The Energy Report: The FTSE AIM All-Share Index recently crossed the 100-day moving average to the upside. How are you interpreting that signal?
Paul Renken: That move happened in early April, and means the market is moving upward for micro-cap natural resources stocks here in London. About two weeks after, the FTSE AIM All-Share Oil & Gas Index also moved above its 100-day moving average. Right now, we’re looking at a gain of about 29% since the lows were set in early February. Things are looking quite favorable in the micro-cap space.
TER: Why is this happening now?
PR: It appears that some of the policy and taxation changes that have taken place in the last 12 months here in Europe—and the United Kingdom (U.K.) specifically—are creating extra liquidity in the smallest end of the market. Investors—particularly private investors and people with pension money to invest—are actually getting more favorable treatment by putting mining stocks into their portfolios. That’s all good news.
TER: As someone who’s taking and exiting positions in different micro-cap names, what are you seeking at this stage?
PR: When companies release good news, share prices are once again moving up. That means investors are looking for news catalysts in these micro-cap stocks. Investors should be able to take a position sometime in advance for what is anticipated to be good news, whether that’s drilling results, permit approvals or a change in management. That’s how we’re positioning.
“If Nemaska Lithium Inc. can produce lithium hydroxide in a single step, which seems possible, it would be quite competitive with other producers.”
The interesting thing is that the activity here in the London market is not commodity-price driven. Even if the commodity price over the last six months hasn’t done any favors for the sector …read more