Lens on three ASX-listed small-cap stocks - BLZ, FGO, ELT

Small-cap stocks are not for the faint-hearted investors as they usually carry a significant amount of risk. However, if studied and assessed thoroughly, one can earn impressive returns by investing in small-cap stocks in the short-term as these companies have substantial potential for growth. The returns are generally higher than those earned with large-cap stocks though there is uncertainty regarding the consistency of positive returns.

In this article, we will look at three small-cap stocks from diverse sectors and throw light on their recent developments.

Blaze International Limited (ASX:BLZ)

Australia-based Blaze International Limited is engaged in the exploration of minerals, primarily gold, and is developing the Barkly Copper-Gold project. The Company is also currently working on multiple projects located in Western Australia like the Kirkalocka Project, the Thundelarra Project, and the Leonora Project which was acquired recently.

Quarterly Report for the period ended 31 December 2019

For the three months ended 31 December 2019, net cash used in operating activities stood at $340,000 while for the six months, it stood at $839,000. During the quarter, Blaze carried out the following activities:

• In the December quarter, the Company finished a reconnaissance aircore drilling program over several tenements in the Leonora tenement portfolio. 42 aircore holes for 1,940 metres were drilled, focusing on multiple previously defined gold in soil anomalies and structurally complex zones with six specific areas assessed. Results from hole BAC005 were impressive.
• During the three months, the Company had applied for an additional three exploration licences (E15/1750, E15/1751, E63/2004) that will cover about 440 square kilometres of the area looking for nickel sulphide accumulations located within high gravity Proterozoic dykes cutting across the Archean stratigraphy. The tenements are dependent on a joint venture, in which Blaze holds 90% interest and an unrelated private entity holds the remaining 10%.
• The Company has also started planning the exploration season for fiscal 2020.

Stock Performance

BLZ stock closed the day’s trade at $0.014 on 27 February 2020, an increase of 16.667% compared to the previous day’s close. The market capitalisation of the Company was ~$2.52 million, and the outstanding shares stood at ~210 million. The 52-week low and high prices were $0.011 and $0.030, respectively. The stock has delivered returns of -33.33% on a YTD basis and -42.86% in the last six months.

Flamingo AI Limited (ASX:FGO)

Flamingo AI Limited formerly known as Cre8tek Limited, is an Australian technology Company, that offers cognitive virtual assistant (AI) platforms meant for enterprises selling, providing financial services and servicing complex products online. The Company also helps in online social networking services, security and encryption.

Quarterly Update – December 2019

Flamingo announced its Quarterly Update for the period ended 31 December 2019 with the following key developments:

• Received a patent for Semi-supervised Question Answering Machine: The patent, granted on 15 January 2020, sets out the procedure that Flamingo utilizes for semi-supervised machine learning to disseminate answer weights around a question space. The patent life is of 20 years and is valid until 30 August 2038. The patent is also currently anticipating examination in the US.
• Flamingo launched its SaaS product during the period and is active in the US and Australia
• The Company authorized a Services Agreement and Pilot Contract with an Australia-based financial services Company to test its Intelligent Knowledge Sharing Hub. The client will install the Flamingo’s machine learning product for an initial period of six months starting January 2020. After the trial completion, the client has the option to extend the use of the Flamingo’s products in other business areas.
• Mr Zane Lewis was appointed as Non-Executive Director of Flamingo following the resignation of Mr Peter Lloyd
• During the December 2019 quarter, the Company had continued to make progress in go-to-market strategy, which resulted in a further increase in the sales pipeline and is progressing enterprise clients via various stages of engagement
• The Company announced that its net operating cash burn had decreased to $1.060 million, compared to $1.276 million in Q1 FY20. Also, the Company’s cash balance stood at $2.675 million as on 31 December 2019, lower than the previous quarter ($3.756 million)

Net operating cash burn (excluding Government grants/tax incentives) (source: Company’s Quarterly Update)

Stock Performance

FGO stock closed the day’s trade at $0.002 on 27 February 2020, in line with the previous day’s close. The market capitalisation of the Company was ~$2.24 million, and the outstanding shares stood at ~1.12 billion. The 52-week low and high prices were $0.001 and $0.012, respectively. The stock has delivered returns of 33.33% on a YTD basis and -50.00% in the last six months.

Elementos Limited (ASX:ELT)

Elementos Limited is an Australian resources Company engaged in the exploration and production of tin. The Company is engaged in the development of the Tasmania-based Cleveland Project. Elementos also has the Spain-based Oropesa Tin Project in its portfolio. The Company focuses on developing assets in regions that have low sovereign risk and have established mining infrastructure.

Quarterly Report - December 2019

Elementos released its Quarterly Report for the period ended 31 December 2019 and provided the following highlights:

• Completed the acquisition of Oropesa Tin Project from TSX-V listed Eurotin Inc.: Elementos, in the December 2019 quarter, announced that it had completed the acquisition of the Oropesa Tin Project from TSX-V listed Eurotin Inc. (TIN). The deal was complete once the Company received all the shares in Minas De Estana De Espana S.L.U. (MESPA), which was a vital component of the acquisition agreement.
• Further, all the convertible redeemable preference shares (CRPS) that were issued by Elementos to Eurotin previously as consideration for the acquisition were given to Eurotin shareholders. The CRPS had been converted to ordinary shares of Elementos as per the acquisition agreement. Moreover, the Company started a detailed Economic Study of this project. ELT is also in discussions to get project finance for Oropesa.
• Net cash used in operating activities stood at $459,000 in the December quarter while it stood at $994,000 for the six months ended 31 December 2019.
• Cash and cash equivalents as on 31 December 2019 were $153,000.

Stock Performance

ELT stock closed the day’s trade at $0.003 on 27 February 2020, an increase of 50.0% compared to the previous day’s close. The market capitalisation of the Company was ~$5.09 million, and the outstanding shares stood at ~2.54 billion. The 52-week low and high prices were $0.002 and $0.009, respectively. The stock has delivered returns of -16.67% on a YTD basis and -44.44% in the last six months.

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