable supply chain that could also include developing domestic sources of key battery metals.”

 

How the Macro Backdrop and Supply Squeeze Will Make Recycling Increasingly Important

The Committee for Climate Change has suggested that 50% of new car and van sales would be battery electric or plug-in hybrid by 2035. Bringing forward deadlines for zero emission vehicles means we are now looking at 100% of new cars and vans being zero emission at the tailpipe by 2035.

The supply crunch will not hit immediately. Even though the price of lithium has surged more than tenfold over the past two years, there’s enough capacity to meet anticipated demand until around 2025—and potentially through 2030 if enough recycling operations come online. After that, chronic shortages are expected. Even assuming that all the new lithium-mining projects that the industry currently regards as probable or possible resources go into operation, as well as a significant expansion of lithium-recycling projects, lithium supply in 2030 is expected to fall around 4% short of projected demand, or by around 100,000 metric tons of lithium carbonate equivalent (the processed form of raw lithium). By 2035, that supply gap is projected to be acute—at least 1.1 million metric tons, or 24% less than demand.

 

Source: https://www.bcg.com/publications/2022/the-lithium-supply-crunch-doesnt-have-to-stall-electric-cars

It is more vital than ever that metals are recycled responsibly and effectively. This will:

  • Contribute to the conservation of raw materials, complementing the primary supply of important and partially critical metals for our society.
  • Significantly improve supply security, especially for many technology metals which currently are imported from outside Europe. Many metal imports derive from regions with higher geopolitical risks, hence making the European economy vulnerable to supply disruptions. Exploiting the European “urban mine” built from our end-of-life (EoL) products, infrastructure, and other residue streams reduces import dependence, improves the resilience of crucial value chains, and hence supports economic activities and jobs in Europe. The need for more supply chain resilience has become even more obvious in the context of the Covid-19 pandemic and the Ukraine war.
  • Contribute to cushion volatile metal prices as the additional supply of recycled metals can help to overcome demand–supply imbalances and increases the number of metal sources beyond the primary producers.
  • Reduce the CO2 footprint and overall environmental impact of raw materials supply. If taking place in state-of-the-art recycling facilities, in most cases the energy efficiency (per kg of metal) is better and the impact on water, air, soil, and biosphere is considerably lower than in mining operations. The main reason for this is that the metal concentration in most products is much higher than in geological deposits.
  • Be one pillar of responsible sourcing by providing transparent and clean supply chains.
  • Protect the environment as non-recycling or landfilling of end-of-life products, such as batteries, can emit hazardous substances.

 

How the Technology Minerals #TM1 Blueprint for Lithium-ion and Lead-acid Battery Recycling Will Be a Vital Part of the Supply Chain

The battery recycling market is growing at an accelerated rate, driven by automotive and industrial sectors transitioning to more environmentally friendly and sustainable electric solutions. The UK needs industrial-scale battery recycling technologies. There is currently no major UK capability to recycle lithium-ion batteries. Technology Minerals’ plants in Tipton and Wolverhampton aim to provide a national capability to recycle lead-acid and lithium-ion batteries. As a first-mover in the battery recycling sector, the company expects to open 10 plants over the next six years, with its innovative IP in the lithium-ion sector a driving factor in the expansion strategy.

Technology Minerals has developed a unique frontend process that can safely break open Li-ion batteries which are not suitable for repurposing, to recover the battery mineral rich ‘black mass’ they contain as well as other battery components. This is the only process currently capable of handling all five li-ion battery compositions simultaneously on an industrial scale. The solution is also modular and can be easily built on-site at OEMs, minimising transportation costs.Technology Minerals has also developed a significantly improved process to recover the lead from end-of-life lead-acid batteries as well as recovering the acid for re-use as electrolyte or for the manufacture of fertiliser or gypsum, subject to the preferred economics.

 

Conclusion

As the world races to decarbonise, industry needs a secure source of critical minerals to fuel the transition. Brundle said, “The only ways this can be achieved is creating new mines, opening old mines, and building a secondary source of supply through recycling.”

It is necessary to dramatically escalate new production of battery metals to allow industry to make the green switch. This must be coupled with the implementation of a circular ecosystem so that each mineral mined is used to its full potential. The urgency and scale of the transition means that nothing less than a maximal approach will suffice.

On the strategic level, there are two temporal considerations. Brundle explained, “We have a very narrow window of opportunity so there is a necessity to take action to avert the incoming supply crunch in the short-term, but there is also a longer-term need to create a sustainable, circular ecosystem for battery metals.” Urgent action is required to avoid the immediate shortfall of supply, but there is also a wider structural shift to circularity needed to ensure a decarbonised economy can continue to grow sustainably.

 

#SVML – Sovereign Metals Ltd Sovereign to Demerge Standalone Graphite Projects

#SVML- SOVEREIGN TO DEMERGE STANDALONE GRAPHITE PROJECTS

 

·

Sovereign to demerge standalone Graphite Projects (being the Nanzeka, Malingunde, Duwi and Mabuwa Projects) into a wholly owned subsidiary, NGX Limited

·

The Demerger seeks to unlock the value of the Graphite Projects for Sovereign shareholders and separate its Kasiya Rutile Project and its standalone Graphite Projects into two distinct companies

·

The demerger of the Graphite Projects will be subject to shareholder approval and will involve an in-specie distribution to Sovereign shareholders on the basis of one (1) NGX Share for every eleven (11) Sovereign Shares

·

NGX is proposing to pursue an ASX listing through an initial public offering of NGX Shares (IPO) pursuant to a prospectus following the completion of the Demerger

·

Sovereign shareholders to retain further exposure to the value and upside of the Graphite Projects as the NGX IPO is expected to comprise a priority offer to existing shareholders on the basis of one (1) new NGX Share for every one (1) NGX Share received pursuant to the Demerger to raise approximately $8,600,000 and a general offer of $1,000,000 to assist with satisfying ASX spread requirements. This will ensure there is no cash outflow from Sovereign to NGX as part of the Demerger, other than applicable Sovereign expenses to affect the Demerger. However, terms of the NGX IPO are yet to be finalised

·

A Notice of Meeting for the Demerger and Distribution will be sent to shareholders with the meeting planned to take place early in 2023

·

The Demerger allows Sovereign and the existing management team to focus on its flagship Kasiya Rutile Project, the largest natural rutile deposit in the world

·

Sovereign will retain all graphite co-product from the Kasiya Rutile Project

·

Kasiya Pre-Feasibility Study currently advancing and on track for completion in H1 2023

 

Sovereign Metals Limited (ASX:SVM; AIM:SVML) (the Company or Sovereign) is pleased to announce that it intends to undertake a demerger (Demerger) whereby Sovereign’s Malawian graphite projects being the Nanzeka Project, Malingunde Project, Duwi Project and Mabuwa Project (Graphite Projects) are to be demerged through NGX Limited (NGX), a wholly owned subsidiary of the Company, allowing Sovereign to focus on the development of the Kasiya Rutile Project (Kasiya) while unlocking value in its Graphite Projects for shareholders.

Sovereign proposes, subject to shareholder approval, to demerge the Graphite Projects via a spin-out of NGX and in-specie distribution of NGX fully paid ordinary shares (NGX Shares) to Sovereign shareholders by issuing one (1) NGX Share for every eleven (11) Sovereign shares (SVM Shares) held (Distribution), allowing Sovereign shareholders to retain exposure to the value and upside of the Graphite Projects.

Upon completion of the Demerger, NGX intends to seek admission to the official list of the ASX. NGX will undertake a capital raising to satisfy the ASX admission requirements.

NGX will be the offeror of the NGX Shares under the IPO. A prospectus will be issued by NGX for the IPO capital raising which will be made available when the NGX Shares are offered. Anyone wishing to acquire NGX Shares as part of the IPO offer will need to complete the application form that will accompany the prospectus.

 

ENQUIRIES

Dr Julian Stephens (Perth)
Managing Director

+61(8) 9322 6322

Sam Cordin (Perth)
+61(8) 9322 6322

Sapan Ghai (London)
+44 207 478 3900

 

 

Nominated Adviser on AIM

 

RFC Ambrian

 

Bhavesh Patel / Andrew Thomson

+44 20 3440 6800

 

 

Joint Brokers

 

Berenberg

+44 20 3207 7800

Matthew Armitt

 

Jennifer Lee

 

 

 

Optiva Securities

+44 20 3137 1902

Daniel Ingram

 

Mariela Jaho

 

Christian Dennis

 

Demerger and Capital Reduction

Sovereign will seek shareholder approval to enable the Company to demerge its Graphite Projects to NGX. In consideration for the Demerger, NGX will issue 42,807,000 NGX Shares at a deemed issue price of $0.20 per NGX Share. Sovereign will then reduce its capital by an amount equal to the value of the approximately 42.8 million NGX Shares to be returned to Sovereign shareholders on a pro rata basis through an equal capital reduction (Capital Reduction) to be effected through the Distribution. Eligible Shareholders will receive a pro rata distribution of one (1) NGX Share for every eleven (11) SVM Shares held at the Record Date.

If the Capital Reduction is approved, the share capital of the Company will be reduced by approximately $8,561,400.

The terms of the Capital Reduction are the same for each Eligible Shareholder. At the date of this announcement, the Company has 470,875,023 Shares on issue. No additional Shares will be issued as a result of the Capital Reduction. On the basis that no further Shares are issued, no Options are exercised and no Performance Rights are converted, the Company will have 470,875,023 Shares on issue at the Record Date.

The number of SVM Shares held by Shareholders will not change, and Shareholders will retain their SVM Shares in the Company following the Capital Reduction. However, if the Capital Reduction is implemented, the value of the SVM Shares may be less than the value of the SVM Shares held prior to the Capital Reduction because, after the Capital Reduction, the Company will not retain an interest in NGX and the Graphite Projects. The rights attaching to SVM Shares will not be altered by the Capital Reduction.

Given the Capital Reduction is an equal reduction and the Company will still have positive net assets following the Capital Reduction, the Directors consider the Capital Reduction is fair and reasonable to Sovereign shareholders as a whole.

Fractional entitlements will be rounded down to the nearest whole number. Based on there being 470,825,023 SVM Shares on issue on the record date, approximately 42,807,000 NGX Shares would be distributed to Eligible Shareholders.

Each Eligible Shareholder’s name will be entered on the register of members of NGX with each Eligible Shareholder being deemed to have consented to becoming a NGX shareholder and being bound by its constitution. Eligible Shareholders will not be required to pay any consideration for the NGX Shares distributed to them under the Distribution.

An Eligible Shareholder’s entitlement to NGX Shares will be based on the number of SVM Shares held at the record date. Eligible Shareholders will thereby retain direct ownership of the Company and will also receive direct ownership of NGX. NGX will demerge from Sovereign and seek a listing on ASX.

Depositary Interest holders on the in-specie distribution Record Date with a registered address in an Eligible Country (being Eligible Depositary Interest Holders) will be distributed NGX Shares on the basis of one (1) NGX Share for every eleven (11) SVM Shares held. Depositary Interest holders should be aware that the NGX Shares will not be issued in CREST as Depositary Interests and will only be issued in registered form on the Company’s share register. A holding statement representing title to the NGX Shares will be issued to the registered address of the Depositary Interest holder on completion of the Distribution.

The Distribution will only proceed if the Company obtains shareholder approval under the Corporations Act for the Capital Reduction.

No cash outflow from Sovereign to NGX is expected as part of the Demerger, other than applicable Sovereign expenses to affect the Demerger.

Notes:

An “Eligible Shareholder” for the purposes of the Capital Reduction will be a Sovereign shareholder that, as at the record date, has a registered address in Australia, New Zealand, Germany, the United Kingdom, the United States of America, Singapore, Canada, Hong Kong, Luxembourg and any jurisdiction determined by the Company which is not prohibited and unduly onerous or impractical to distribute Distribution Shares.

Rationale for Demerger

·

The Demerger allows the Company to better focus its efforts and resources on Kasiya and other primary rutile discoveries.

·

The Demerger will provide shareholders with an interest in two companies – Sovereign and NGX. The Board believes a separate entity with a separate management team focused on the Graphite Projects presents a better prospect of delivering value to Sovereign shareholders.

·

Shareholders may elect to retain exposure to either one or both companies as dictated by their investment preferences and objectives:

 

– 

Shareholders will retain an interest in NGX through the Distribution and thereby have an opportunity to benefit from the potential development of the Graphite Projects; and

– 

all Shareholders will retain their interest in the capital of Sovereign and exposure to Kasiya.

 

·

The Board sees considerable potential in the Graphite Projects that is not recognised by the market and, therefore, a dedicated, separately funded vehicle may realise appropriate value for shareholders.

·

Future capital raisings are expected to be more readily achieved by each individual entity as the focus of the funding will be on their specific projects. In addition, it is expected to provide greater flexibility to both Sovereign and NGX to attract strategic investors.

·

NGX will have a dedicated board and management team to focus on the development of the Graphite Projects.

·

After a full and proper assessment of all available information, the Directors believe that the Demerger is in the best interests of Sovereign shareholders.

Capital Structure

Th indicative capitastructurof NGX postcompletioof thDemergerwilbe:

 

NGX Shares

Existing securities at the date of this announcement1

2

NGX Shares transferred to Shareholders2

42,807,000

Total

42,807,002

Notes:

1.  Held by Sovereign. 

2.  Transfer to be made pursuant to the terms of the Distribution.

Initial Public Offering

NGX will be a public unlisted company immediately following the Demerger and will not be listed on ASX. However, NGX is proposing to pursue an ASX listing through an initial public offering of NGX Shares (IPO) pursuant to a prospectus following the completion of the Demerger.

To satisfy ASX listing requirements, NGX will need to raise capital at the minimum issue price of $0.20 per NGX Share. The terms of the IPO are yet to be finalised. However, it is expected that the NGX IPO will comprise a priority offer to existing Eligible Shareholders on the basis of one (1) new NGX Share for every one (1) NGX Share received pursuant to the Distribution to raise approximately $8,600,000 and a general offer of $1,000,000 to assist with satisfying ASX spread requirements to raise in total up to approximately $9,600,000 (before costs).

NGX will be the offeror of fully paid ordinary shares under the IPO. A prospectus will be issued by NGX for the IPO capital raising which will be made available when the NGX Shares are offered. Anyone wishing to acquire NGX Shares as part of the IPO offer will need to complete the application form that will accompany the prospectus.

NGX Board and Management

The Board will be comprised of a combination of existing Sovereign directors and new appointments, including a non-executive director with suitable technical expertise. Initially NGX will be led by Mr Matthew Syme who will be appointed as an Executive Director of NGX:

Mr Matthew Syme – Executive Director

B.Com, CA

Mr Syme is a Chartered Accountant and an accomplished mining executive with over 30 years’ experience in senior management roles in Australia and overseas. He was a Manager in a major international Chartered Accounting firm before spending three years as an equities analyst in a large stockbroking firm. Mr Syme then continued a successful career as CFO, CEO or a director of a number of listed mining and exploration companies operating in a wide range of commodities and jurisdictions.

Mr Syme was a previous Director of Sovereign (2014-2016) and is familiar with the Graphite Projects.

Other Key Management Personnel

Ms Elizabeth (Lib) Matthews – Company Secretary

B.Com, CA, GIACD, GIA(Affiliated)

Ms Matthews is a Chartered Accountant and graduate of the Australian Institute of Directors Director Course who commenced her career at a large international accounting firm and has since been involved with exploration and development companies operating in the resources sector, including serving as Company Secretary of ASX listed Peregrine Gold Limited. 

The Graphite Projects

The Nanzeka Project

The Nanzeka Project is located approximately 60km north of Malawi’s capital Lilongwe. Mapping, rock chip sampling, trenching and limited drilling in 2013 identified high-grade flake graphite mineralisation over a strike length of 3.0km with a true width of about 10m, though some surface exposures show up to 150m of graphite mineralisation widths. NGX Exploration Limited (a wholly owned Malawian subsidiary of NGX) is the holder of Retention Licence RL 0012/21, granted on 27 July 2021, which comprises the Nanzeka Project (RL 0012/21).

The Duwi Project

The Duwi Project is located approximately 15km east of Malawi’s capital, Lilongwe, which has a Mineral Resource estimate of 85.9Mt at 7.1% total graphitic carbon (TGC) for contained graphite of 6.13Mt. Sovereign Services Limited (SSL), a wholly owned subsidiary of the Company, is the holder under the retention licence RTL 0032/22 which was granted on 4 October 2022. On 18 October 2022, SSL applied for the transfer of the Duwi Project to NGX Exploration Limited. The transfer is pending approval.

The Malingunde Project

The Malingunde Project is located in the Central Region of the Lilongwe District of Malawi, approximately 20km southwest of Malawi’s capital, Lilongwe.

The Malingunde Project has a Mineral Resource estimate of 65Mt at 7.2% TGC for contained graphite of 4.68Mt. In November 2018, the Company completed a pre-feasibility study ( PFS ) for the Malingunde Project which was updated in November 2021. The PFS has confirmed the low operating costs, low technical risk, high-quality concentrates and substantial upside of the Malingunde Project.

In February 2022, the Company applied for the grant of a mining licence (ML) at the Malingunde Project which covers 5.7km2. Conditional approval for the ML was provided in April 2022 with conditions to be addressed including submission of an environmental and social impact assessment approval certificate under the Malawian environmental management law.

The Mabuwa Project

The Mabuwa project is located approximately 60km south of Malawi’s major commercial city of Blantyre. The project covers a mafic-ultramafic intrusive body potentially favourable for nickel and PGE sulphide mineralisation. No previous exploration work is known. However, historical reconnaissance drilling has been undertaken on nearby targets hosted in similar rock types with low grade nickel and PGE sulphide mineralisation having been discovered. An application for an exploration licence over 9km2 was lodged by NGX Exploration Limited in March 2022 .

Demerger

It is expected that the terms of the Demerger will be documented in a Demerger Deed (Demerger Deed) between Sovereign, SSL, NGX and NGX Mining Limited and NGX Exploration Limited (entities owned by NGX).

The effect of the Demerger Deed will be that NGX acquires the Graphite Projects from the Sovereign Group and in return NGX will issue 42,807,000 NGX Shares at a deemed issue price of $0.20 per NGX Share to Sovereign, for the Distribution to Shareholders.

Indicative Timetable

Demerger

The indicative timetable for the Demerger is provided below.

Event

Indicative Date

General Meeting

January 2023

Effective date of Distribution

February 2023

Record Date

TBA – February 2023

Date for Distribution to Shareholders

TBA – February 2023

Note : The dates shown in the table above are indicative only and may vary subject to the Corporations Act, the ASX Listing Rules, and other applicable laws.

TBA : To be announced

Forward Looking Statement

This release may include forward-looking statements, which may be identified by words such as “expects”, “anticipates”, “believes”, “projects”, “plans”, and similar expressions. These forward-looking statements are based on Sovereign’s expectations and beliefs concerning future events. Forward looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of Sovereign, which could cause actual results to differ materially from such statements. There can be no assurance that forward-looking statements will prove to be correct. Sovereign makes no undertaking to subsequently update or revise the forward-looking statements made in this release, to reflect the circumstances or events after the date of that release.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 (‘MAR’). Upon the publication of this announcement via Regulatory Information Service (‘RIS’), this inside information is now considered to be in the public domain.

Competent Persons Statement

The information in this announcement that relates to the Mineral Resource Estimate is extracted from the announcement dated 30 September 2022. The announcement is available to view on www.sovereignmetals.com.au . Sovereign confirms that a) it is not aware of any new information or data that materially affects the information included in the announcement; b) all material assumptions included in the announcement continue to apply and have not materially changed; and c) the form and context in which the relevant Competent Persons’ findings are presented in this report have not been materially changed from the announcement.

To view this announcement in full, including all illustrations and figures, please refer to http://sovereignmetals.com.au/announcements/

APPENDIX 1 – TABLE OF TENEMENTS

Details of the Graphite Projects licences are set out in the table below: 

Tenement

Type

Status

Expiry

Area (km2)

RL0012/21 (Nanzeka)

Retention Licence

Granted

26-07-2026

6

APL0329 (Mabuwa)

Application – Exploration Licence

Pending

N/A

9

RL0032/22 (Duwi)

Retention Licence

Granted

4-10-2027

24

AML0088 (Malingunde)

Application – Mining Licence

Pending

N/A

6

Total

 

45

 

 

APPENDIX 2 – MINERAL RESOURCES

Malingunde Project Mineral Resource Estimate1

Mineral Resource Category

Tonnes
(Mt)

Grade
(% TGC)

Contained Graphite
(MT)

Measured

4.8

8.5%

0.41

Indicated

32.3

7.2%

2.32

Inferred

27.9

7.0%

1.95

Total2

65.0

7.2%

4.68

Notes:

1.  Malingunde Project Mineral Resource estimate is reported at a 6.75% TGC lower cut-off grade for saprolite and between 9.5% and 11.0% for saprock.

2.  Any minor summation inconsistencies are due to rounding.

 

Duwi Project Mineral Resource Estimate

Deposit 1

Mineral Resource Category

Tonnes
(Mt)

Grade
(% TGC)

Contained Graphite
(MT)

Duwi Main

Indicated

2.52

Inferred

34.3

7.3%

2.49

Total2

69.5

7.2%

5.01

Duwi Bend

Inferred

7.8

7.2%

0.56

Nyama

Inferred

8.6

6.5%

0.56

Duwi Project

Indicated2

35.2

7.2%

2.52

Inferred2

50.7

7.1%

3.61

Total2

85.9

7.1%

6.13

Notes:

1.  Duwi Project Mineral Resource estimate is reported at a 5% TGC lower cut-off grade.

2.  Any minor summation inconsistencies are due to rounding.

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Ken Baksh – December Investment Monthly

In our December investment review, Ken discusses the macro picture in the US, Europe, China and Japan before looking at the effects of inflation. We then look at moves over the past 2 months before moving to the UK economy and issues such as consumer confidence, the trade deficit and Govt deficit, insolvencies and recession expectations. Ken highlights the good job that PM Rishi Sunak has done in steadying the ship, before we look at how previous stock picks in October and November have performed. These include Legal & General #LGEN, Smith & Nephew #SN, Begbies Traynor #BEG, Greencoat UK Wind #UKW, Whitbread #WTB, Frontier IP #FIPP, Enquest Bond #ENQ2 and Georgia Capital #CGEO. Ken then picks out four more stocks for growth, These are:

Chemring #CHG

Lloyds Preference Share #LLPC

Asia Dragon Trust #DGN

Legal & General Cyber Security ETF #ISPY

DECEMBER 2022 Market Report

Investment Review

Summary

During the one-month period to 30th November 2022, major equity markets, as measured by the
aggregate FTSE All – World Index, rose by over 5%, reducing the year-to-date loss to 18%, in $ terms.
Chinese equities, were very strong gaining over 30% and taking the broad emerging market indices
and Asia with them. The VIX index fell, finishing the period at a level of 22.22.
Government Fixed Interest stocks also rose over the month. The UK 10-year gilt ended the month on
a yield of 3.16% with corresponding yields of 3.77%, 1.94% and 0.25% in USA, Germany, and Japan
respectively. Speculative and lower quality bonds, however,fell in price terms. Currency moves
featured a weaker US dollar. Commodities were mixed.

News

Over the recent month, the OECD has made further downgrades to world economic growth and
anecdotal evidence from several third quarter reporting companies suggests that the slowdown is
accelerating. e.g. Maersk (“freight rates peaked….decreasing demand”).
At the same time, key data indicators (factory gate and commodity prices, shipping rates, inflation
expectations) suggest that headline price growth is set to slow in coming months, although labour
compensation developments must be watched carefully .
More volatility expected in oil prices as western countries prepare to impose a price cap on Russian
crude.
FTX,a leading crypto exchange,and a sprawling network of affiliated firms filed for bankruptcy
protection dealing another blow to the crypto sector.

US

Recent US Federal Reserve meetings and informal comments by Jerome Powell and other Fed
governors remain hawkish and further increases are expected though calls for 50bp rather than
75bp are increasing. The latest rise took the benchmark rate to the 3.75%/4% range.At a speech at
the Brookings Institute yesterday,the Fed Chairman sent mixed signals that the fight against
inflation “had a long way to go” while also sending a strong hint that the next rate rise,mid
December, would be 50bp rather than 75bp
would be Downward projections to economic growth, and upward moves to inflation forecasts
were also released.
Recently announced inflation indicators showed October headline CPI of 7.7%, lower than estimates,
while the core inflation rate rose by 6.3%. First quarter negative GDP growth followed by second
quarter of -0.9% signals a “technical recession”, although labour/employment trends still seem
reasonably robust. Third quarter preliminary GDP growth of 2.6%, annualised, while higher than

estimates concealed a weaker consumer component offset by a strong trade balance. Recent
consumer sentiment indicators (November composite PMI for example), retail sales, housing
activity, construction figures and the Empire States Survey back this up, showing declining trends
into recent weeks. . The Fed’s own forecasts expect GDP growth of 0.2% and 1.2%, and core PCE
growth of 4.5% and 3.1% respectively for 2022 and 2023
US midterm election results showed the Republicans narrowly taking control of the House of
Representatives while the Democrats retained the Senate, a situation which could minimise more
extreme policies, but also thwart some of Biden’s ambitions. Donald Trump has vowed to return in
2024, although the Republican Party is far from united at the current time

 

EUROPE

The European Central Bank raised interest rates by half a percentage point on July 22nd, and a further
75bp in September also pledging to support surging borrowing costs from sparking a eurozone debt
crisis. The ECB raised interest rates by another 75bp, to their highest level since 2009, on 27th
October, pledging to continue increasing borrowing costs in the coming months to tackle record
inflation, despite a looming recession. On 29th November, Christine Lagarde, the ECB president,
warned that the bank was “not done” raising interest rates, saying that inflation “still has a way to
go”.
First quarter 2022 GDP for the Eurozone showed a weaker than expected trend especially in
Sweden, Italy and Germany and more recent indicators show a continuation of this trend,
exacerbated by the Russia/Ukraine conflict, supply chain issues, and rapidly increasing costs. The
“flash” PMI figure for October, released on the24th October, fell to 47.1 the lowest since November
2020, although German quarterly GDP growth figures, just released, were marginally ahead of
expectations.
Current ECB staff projections foresee economic growth of 2.8% for 2022, a sharp reduction on the
previous forecast, and further downgrades could be likely in the wake of the ongoing Ukrainian
conflict and related gas shortages.
November Eurozone inflation, just released, of 10.0% was lower than expected.with slower gains in
energy and services ,and faster growth in food prices.

ASIA excl JAPAN

The GDP figures, shown below (source: CLSA, CEIC) show that 2022 and 2023 growth
projections for the Asia excl Japan region compare favourably with those of other developed
regions. The reasons include a “better” Covid experience, selective commodity exposure,
tourism, continued FDI Investment (especially China related) and better initial fiscal
situations (compared with late 90’s for example) and limited direct connections with the
Russia/Ukraine situation. The forecasts do not assume a total easing of Chinese covid rules.
Headline inflation of around 5% (core 3%) also compares favourably.
Geo-political concerns must be taken into account, especially In Taiwan.


CHINA

The 5.5% official GDP growth target for 2022 looks clearly unachievable, with some investment
banks now forecasting below 3%. Official data shows weakening trends in consumer spending, fixed
asset investment and construction activity while more recent “live” tracking data e.g., mobility,
cement production and electricity use also showed subdued economic activity. Official data for the
third quarter, just released shows growth of 3.9%. The major historic negative issues of a very
restrictive anti-Covid policy and major disruption within the property market have now been
supplemented by increasing US restrictions on the production/export of certain key electronic
products.
At the time of writing a property “rescue” package has been implemented, while on the Covid front,
tens of thousands of people have taken to the streets protesting strict coronavirus controls and
suppression of freedom of speech, triggering clashes with police and security forces.While nothing is
certain in Xi’s approach to the Covid Pandemic, there is a growing feeling that certain measures will
be relaxed/increase in vaccination.


JAPAN

The Japanese economy contracted 1.2% on an annualized basis during the third quarter of 2022,
missing forecasts of 1.1% growth, and considerably weaker than the 4.6% expansion recorded during
the second quarter. This was the first down quarter of the year reflecting weak domestic
consumption, a slowdown in business investment and an acceleration in imports. Estimates for the
full year seem to fall mainly within the 1.5%-2.0% band. Inflation, while still well below international
peers, rose by 3.6% in October, the highest since 1982, driven by currency weakness.
Recently the Japanese government unveiled a $197 billion stimulus package to ease the impact on
consumers of soaring commodity prices and a falling yen, while the BoJ stuck by its ultra-loose
policy, maintaining very low interest rates and re-affirming it yield control policy.

UNITED KINGDOM

Within the UK, live activity data (e.g November Gfk data) continues to show a weaker overall trend,
especially within the services sector. According to this survey, released late November, covering the
mid November period, consumer confidence remains very low, amid the cost-of-living crisis.The

retail sales figure for October did however show a slightly better than expected reading but this may
have been distorted by the Queen’s mourning period . Unemployment, however, is still at a very
low level, although recent official figures did show a tentative slowing in hiring intentions.
Inflation continues to rise, the October CPI and RPI readings registering hikes of 11.1% and 14.2%
respectively. Kantar and the ONS both reported food/grocery prices rising about 15% year on year as
well as turkey/egg shortages.Happy Christmas!
The PSBR was starting to deteriorate again, largely as a results of rapidly rising interest (index linked)
payments and expectations of higher public sector pay and state pensions. The most recent “official”
figure showed September PSNB at £20 billion, much larger than forecast and the second largest
since monthly records began in 1993, according to the ONS.

Despite some relief with the recent energy price package, until April at least, (but not other utilitiessee below), shop price inflation, greater Council Tax “freedom”, upward interest/mortgage rate
pressure, stalling house prices, accelerating rents, insolvencies/evictions, legacy Brexit issues and ,
strike activity, will continue to be headwinds and the outlook for economic growth over coming
quarters is highly uncertain. Both the Bank of England as well as the OBR and now the OECD are
expecting recessionary conditions for one to two years.

Experts at consultancy EY-Parthenon reported that company profit warnings had jumped from 51 to
over 86 over the third quarter of 2022 citing increasing costs and overheads as the main reason,
especially in consumer facing businesses. Another report from Begbies Traynor, Latest Red Flag Alert

Report for Q3 2022 – 07:00:07 19 Oct 2022 – BEG News article | London Stock Exchange quoted that
over 600,000 business were already in severe financial distress.
Monetary policy has tightened from a 0.1% interest rate in December last year to the 1.25% rate set
in June and a further 50bp at the August, meeting, followed by 50bp in September, taking the
benchmark rate to 2.25%. Markets are expecting rates to be above 4.0% by mid-2023.

Autumn Statement
On 17th November, Chancellor Hunt told a sombre House of Commons that a massive fiscal
consolidation including £30 billion of spending cuts and £25 billion of tax rises was needed to restore
Britain’s credibility and tame inflation. The OBR said they expected the economy to shrink 1.4% and
not regain pre -pandemic levels until 2024.Inflation was expected to remain over 7% next year.
While many of the proposals had been leaked, and the market reaction was muted (first objective
achieved!), there were a few positive surprises (e.g help for NHS and education) and several
negatives.
From an investor point of view the reduction in tax free allowances for investment income and
capital gains, was higher than expected. Make full use of ISA etc while can!


Monthly Review of Markets
Equities
Global Equities rose over November (+5.02%) extending the quarterly recovery and reducing the
year to date decline to 18.04% in dollar terms. All major indices climbed with especially large gains
registered in China, which also benefited Emerging Market and FT Asia-excl Japan bourses.

Continental European indices were also relatively strong, while the NASDAQ and Nikkei lagged in
relative terms. The VIX index fell over the month to end November at a level of 22.22. The ten –
month gain of 29.04% reflects the degree of risk aversion compared with the” relative calm” of last
December (medical, geo-political and economic!)

UK Sectors
Sector moves were again very mixed over the month although most ended in positive territory. The
few losers included telco’s and tobacco On the other hand, miners, utilities, life companies,
financials,retailers and food were relatively strong. The FTSE100 outperformed the All-Share Index
and is about 3% ahead of the broader index since the beginning of the year. By IA sectors, UK active
unit trusts are underperforming benchmark indices, trackers etc, so far this year, with small
company funds even more so. Income based funds, by contrast, are significantly outperforming the
averages. “Balanced” funds, by IA definitions, are falling by about 8%-10% so far this year (Source:
Trustnet November 30th).


Fixed Interest
Major global government bonds rose in price terms over November, the UK 10-year yield for
instance finishing the month at a yield of 3.16%. Other ten-year government bond yields showed
closing month yields of 3.77%,1.93% and 0.25% for US, German and Japanese debt respectively. UK
corporate bonds also bounced strongly, up approximately 4% on the month in price terms.
Speculative bonds, however, bucked the trend falling in price terms.
Year to date, the composite gilt index has fallen approximately 22% underperforming UK higher
quality corporate bonds in price terms and more so in total return.
Check my recommendations in preference shares, selected corporate bonds,fixed interest ETF’s ,
zero-coupons, speculative high yield etc. A list of my top ideas from over 10 different asset classes
is also available to subscribers.

Foreign Exchange
Currency moves featured a sharp fall in the US dollar, largely following the better-than-expected
inflation rate. Sterling rose against the US dollar but fell against the Japanese Yen and Euro. Currency
developments during November also included modest strength in the Chinese Yuan.

Commodities
A mixed performance by commodities during November with weakness in Oil and many agricultural
commodities and strength in copper, Iron ore and the precious metals. Year to date, uranium and
the energy complex are strongly up in price terms while industrial metals copper, aluminium and
iron have all shown price declines of over 13%. Gold has also dropped in dollar terms by about 3% so
far this year.

Looking Forward
Major central banks have remained hawkish with reducing QE/commencing QT and accelerating the
timing and extents of rate increases as the main objectives, especially where inflation control is the
sole mandate. In a growing number of smaller economies where US contagion, politics, commodity
exposure inflation/fx are also issues, several official increase rate increases have already taken
effect. Japan, however, has continued to adopt stimulative measures, up to now.
Global Government Bonds have stabilised somewhat although differing inflationary outlooks and
supply concerns could lead to continued volatility in the sector.
For equities, the two medium term key questions will be when rising interest rates eventually cause
equity derating/fund flow switches, government, corporate and household problems, and how the
rate of corporate earnings growth develops after the initial snapback. Going forward, withdrawal of
certain pandemic supports, uncertain consumer and corporate behaviour and cost pressures are
likely to lead to great variations by sector and individual company. The third quarter reporting
season produced several negative surprises e.g large American technology companies and UK
building and property companies.


.

Observations/Thoughts
ASSET ALLOCATION
As well as maintaining an overweight position in UK equities, it may be worth initiating or adding to
Japanese positions within an international portfolio. The US market has fallen about 19% so far this
year (NASDAQ -30%) but remains a relative underweight in my view. Margin pressure headwinds,
political uncertainty, prospective dollar weakness and technology sector volatility must be balanced
against the current stock market ratings. Continental European equities appear cheaply rated in
aggregate, but great selectivity is required. Within the Emerging market space I currently favour
exposure to the Far East.

Another major asset allocation decision would be to keep part of the conventional “fixed interest”
portion in alternative income plays in the infrastructure, renewables, and specialist property
areas. Many instruments in this area provide superior capital growth, income, and lower volatility
than gilts for example. Recent stock market volatility has brought several renewable stocks back to
attractive levels.
I am also adding selected preference shares to the “fixed interest” allocation, where annual yields
of approximately 6% are currently available.

UK Equities continue to remain a relative overweight in my view, based on several
conventional investment metrics (see above), longer term underperformance since the
Brexit vote, style preference (value overgrowth) and international resource exposure
although be aware of the numerous domestic headwinds I have highlighted above.
Value should be favoured over growth, and the FTSE 100 favoured over the FT All-Share.
Apart from the style drift, remember that the non sterling element of leading FTSE 100
companies and sectors is relatively high
By sector, Oil and Mining equities continue to benefit from above average yields, strong
balance sheets, dollar exposure and secular demand e.g copper, cobalt for electronics,
construction, electric vehicles etc. Any moves regarding Chinese re-opening the economy
would be another positive for this sector.
Remain overweight in pharmaceuticals and underweight in non-renewable utility stocks
which may suffer from consumer and government pressures, and no longer trade on yield
premia, especially against the backdrop of higher gilt yields.
Construction materials, especially cement will benefit from growing
infrastructure/renewable initiatives., although rising cost pressures and falling housing
activity must also be considered.
Banks, may enjoy some relative strength from rising interest rates, but continue to
monitor the recession/loan growth and default risks.These mixed trends were very
evident in the recent third quarter figures. Preference Shares as well as ordinary shares
have attractions in this area
Housebuilders and real estate-expect depressed activity and remember that the rising
interest rates have not yet been fully factored into bricks and mortar property yields.
Industry data and anecdotal news from both housebuilders and REIT’s suggest further
weakness to come.

Retailers are in general suffering from a combination of falling sales and rising costs and
clear trends in consumers “trading down” are apparent. Certain on-line operations e.g
Asos additionally are suffering from an element of post-Covid comparison.
Domestic Breweries/pubs etc are having a hard time with stalling consumer’s
expenditure, supermarket competition and rapidly rising costs.
Airlines may suffer as a result of large dollar costs, uncertain foreign travel outlook and
often high debt levels
Extra due diligence at stock level more generally will be required as I expect a growing
number of profit warnings and downbeat forward looking statements. See the EY and
Begbies statements on page 7 above.
However,takeover activity is also clearly increasing with, for example, private equity
snapping up UK-listed companies at the fastest pace for more than twenty years. Foreign
takeover, stake building is also increasing, current weak sterling being a factor, with
Vodafone under scrutiny by a French (who already have BT interest!) investor. Biffa (waste
management),MicroFocus(technology),Aveva(software) and RPS(professional services)
have all succumbed to foreign takeovers in recent months, much by “strong dollar”
American or Canadian organizations.

JAPANESE EQUITIES also remain an overweight in my view, although my recent
comment re hedging may “nuanced “now following the extreme currency weakness and
surprise intervention. Unlike most other major economies, Japan is expected to continue
its easy money policy. Exporters have benefitted from the plunging Yen although higher
input costs and more “off-shoring” also must be considered. The prospective price/book
ratio of 1.19 is attracting interest of corporate and private equity buyers, while the
prospective yield of 2.6% is above the world average and compares very favourably with
USA (1.7%). Corporate governance is rapidly improving with diverse boards, reduction of
cross holding, higher dividends etc. There are clear signs that inward investment attracted
by the pro-growth, pro-deregulation agenda and relatively low costs (average Japanese
annual wage $30000 compared with $75000 USA) is increasing. Private equity stake
building interest in Toshiba and growing activity in the property sector (discount on a
discount in a cheap currency) demonstrate the search for value in Japan. Investors may
wish to adopt a partially rather than fully hedged FX position following recent
developments
On a valuation basis (see table above) the forward PE multiple of 12.9 is at a considerable
discount to the world, and especially US average (18.0)

EMERGING MARKETS-Very difficult to adopt a “blanket” approach to the region even in
“normal times”, but especially difficult now, with so many different COVID, commodity,
sectoral mix, debt, geo-political and increasingly natural disaster variables. The IMF recently
warned that several emerging nations could disproportionately suffer from a combination of
COVID and adverse reaction to “tapering” by developed counties e.g., FX/Interest rate

pressures. Six countries have already defaulted during the pandemic, and the IMF is currently
in various stages of bail-out discussions with Pakistan,Argentina,Zambia,Sri
Lanka,Ghana,Tunisia and Egypt.
Within the emerging/frontier universe I continue to have a relatively positive view on Asia.
The economic fundamentals were discussed on page 16 above, and the forward-looking
multiples and dividend growth metrics appear relatively attractive in a global context. Any
move by China to open more fully after their severe Covid lockdown, would of course
additionally help. Exposure to the entire area can be achieved through a number of ETF’s and
also investment trusts currently on discounts
If a country-by-country approach is adopted, I have a longer term positive view on Vietnam
where, the nation is supported by positive demographics, with a population of near 100
million, an emerging middle class, and a recipient of strong foreign direct investment.
Qualconn,an Apple supplier, Intel(semi-conductors),Lego and Samsung(mobile phone plant)
have all recently invested in new capacity in the country. Other big names moving chunks of
production from China to Vietnam include Dell and HP (laptops), Google(phones)and
Microsoft (Games Consoles) The economy is expected to grow at around 6.5% this year (7.7%
Q2 2022) and current inflation is running at about 3.5%. On a relatively low prospective PE
based on forecast earnings growth over 20%, Vietnamese equities appear good value. India,
although quite highly rated and a major oil importer, warrants inclusion in a diversified
portfolio, and is currently receiving some fund flows from “overweight” Chinese portfolios.
Indonesia, the last of my current Asian ideas benefits from a commodity boom, strong
domestic market, low debt, relatively stable currency, forecast 5% GDP growth and 5%
inflation

Caution is required in many South American markets with poor COVID-19 situations,
deteriorating fiscal balances, weak investment, low productivity (see below) and
governments in a state of transitioning e.g Brazil. However, some stock market
valuations currently appear interesting in the region, which, so far, has been relatively
unaffected by events in Ukraine. Commodity exposure, deglobalization beneficiary,
valuation and recovery from a very low-level account for some year-to-date stock
market relative out- performance. Many of these countries also raised interest rates
at an earlier stage, allowing relative currency strength, compared with say the Euro,Yen or Sterling.

Certain areas within Central Europe are starting to receive more attention, mainly on
valuation grounds, but the lingering Covid effects and indir
ect effects of the Russia/Ukraine invasion should be borne into account. Regarding the
latter, a reduction/termination of Russian gas supply could have a serious recessionary
impact in certain countries. Large refugee influxes e.g Poland are also starting to
create budgetary/social issues.

Comments re great selectivity above also apply to emerging market debt. For the
more adventurous fixed interest investor combinations of well above average yields
(sometimes caused by pre-emptive moves last year), stable fiscal and FX situations
and, diversified economic models could provide outperformance from carefully
selected bonds.


• COMMODITIES– Gold spiked to over $2000 in March, a recent high, when Russia invaded
Ukraine, but has since fallen about 12%, although of course, remaining reasonably stable in
many local currency terms . The longer-term prospects for more cyclical plays continue to
look brighter. Increased renewable initiatives, greater infrastructure spending as well as
general growth, especially from Asia, are likely to keep selected commodities in demand at
the same time as certain supply constraints (weather, labour and equipment shortages,
Covid, transport) are biting. Anecdotal evidence from reporting companies RTZ, BHP and
Anglo American appear to suggest that the industry is enjoying a bumper time, and with
disciplined capex programmes, extra dividends and share buy-backs are commonplace!
Current rumours of a cautious relaxation of the Chinese Covid policy, may provide a boost to
base metals.
• Wheat and other grain prices have fallen from the levels reached following the Russian
invasion of Ukraine, but the current grain shipment complications, planting/harvesting
schedules within the region and extreme global meteorological conditions are expected to
lead to further price volatility. If the conflict is prolonged it will affect millions of people
living in such places as Egypt, Libya, Lebanon Tunisia, Morocco, Pakistan and Indonesia that
could have political consequences. There has been renewed interest in agricultural funds as
well as the soft commodities themselves.

GLOBAL CLIMATE CHANGE remains a longer-term theme, and will be built into
the many infrastructure initiatives, being pursued by Europe, USA, and Asia. The
Russia/Ukraine conflict is accelerating the debate, and hopefully the action. There are
several infrastructure/renewable investment vehicles which still appear attractive, in

my view, combining well above average yields and low market correlation with low
premium to asset value. The recent volatility in natural gas prices has highlighted both
risks and opportunities in the production and storage of energy from alternative
sources. However, increasing levels of due diligence are required, in committing new
money to the area overall. Financial watchdogs across the world are sharpening their
scrutiny of potential “greenwashing” in the investment industry on rising concerns that
capital is being deployed on misleading claims.
• However, in the shorter term, the Russian invasion of Ukraine has precipitated a global
energy crisis, that has forced countries, especially in Europe to look for ways to quickly
wean themselves off Russian oil and gas, and reconsider timelines of commitments to
cut the use of fossil fuels. At the time of writing, it seems highly likely that USA will
increase oil and gas output, UK North Sea may see further investment and EU coal
consumption could increase.
• Another area currently in the ESG purist cross hairs is “nuclear”. Ignoring the fact that
nuclear weapons have not been used in anger since 1945, and the fact that some deterrent is
needed, (now?), where should the confused investor stand when it comes to nuclear power
substituting coal power? Japan, UK and Germany are all studying proposals to revive their
nuclear power capacities. I have some interesting “uranium play” ideas for those interested.


• ALTERNATIVE ASSETS-this group, encompassing private equity, private debt, hedge
funds, real estate, infrastructure, and natural resources is expected to continue growing both
in actual and relative terms over coming years.
Traditional asset management groups are racing to expand offerings in alternative
investments as they seek to boost profitability and head off competition from private
equity groups (see graph below).
I have, for a while, recommended some exposure to this area maybe as part of the
former “gilt allocation”. With strong caveats re liquidity, transparency, dealing
process, I still adopt this stance, continuing to use the investment trust route. So far
this year, gilts have declined approximately 24% while my favoured UK renewable
closed-end funds have appreciated by around 6% in capital terms and delivered about
6% in annual income. Please contact me directly for specific ideas

COMMERCIAL PROPERTY The MSCI/IPD Property Index showed a sharp fall in the total return across all
properties in October, the decline of 6.4% (-6.8% capital values, +0.4% income),taking
the year to date return to -1.6% (capital -5.2%,Income +3.8%).The monthly decline
accelerated the downward trend started in July this year, especially in Industrial
Properties. Rental growth however was positive at +2.4% in October..or 4.4%
annualised for the ten month period
Several analysts are down grading their estimates for the sector following the rapid move
in UK longer and shorter-term interest rates. Property asset valuations take time to
materialise where there is a lag between balance sheet date and results publication in
the listed area. Live traded property corporate bonds, however, have already moved
sharply lower.
Quoted property giants British Land and Land Securities both reported deteriorating
conditions witing their third quarter statements, expecting further valuation declines
following rising yields.

Full asset allocation and stock selection ideas if needed for ISA/dealing accounts, pensions.
Ideas for a ten stock FTSE portfolio. Stock/pooled fund lists for income, cautious or growth
portfolios are available. Hedging ideas, and a list of shorter-term low risk/ high risk ideas
can also be purchased.
I also undertake bespoke portfolio construction/restructuring and analysis of legacy
portfolios.
Independence from any product provider and transparent charging structure
Feel free to contact regarding any investment project.
Good luck with performance!
Ken Baksh Bsc,Fellow (UK Society of Investment Professionals)
kenbaksh@btopenworld.com

1st December ,2022
Important Note: This article is not an investment recommendation and should
not be relied upon when making investment decisions – investors should conduct
their own comprehensive research. Please read the disclaimer.
Disclaimer: Opinions expressed herein by the author are not an investment
recommendation and are not meant to be relied upon in investment decisions.
The author is not acting in an investment, tax, legal or any other advisory
capacity. This is not an investment research report. The author’s opinions
expressed herein address only select aspects of potential investment in
securities of the companies mentioned and cannot be a substitute for
comprehensive investment analysis. Any analysis presented herein is illustrative
in nature, limited in scope, based on an incomplete set of information, and has
limitations to its accuracy. The author recommends that potential and existing
investors conduct thorough investment research of their own, including detailed
review of the companies’ regulatory filings, and consult a qualified investment
advisor. The information upon which this material is based was obtained from
sources believed to be reliable but has not been independently verified.
Therefore, the author cannot guarantee its accuracy. Any opinions or estimates
constitute the author’s best judgment as of the date of publication and are
subject to change without notice.The author may hold positions in any of the
securities mentioned
The author explicitly disclaims any liability that may arise from the use of this
material.

Technology Minerals #TM1 – Resignation of Auditor

Resignation of Auditor 

Technology Minerals Plc (LSE: TM1), the first listed UK company focused on creating a sustainable circular economy for battery metals, announces that Jeffreys Henry LLP have notified the Company of their resignation of auditor of the Company. 

Jeffreys Henry LLP has advised the Company that it has decided to withdraw from the Public Interest Entity (“PIE”) audit market. Technology Minerals is classified as a PIE due to its Standard Listing on the London Stock Exchange’s Main Market. 

Jeffreys Henry LLP has confirmed that there are no circumstances connected with their resignation which they consider should be brought to the attention of the Company’s members or creditors in accordance with Section 519 of the Companies Act 2006. 

The Board is in discussion about appointing a new auditor and a further announcement will be made shortly.

#TM1 Technology Minerals Plc- First lead acid batteries recycled at Tipton

Technology Minerals Plc (LSE: TM1), the first listed UK company focused on creating a sustainable circular economy for battery metals, is pleased to announce that Recyclus Group Ltd (“Recyclus”), its 49% owned battery recycling business, has processed 19 tonnes of end-of-life batteries at its battery recycling plant in Tipton, West Midlands.  

 

Highlights

·    First 19 tonnes of batteries manually processed and recycled into 16.5 tonnes of lead, lead plate and other recovered materials

·    Facility is licenced for manual recycling activities while awaiting Environmental Agency (“EA”) approval for automated industrial-scale processing

·    Process recycles the entire battery into separate constituent parts to recover lead, acid, and plastic materials, which can then be reused in a wide range of industries

·    Recyclus is in discussions with several potential buyers for the recycled materials and will update the market in due course

Recyclus plans to scale up its operations at Tipton while preparing to commence industrial-scale automated processing once it has received the final approval from the Environmental Agency.

As announced in September 2022, Recyclus received Approved Battery Treatment Operator (“ABTO”) status at the Tipton plant, granting approval to begin manual processing of lead-acid batteries at the site. Under ABTO status, Recyclus is authorised to produce up to 15,000MT per annum of lead and store up to 300MT of inbound stock at any one time on-site. This enabled phase one of production to begin, with the second phase set to begin once final approval is granted by the EA.

Robin Brundle, Chairman of Technology Minerals, said: “We are delighted to process the first batch of end-of-life batteries as Recyclus looks to ramp up its operations at the recycling plant in Tipton. Our process enables the recycling of spent batteries to recover lead, acid, and plastic materials to be repurposed back into a range of industries. We have seen strong demand for the recovered materials and look forward to securing first sales and generating cashflow at Tipton. Recyclus is in discussions with multiple parties regarding the sale of the recycled material and will update the market in due course.”

As announced on 19 October 2022, the Company signed binding Heads of Terms to acquire the remaining issued share capital of Recyclus (the “Proposed Transaction”). The Company will update shareholders as to progress made in relation to the Proposed Transaction as and when appropriate.

Enquiries

Technology Minerals Plc

Robin Brundle, Executive Chairman

Alexander Stanbury, Chief Executive Officer

+44 (0)20 4582 3500

Oberon Investments Limited

Nick Lovering, Adam Pollock

+44 (0)20 3179 0535

Arden Partners Plc

Ruari McGirr

+44 (0)207 614 5900

Gracechurch Group

Harry Chathli, Alexis Gore, Amy Stupavsky

+44 (0)20 4582 3500

 

 

Technology Minerals Plc 

 

Technology Minerals is developing the UK’s first listed, sustainable circular economy for battery metals, using cutting-edge technology to recycle, recover, and re-use battery technologies for a renewable energy future. Technology Minerals is focused on extracting raw materials required for Li-ion batteries, whilst solving the ecological issue of spent Li-ion batteries, by recycling them for re-use by battery manufacturers. With the increasing global demand for battery metals to supply electrification, the group will explore, mine, and recycle metals from spent batteries. Further information on Technology Minerals is available atwww.technologyminerals.co.uk   

Power Metal Resources #POW – Total Voting Rights

Total Voting Rights

In accordance with the Financial Conduct Authority’s Disclosure and Transparency Rules, the Company hereby announces that as at 30 November 2022 there were 1,660,789,092 ordinary shares of 0.1 pence each in issue, none of which are held in treasury. Therefore, the total number of voting rights in the Company is 1,660,789,092 .

The above figure of 1,660,789,092 may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA’s Disclosure and Transparency Rules.

 

Kavango Resources #KAV – Holding(s) in Company

 

TR-1: S tandard form for notification of major holdings

 

NOTIFICATION OF MAJOR HOLDINGS (to be sent to the relevant issuer and to the FCA in Microsoft Word format if possible) i

1a. Identity of the issuer or the underlying issuer of existing shares to which voting rights are attached ii :

Kavango Resources PLC

1b. Please indicate if the issuer is a non-UK issuer   (please mark with an “X” if appropriate)

2. Reason for the notification (please mark the appropriate box or boxes with an “X”)

An acquisition or disposal of voting rights

X

An acquisition or disposal of financial instruments

An event changing the breakdown of voting rights

Other (please specify)iii:

3. Details of person subject to the notification obligation iv

Name

Power Metal Resources PLC

City and country of registered office (if applicable)

London, England

4. Full name of shareholder(s) (if different from 3.) v

Name

City and country of registered office (if applicable)

5. Date on which the threshold was crossed or reached vi :

25.11.2022

6. Date on which issuer notified (DD/MM/YYYY):

29.11.2022

7. Total positions of person(s) subject to the notification obligation

% of voting rights attached to shares (total of 8. A)

% of voting rights through financial instruments
(total of 8.B 1 + 8.B 2)

Total of both in % (8.A + 8.B)

Total number of voting rights of issuer vii

Resulting situation on the date on which threshold was crossed or reached

9.85%

9.85%

705,569,314

Position of previous notification (if

applicable)

 

8. Notified details of the resulting situation on the date on which the threshold was crossed or reached viii

A: Voting rights attached to shares

Class/type of
shares

ISIN code (if possible)

Number of voting rights ix

% of voting rights

Direct

(Art 9 of Directive 2004/109/EC) (DTR5.1)

Indirect

(Art 10 of Directive 2004/109/EC) (DTR5.2.1)

Direct

(Art 9 of Directive 2004/109/EC) (DTR5.1)

Indirect

(Art 10 of Directive 2004/109/EC) (DTR5.2.1)

GB00BF0VMV24

69,500,000

9.85%

SUBTOTAL 8. A

69,500,000

9.85%

 

 

B 1: Financial Instruments according to Art. 13(1)(a) of Directive 2004/109/EC (DTR5.3.1.1 (a))

Type of financial instrument

Expiration
date
 x

Exercise/
Conversion Period
 xi

Number of voting rights that may be acquired if the instrument is

exercised/converted.

% of voting rights

SUBTOTAL 8. B 1

 

 

B 2: Financial Instruments with similar economic effect according to Art. 13(1)(b) of Directive 2004/109/EC (DTR5.3.1.1 (b))

Type of financial instrument

Expiration
date
 x

Exercise/
Conversion Period
 xi

Physical or cash

settlement xii

Number of voting rights

% of voting rights

 

SUBTOTAL 8.B.2

 

 

 

9. Information in relation to the person subject to the notification obligation (please mark the

applicable box with an “X”)

Person subject to the notification obligation is not controlled by any natural person or legal entity and does not control any other undertaking(s) holding directly or indirectly an interest in the (underlying) issuer xiii

Full chain of controlled undertakings through which the voting rights and/or the
financial instruments are effectively held starting with the ultimate controlling natural person or legal entity
 xiv (please add additional rows as necessary)

Name xv

% of voting rights if it equals or is higher than the notifiable threshold

% of voting rights through financial instruments if it equals or is higher than the notifiable threshold

Total of both if it equals or is higher than the notifiable threshold

 

10. In case of proxy voting, please identify:

Name of the proxy holder

The number and % of voting rights held

The date until which the voting rights will be held

11. Additional information xvi

Place of completion

London, England

Date of completion

29.11.2022

New UK Investor Magazine with our CEO Alan Green covering: EasyJet #EZJ, More Acquisition #TMOR

investor

Alan Green joins the UK Investor Magazine Podcast to dive into this week’s key market themes. We look at the FTSE 100 and the China-exposed stocks leading the index higher on Tuesday.

China has announced they will be looking at increasing the rollout of vaccines to the over 65s. Such a move will help reopen the economy and boost headline global growth figures.

We discuss easyJet and More Acquisitions.

https://ukinvestormagazine.co.uk/eastjet-china-growth-and-inflation-with-alan-green/

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