APM board blocks buyout … and faith pays off

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Some days it doesn’t take much to spark the market’s interest.

Last week, it was rumours and this week it is media speculation – which, let’s be honest, is pretty much the same thing – that has prompted a significant share price hike for our profiled Bulls N’ Bears’ runner for this week.

On Sunday, the Australian Financial Review’s Street Talk column revealed that private equity company CVC Asia Pacific had expressed interest in buying human services provider APM Human Services. And, to be fair, Street Talk was on the money.

The following day, APM confirmed it had been in discussions with CVC and had, on the Friday prior, received a conditional and non-binding proposal for the acquisition of all of its shares through a scheme of arrangement. Under the terms of the deal, APM shareholders would receive consideration of $1.60 per share, less any dividends paid to shareholders after the date of the proposal.

Then, in practically the same breath as announcing the bid, the APM board shut it down, prompting a share price hike of more than 73 per cent from a previous close of 83c up to $1.44. And the stock continued to rise today, with the company’s value touching $1.452 per share during intraday trading.

In a brutally honest announcement, APM acknowledged it was operating in a challenging environment at a historic low point of the unemployment cycle, yet it still remains confident in its outlook. And the company has indeed endured a challenging start to the year where its stocks slumped after less-than-ideal first half financials and showed net profit was down more than 35 per cent despite increased revenue.

APM executive chair Megan Wynne expressed the board’s confidence in its management team and its ability to deliver long-term value to its shareholders. Perhaps the market can also see the light at the end of the tunnel and is getting in while the getting is good.

Speaking of media attention leading to market interest in an ASX company, could this humble Runners of the Week column be responsible for one of the top performers of the past five days? Doubtful, but who knows?

And in any case, who are we to question what influences the market to throw its cash at a budding up-and-comer?

Regular readers (there are at least two – thanks mum and dad!) may recall our journalistic horror last week when global fintech Way2Vat joined the illustrious runners ranks after launching what it calls the world’s first AI-driven automated auditing project – dubbed “AI-AP Compliance”.

The fear had nothing to do with the company’s performance, which was genuinely impressive. It was the combination of AI and auditing that struck a very real fear into this writer’s heart.

Well, Way2Vat continued to climb this week with nary a new announcement in sight. Its share price climbed another 160 per cent this week to touch 3.9c from a previous close of 1.5c. Management says its new automated product is the first of its kind, building on the company’s existing technology platform to perform a full audit of all accounts payable and VAT/GST invoices for clients across 80 countries.

So, based on the only evidence available, it appears this column is finally getting the respect it deserves, with punters obviously splashing their cash on the sound, logical thinking and intricate share-price research offered here.

And while there is certainly a degree of logic used while writing this weekly article, nobody in their right mind would call our thinking particularly sound.

So maybe – just maybe – Way2Vat is onto something and investors are jumping in on the ground floor. As the saying goes, the only two guarantees in life are death and taxes. Why not try to make some money out of one of them?

While media speculation and rumours can bring a company into focus for market punters, another way to get your message across to shareholders can involve an old-fashioned letter.

Last Friday, 29Metals non-executive chair Owen Hegarty wrote to the company’s shareholders regarding its “recent negative trading history”. The message to investors stated that: “The recent dramatic fall in our share price is, in our opinion, unwarranted and is a serious concern for the Board of Directors.”

Hegarty pointed to the fact that the company’s assets remained unchanged and highlighted that its Golden Grove and Capricorn Copper projects contain significant upside potential. He also acknowledged the challenging year 29Metals and its shareholders endured throughout 2023.

The last couple of sentences in the letter even struck a chord with this columnist’s cold cynical heart and they are worth repeating verbatim:

“We are all working furiously on all fronts – operationally, technically, commercially and regulatory. Like you, the Board is disappointed by the recent selling and the share price fall. We all feel the pain. We appreciate the feedback we have received from our investors and the market. Please stay in touch.”

See? Companies can care too!

And the emotional outpouring from the board appeared to have reinvigorated the market’s faith in the company, with its shares jumping more than 62 per cent to touch 30c from a previous close of 18.5c.

The letter was followed up by four more market sensitive announcements, including its 2023 financial results and its end of year mineral resources and ore reserves estimates.

And there is plenty of upside there. The company’s contained metal at the end of last year came in at 2.26 million tonnes of copper, 2.31 million tonnes of zinc, 1.29 million ounces of gold and 76 million ounces of silver with significant lead and cobalt resources.

While revenue and EBITDA were down, there were reasons for the drop, including the impact of extreme weather, ventilation issues at Golden Grove and labour market factors. So, is the reasoning behind the latest price lift a sign of shareholder faith? Only time will tell.

This week’s final runner goes to Australian Mines, which enjoyed a share price lift of more than 56 per cent from 1.5c up to 2.4c after increasing its exploration footprint in the Brazilian State of Bahia by picking up the Jequie rare earth project.

The operation covers 826 square kilometres and the company has already identified an airborne radiometric thorium anomaly about 12km in length and up to 2.5km in width. The operation sits in a good neighbourhood, too, adjacent to Brazilian Rare Earths’ tenements where the company has an inferred mineral resource of 510 million tonnes at an impressive 1513 parts per million total rare earth oxides (TREO).

While Australian Mines is quick to point out that nearology is no guarantee of similar levels of results at Jequie, it is refreshing to see a company’s share price jump on the back of an initial exploration announcement. Brazil appears to be on the rise with many lithium, niobium and rare earths projects being snapped up during the past 12 months, particularly in the mining-friendly jurisdiction of Minas Gerais where the company holds its Resende lithium project.

One of the more interesting parts of this gig is seeing where in the world the next commodity hotspot is likely to appear and on the flipside, which ones quickly fall out of favour.

I notice we haven’t spoken about Canada’s James Bay in this column for some time…

Is your ASX-listed company doing something interesting? Contact: [email protected]