The week in Small Caps: billionaires battle over Atlas, Paradigm takes the pain away, Adriatic Metals scores big in Bosnia

Atlas Iron billionaires Paradigm Biopharma pain Adriatic Metals zinc Bosnia
WEEKLY MARKET REPORT

It has been an eventful week for the Australian market with the Aussie dollar feeling the pressure while the share market enjoyed its best one day gain for the year on Friday.

The 77 point or 1.3 per cent rise on Friday came as the Commonwealth Bank rallied after hitting five year lows and rises were recorded across most sectors, particularly financials, telcos, consumer staples and energy stocks.

It was a much bleaker story for the Australian dollar, which has been weakening against most currencies in the aftermath of the rise in official interest rates in the US.

At 4pm the dollar had recovered a little to reach US74.77c but the bearish Australian dollar trend seems intact until something new comes along.

For the week the ASX 200 index rose 48.8 points or 0.8 per cent to 6094, with most of those gains coming on Friday.

Telstra was a highlight, rebounding from a month’s worth of losses this week, jumping by 6.1 per cent to record its best weekly result this year.

After some very bleak days of losses, investors were hopeful of positive strategy day next week with announcements of cost savings and new product bundling initiatives.

That left Telstra shares at $2.94.

It was a big week for takeover inspired rises with Gateway Lifestyle hitting a year high after it received a takeover bid from the Australian arm of US prefab housing giant Hometown America. Its shares rose 14.8 per cent on Wednesday following the $635 million offer which valued the company at $2.10 a share, pushing Gateway’s shares up 19.1 per cent for the week to $2.15.

APA Group also received a takeover bid worth $13 billion from Chinese CK Group.

Initially that $11 a share offer was met favourably but its shares fell slightly on Thursday after the ACCC promised an all-encompassing review of the bid.

APA’s shares closed the week higher, up 17.5 per cent to $9.82 this week.

Small cap action this week

This week’s small cap action was centred around defence-sector news with a number of stocks operating in the space including CFOAM (ASC: CFO), DroneShield (ASX: DRO) and Aquabotix (ASX: UUV), announcing commercial deals.

Although the standout news was Atlas Iron’s ongoing saga that saw the company’s plight in the Pilbara reach the WA Parliament.

The small cap ordinaries index closed the week marginally up around 20 points at 2,880 much like its larger sibling, the ASX 200.

Atlas Iron (ASX: AGO)

The Pilbara is quickly becoming the staging area for Australian billionaires to do battle in the hunt for more greater iron ore market dominance.

This week saw billionaires Andrew Forrest and Gina Rinehart emerge with strategic stakes in Atlas Iron, sending the rumour mill into overdrive.

However, later in the week the company had been advised by the West Australian government that it does not have a “priority right” to develop valuable export infrastructure at Port Hedland.

The war of words (and exploration rights) then spilt into the WA state parliament on Thursday, with opposition mines and petroleum spokesman Bill Marmion quizzing Transport Minister Rita Saffioti about the exact nature of the “junior miner”.

The saga at Atlas continues with almost 1 billion Atlas shares changing hands this week – although the share price closed out the week more or less where it started – at $0.036 per share.

Dropsuite (ASX: DSE)

Dropsuite announced record user numbers and $3.4 million in annual revenues as its cloud-powered email backup service accrued “triple-digit growth”.

This week also saw Dropsuite furthering its geographic expansion in Asia via a new partnership with Mat Bao, a leading Vietnamese hosting provider.

Boosted by a strong marketing campaign, Dropsuite says it wants to expand its operations around the world in addition to its success in Asia.

Adriatic Metals (ASX: ADT)

Adriatic Metals hopes to uncover a strong zinc resource in Bosnia and published its highest-grade and thickest intercept to-date from its Rupice project.

There is further resource potential on the cards in the form of gold and silver mineralisation with Adriatic reporting 186g/t silver and 2.59g/t gold from recent assay results.

Led by CEO Geraint Harris and Robert Annett as head of exploration, Adriatic says it has all the key infrastructure in place to deliver a strong zinc project to European markets with the kicker that only 17% of the anomalies detected at Rupice has been drilled to date.

Plenty more exploration news is likely to come out of Adriatic in the coming months, but already, the explorer’s share price is off to the races, up around 130% this week.

Rectifier Technologies (ASX: RFT)

Rectifier Technologies turned a major corner last year turning a $44,370 loss into a $256,070 profit. The rectifier maker made further progress this week, by securing product purchase orders for around A$6.6 million to supply 35kW modular power supply units.

Its latest customer Tritium is a Brisbane-based technology company that specialises in the design and manufacture of fast chargers for electric vehicles (EVs), power-electronic systems and battery energy-storage applications.

Rectifier said that its improved performance reflects significant sales growth within the electric vehicle charging market with other market segments, namely, electronic components, power generation and distribution also generating “steady revenue”.

Fluence (ASX: FLC)

Fluence added two more high profile contracts to its ever-growing wastewater treatment business by securing a deal on either side of the globe.

Its first deal of the week was a tripartite framework agreement with the Yiyang City Government and local partner Hunan Aerospace, a subsidiary of Hunan Aerospace (Kaitian) for the deployment of three Aspiral smart-packaged MABR-based units.

A few days later, Fluence announced a multimillion contract to install a “waste-to-energy system” for ArcelorMittal, the world’s largest crude steel producer, accounting for 90 million tons of steel per year.

Australian Mines (ASX: AUZ)

Australian Mines announced plans to take its Sconi project to the next level by saying it wants to develop the “next-generation” of scandium alloys that could command higher revenue margins and serve as better final products for end-users.

The nickel and scandium explorer revealed its intentions to add a further layer of commerciality to its development by striking up a research partnership with a UK-based company that has developed a novel solid-state process to produce a low-cost yet superior aluminium-scandium alloy to be used by the automotive and aerospace industries.

Paradigm Biopharmaceuticals (ASX: PAR)

Paradigm is on course to deliver a successful pain reduction study before the end of the year following the addition of a further 30 patients to its Special Access Scheme study.

The company reported that of 75 patients treated, 84.0% responded with both a reduction in joint pain and an improvement in knee function.

The significant news adds further evidence that PPS can successful reduce joint pain with Paradigm adding that it “demonstrates superiority over the 15% pain reduction scores reported for opioid treatments” that are currently being used by patients.

The market Paradigm is after is worth somewhere in the region of US$5 billion per year.

Paradigm shares were up around 5% this week and a whopping 120% since the start of this year.

Piedmont Lithium (ASX: PLL)

Piedmont unveiled its maiden lithium resource this week. The lithium explorer debuted a maiden resource of 16.19 million tonnes at 1.12% lithium oxide at its flagship project in North Carolina.

Further exploration is already planned and could see Piedmont’s resource grow further before the end of the year.

Marindi Metals (ASX: MZN)

Marindi Metals had a busy week, to say the least.

The gold explorer scooped up “hundreds” of gold nuggets from its Bellary Dome gold project, near to tenements held by TSX-listed Novo Resources in Western Australia.

Later in the week, Marindi said it discovered three additional lithium-bearing outcrops at its Forrestania lithium-gold project, taking the total number of pegmatites identified at the project to seven.

According to Marindi, the company holds more than 1,000 square kilometres of one of the last under-explored greenstone belts in WA, within a region that has produced millions of tonnes of nickel and gold.

With its exploration pipeline growing steadily, Marindi says it has potentially come across a “multiplier” of gold enrichment in the goldfields of WA.

The week ahead

It is a quieter week in prospect with no leading economic indicators for Australia or the US.

There are some figures which will enhance our knowledge of how the economy is performing, starting on Monday with the Australian Bureau of Statistics releasing the Overseas Arrivals & Departures publication.

That data on tourist arrivals and departures plus longer-term migration flows.

In the US there will be several indicators about the health of the housing market including building starts, home prices and sales of existing homes.

On Tuesday the minutes of the last Reserve Bank Board meeting are released along with the ABS release of its Residential Property Price Indexes.

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