The bear market for junior oilers seems to have got to the normally ebullient John Teeling – so much so he is mulling a change of strategy for Clontarf Energy, the company he chairs.
‘The shares of listed oil exploration companies are generally friendless,’ he said in a preface to Clontarf’s prelims.
‘Their share prices have almost all fallen and remain in, many cases, more than 90% below their peak. It is virtually impossible to raise serious money.
Strategy shifts: The bear market for junior oilers seems to have got to the normally ebullient John Teeling – so much so he is mulling a change of strategy for Clontarf Energy
‘This, in turn, makes it very hard to undertake meaningful grass roots exploration.’
The firm has had its fair share of misfortune. Its stock in trade is developing projects with good geological characteristics, eschewing the political dimension.
The latest update revealed company has taken a £2.6million write-off after a partner in a Peruvian project walked away.
This left leaving Clontarf with no value as the exploration licence in question was handed back to the State. There have been setbacks in Ghana and Bolivia too along the way.
‘We like our strategy of selecting good geology with politics being a secondary concern but we are considering other directions,’ admitted Teeling.
Honesty may well be the best policy, but it didn’t really aid the share price, which fell 32 per cent over the week, making it the biggest faller on AIM.
Tough week: Clontarf’s share price fell by 32 per cent earlier this week
There seems to be no let up for diagnostics group Akers Bioscience, which has withdrawn a regulatory application for its chlamydia test at the recommendation of the US Food & Drug Administration.
It also confirmed that former chairman Ray Akers had resigned from the business. He had previously been relieved of his executive duties.
Investors were told: ‘Pursuant to US Federal Securities Laws, within four business days the company will file a Form 8-K with the Securities and Exchange Commission, which may include further information with respect to the resignation.’
The shares closed the week off 29 per cent.
The AIM All Share had a fairly uneventful four trading days, as it edged 2 points lower to 1,084.84.
There was a boost this week for ultrasound supplier MedaPhor, up 64 per cent, after it said the NYU School of Medicine had taken delivery of and installed its first BodyWorks Eve simulator.
This is a female manikin-based simulator designed specifically for doctors.
‘[It] has gained great market acceptance and customer feedback since its recent launch,’ said chief executive Ian Whittaker.
‘NYU is the first in a long line of customers who are looking to deploy BodyWorks Eve to advance their training capabilities and reap the educational benefits of a truly one-of-a-kind ultrasound simulator.’
Not far behind MedaPhor was Richland Resources, which shot up 44 per cent following the appointment of Tony Brooke as the new chief executive.
Brooke is a leading expert in the gemstone industry and will be using his experience to further develop the company’s Capricorn Sapphire mine in Queensland, Australia, the company said.
Finally, the art of stock picking is identifying undervalued gems where the news flow is positive but the share price is failing to reflect the progress.
Impediments to progress are often quite obvious: they are usually funds, or funding related. Fashion and fad also play a part.
However, there are occasions where the valuation gap is inexplicable and prove definitively that markets, particularly AIM, are neither rational nor efficient.
The UK’s junior mining sector has thrown up a number of these anomalies. Most are gold prospectors and diggers, although this is not exclusively the case.
A glaring example of is Ariana Resources, which after covering the hard yards required to get a mine permitted and built in Turkey, is now producing the yellow metal from its Red Rabbit operation.
Okay, the output is modest at 10,000 ounces (expanding to 25,000 ounces), and it shares the proceeds from sales with local partner Procea; however, one would have expected the share price to have appreciated as Ariana moved from the construction phase into production.
The rising price of gold, which is once again back above $1,300 an ounce, should also provide a tail-wind.
Instead, the stock has been in reverse gear as it has fallen around a quarter in the last 12 months.
So are the shares a bargain at 1.3p each? Well, that’s not for us to say. But Ariana is probably one for the watch-list.