My attention recently fell on a micro-cap company called Power Metal Resources plc Power Metal Resources (LON:POW) (TIDM: POW). At time of writing, the market value is £8.7 million. Small it may be, but it has big ambitions. The cynics amongst you may instinctively shy away from any company described as small, ambitious and in natural resources, and especially if its Stockreport page has a lot of red ink and a low StockRank. I dug a little deeper, and then bought some.
So why on earth did I do that? I always spend a little time on past trading updates and results: these are on the News tab for the individual share, and in my view this is one of the best features of Stocko. Trawling back through the RNS announcements, I noticed that the company had raised quite a lot of money recently, including £1 million on 6 July 2020, plus further receipts from the exercise of warrants, but that these were not reflected in the cash figure on the Stockreport page. I queried this with Stocko, and was told that not all micro-caps provide sufficient information and thus do not get updated. Hence the lousy StockRank.
The Company
The Company used to be called African Battery Metals plc and appeared to have lost its way. There was a business restructuring and refinancing exercise in February 2019, which included a board restructuring in which Andrew Bell joined as Chairman and Paul Johnson (formerly a leading light at Metal Tiger (TIDM: MTR) as Executive Director (now CEO). The refinancing saw £1 million raised by the Company and the clearance of creditors through a combination of discounted cash and share settlement payments. The new Board launched a strategic review, and things began to move fairly fast.
The modus operandi seems to be to identify either old and abandoned, or early stage promising mining projects where the owners have run out of money. The Company buys a few shares and either takes warrants or an option to buy a substantial stake. It seems to target areas of, or next door to, known mining operations, using up to date technology and methods to gauge the amounts of mineralisation. If any of the projects come good, it remains to be seen whether the company monetises all or part of its stake, or whether it sits tight and funds the…
