Gold is making headlines again. Yesterday the yellow metal hit a new high of $1,349. This is potentially great news for our latest gold play, Vatukoula. But let's remember that there is another gold story in the Red Hot portfolio...
That is, of course, CHAARAT GOLD (CGH). Chaarat is not in production yet but is making steady progress towards this goal. As the positive news continues to roll in, the time when these shares really start to move grows ever closer.
The price is hovering around my 50p buy limit, so buy if you can. And if the price is above that when you want to buy, don't be afraid to place an order with your broker with a 50p buy limit. You can find out more about Charaat's progress below
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What we're waiting for with SRT
Our big success story this year has been SOFTWARE RADIO TECHNOLOGY (SRT). This company has been going from strength to strength. Lucrative new contracts continue to roll in and the shares have gained a whopping 651% since they entered the portfolio back in November 2009.
Today I want to alert you to the fact that the company's interim results will be announced on November 2. I will be meeting CEO Simon Tucker that day and I am sure he will have plenty to tell me. The shares are now well above my most recent buy limit of 25p, but we will hold them at least until I have had a chance to review the situation early next month.
I also hope to have some news for you next week from AFC ENERGY (AFC). I am heading down to the Dunsfold Business Park next Wednesday to get all the latest. Meanwhile AFC has made an interesting announcement this week all is revealed below.
Before we get on to this week's updates, a quick mention of buy limits and the three shares I tipped in the October issue.
While you should have been able to get into EQUATORIAL PALM OIL (PAL) within my 20p buy limit, you may have found it harder to get into VATUKOULA (VGM) or US OIL & GAS (USOP).
If this has been your experience do not worry. As usual my strategy now is to allow the dust to settle and keep these buy limits under continuous review. If I alter the buy limits you will hear it first in these e-alerts.
Now on to this week's news: TABLE.ben-table TABLE {BORDER-BOTTOM: #2b1083 3px solid; BORDER-LEFT: #2b1083 3px solid; FONT: 0.92em/1.23em verdana, arial, sans-serif; BORDER-TOP: #2b1083 3px solid; BORDER-RIGHT: #2b1083 3px solid}TH {TEXT-ALIGN: center; BORDER-LEFT: #a6a6c9 1px solid; PADDING-BOTTOM: 10px; PADDING-LEFT: 5px; PADDING-RIGHT: 5px; BACKGROUND: #2b1083; COLOR: white; FONT-WEIGHT: bold; PADDING-TOP: 10px}TH.first {TEXT-ALIGN: left; BORDER-LEFT: 0px; PADDING-BOTTOM: 5px; PADDING-LEFT: 2px; PADDING-RIGHT: 2px; PADDING-TOP: 5px}TR {BACKGROUND: #fff}TR.alt {BACKGROUND: #f6f5f9}TD {TEXT-ALIGN: center; BORDER-LEFT: #a6a6c9 1px solid; PADDING-BOTTOM: 5px; PADDING-LEFT: 2px; PADDING-RIGHT: 2px; COLOR: #000; PADDING-TOP: 5px}TD.alt {BACKGROUND-COLOR: #f6f5f9}TD.bold {FONT-WEIGHT: bold}TD.first {TEXT-ALIGN: left; BORDER-LEFT: 0px}
| RHPS | 4.5% | 4.8% |
| FT Small Cap | 2.3% | 2.4% |
| AIM | 2.4% | 2.9% |
| BPC | +39% (see below) |
| Global Brands | +21% (see below) |
| Iomart | +13% (see below) |
| Sirius Exploration | -12% (see below) |
| Firestone Diamonds | -11% |
| Altona Energy | -7% (see below) |
We're waiting for a trigger for Accsys...
ACCSYS TECHNOLOGIES (AXS): Chairman Willy Paterson-Brown has resigned no great surprise. While Patterson-Brown spotted the potential of Accoya, it was his failure to successfully commercialise it that led to the change of leadership last year.
Accsys has repeated the news that Accoya sales were up 46% in the first quarter of this financial year and said "licensing interest continues to grow". According to a research note by Matrix Corporate Capital, production and sales through the enlarged distributer network are continuing to increase. The average price charged has increased from c.€1,150/m3 to c.€1,250/m3, while input costs have remained flat. Matrix has set a target price or €0.83.
We are still awaiting confirmation that Chinese licensee Diamond Wood can obtain financing for its proposed plant. Although this is not crucial to Accsys's future, positive news on this score could be the trigger for the shares to advance. BUY UP TO €0.38.
(Five-year performance: 2005 +19% | 2006 +41.78% | 2007 +83.46% | 2008 -51.26% | 2009 -70.1% | 2010 -37.5% )
Could AFC be on the verge of something big?
AFC ENERGY (AFC): AFC has signed a letter of intent with Powerfuel Power and B9 Coal to run a demonstration power station near Doncaster. Here electricity will be produced with AFC's fuel cells from hydrogen derived from the gasification of coal.
If successful, AFC believes that a series of such power stations could be rolled out in the UK. The letter of intent also provides an option for Powerfuel to acquire exclusive rights to incorporate AFC's fuel cell systems into power stations of 50MW and greater in other territories, upon payment of fees. I hope to have more on AFC next week, but for now BUY UP TO 25p.
(12-month performance since listing: 2007 -40.40% | 2008 -88.98% | 2009 +561.54% | 2010 +84.62% )
This fuel trend could be very good for Altona Energy...
ALTONA ENERGY (ANR): Altona has started the first phase of its two-phase Bankable Feasibility Study at the Arckaringa coal project in South Australia. The $40m cost of this 24-month exercise has been funded by Chinese partner CNOC. It will include: a detailed review of coal deposit geology; groundwater investigation and verification; groundwater management research and design; environmental baseline studies; open cut mining methodology options; and product market research.
As I have said before, this is a long-term project, so don't expect immediate gratification. But Sasol has flown the world's first passenger aircraft using entirely synthetic aviation fuel derived from coal. This news highlights the importance of coal-to-liquids (CTL) in modern energy supply. Altona Energy plans to use this technology to produce liquid fuels from Arckaringa.
In a new note, Edison Investment Research has calculated a value for the shares today of 37p, while Evolution Securities has a target of 35p. Given time, and if the project is developed as planned, the shares have the potential to do much better than this. BUY up to 12p.
(12-month performance since listing: 2005 +154.55% | 2006 +5.36% | 2007 -59.32% | 2008 -70.83% | 2009 +554.29% | 2010 +69.39% )
Don't pay over my limit for BPC shares...
BPC (BPC): In its interim results statement BPC (which has changed its name to Bahamas Petroleum Company) has confirmed that it could be in a position to drill its first well next year. It also emphasised that the environment in the relatively shallow waters around the Bahamas makes drilling a far less hazardous undertaking than in the deep Gulf of Mexico.
Through a placing of shares it has raised £5.1m to undertake the seismic surveys necessary to locate the best drilling targets.
BPC has been lying low since I tipped the shares a year ago. But clearly much has been going on behind the scenes and the story should gather pace. You have had plenty of time to get aboard below my 5p buy limit, which I am sticking with. HOLD.
Chaarat gold begins to move grab some if you can...
CHAARAT GOLD (CGH): Interim results from Chaarat confirm that progress is being made towards creating a gold mine in Kyrgyzstan. Chaarat plans to achieve early production from a small open-pit operation while it develops a larger mine and looks at other prospects in the vicinity.
It has identified the site for a tailings dam and mill and also established that the best source of power will be a dedicated line from an existing hydro-power station. All of this will be incorporated in the Feasibility Study, expected next summer, which will describe the full economic potential of the mine and the means of exploitation.
In order to deal with what it perceives to be an undervaluation of its shares, Chaarat is considering a listing on the Hong Kong or Toronto stock exchanges. But the shares are already starting to move up and are now around my 50p buy limit. If you can get them at or below this 50p limit, BUY.
(12-month performance since listing: 2007 -34.11% | 2008 -76.47% | 2009 +212.5% | 2010 +49.24% )
Keep holding Iomart...
IOMART (IOM): Managed hosting and cloud computing services company Iomart has reported strong trading "and consequently expects to report interim results ahead of market expectations". This is great news and with the trend towards cloud computing swelling Iomart's pipeline of new business opportunities, the future is looking very bright.
Interim results will be announced on November 29. The shares, which I have been highlighting recently, have shot up from 70p to 100p. My target is 120p, but Iomart is at the early stage of profitability and there is clearly scope for the shares to do much better than this over time. I may revise my target upwards, so HOLD.
The massive market OCG is targeting...
OXFORD CATALYSTS (OCG): Last week's interim results added little to what we already know about OCG a specialist in catalysts and micro-channel reactors, both key elements in the production of alternative fuels. Its first demonstration plant in Austria is going well and a second demonstration is scheduled to commence in Brazil next year.
Oxford hopes to secure its first commercial order soon, and that would be a milestone for a group that has so far relied upon outside funding. The shares are yet to take off, but Oxford has very important technologies and is addressing a massive market. BUY UP TO 80p.
(12-month performance since listing: 2006 -24.24% | 2007 -1.67% | 2008 -24.58% | 2009 -48.19% | 2010 +23.27% )
Rambler eyes 2011 production...
RAMBLER METALS & MINING (RMM): Rambler has confirmed that it is on course to bring its Ming copper, gold and silver mine in Newfoundland in to production in the second half of next year. Construction of the mine and processing plant is underway and equipment has been ordered from Atlas Copco.
Rambler has received $2m from its financing partner Sandstorm Resources and the economics of the project look excellent in the light of today's metal prices. BUY UP TO 40p.
(12-month performance since listing: 2005 -46.92% | 2006 +33.33% | 2007 +50% | 2008 -90.22% | 2009 +392.59% | 2010 -25.18%)
Resist the temptation to pay too much for Sirius...
SIRIUS MINERALS (SXX): Now called Sirius Minerals and not Sirius Exploration, the potash mining group has appointed Boyd PetroSearch to review the 2D Seismic data covering its Derby Salts tenements in Western Australia. This should enable Sirius to identify some drilling locations. Results should be known in about three months' time.
The shares have been under the spotlight recently, and not only from Red Hot Penny Shares. I still believe that we could see a better opportunity when the noise dies down a bit. So I am sticking to my 5.5p buy. HOLD.
Things could soon start moving for Top Level...
TOP LEVEL DOMAIN HOLDINGS (TLDH): Introduction of new generic top level domain names is expected to be finally given the green light next March. This is when ICANN, the body that governs the internet, will meet in San Francisco.
Following last month's meeting in Trondheim, a number of contentious issues have been settled. And with another meeting scheduled for Cartagena in December, the final Applicant Guidebook should be published early next year. This will then open the way for the creation of a number of new top level domains (e.g. .eco, .gay), and TLDH is placed to benefit.
This story has unfolded much more slowly than I had hoped. But the good news is that TLDH is a low-cost operation and has not got through much money during the wait. BUY UP TO 13p.
(12-month performance since listing: 2007 -41.67% | 2008 -12.50% | 2009 + 171.43% | 2010 -26.32% )
That's all the updates for this week. I hope you have been able to take advantage of the recommendations brought to you in the October issue of Red Hot Penny Shares.
Have you got any penny share success stories?
As ever, I'm most keen to hear how you get on with all your investments. You can email me with your feedback at rhps@moneyweek.com.
What do penny shares mean to you? And how is your subscription to Red Hot helping you reach your goals? Tell me as much as you are prepared to say
Until next time, good investing
