QIS Update #23 2014 - August 6th 2014
Included in this update:
- California Nanotechnologies appoints new director
- Newlox Gold Ventures discusses details on phase two plant upgrade program
- Quinsam Capital provides portfolio update
- Virtutone Networks announces record monthly revenues of $15.8 million for July 2014
We are entering earnings season for many of the small-caps. Market performance for small-cap stocks has been dismal for at least the past 3 months so hopefully some positive financials will breathe a little life back into the markets before most investors get back to trading in September. NTG Clarity Networks and Dalmac Energy are expected to have their numbers out around mid-month.
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California Nanotechnologies Corp. (CNO:TSX-V)
Current Price: $0.13 (coverage commenced May 5/14 - $0.15)
California Nanotechnologies Corp. has announced the appointment of Dr. Enrique Lavernia, Distinguished Professor and Dean of the College of Engineering at the University of California at Davis, to the Board of Directors of California Nanotechnologies Corp. Dr. Lavernia will replace David F. Grant on the Board. Mr. Grant will continue to support the development of the company as a consultant.
Since the completion of his PhD in Materials Engineering at the Massachusetts Institute of Technology (MIT) in 1986, Dean Lavernia has served in various positions including as Chair and Chancellor's Professor of the Department of Chemical Engineering and Materials Science at the University of California at Irvine and as Provost and Executive Vice Chancellor of the University of California at Davis. He is a member of several professional organizations and fellowships and serves on various boards of review and advisory panels. In addition to his nine patents, Dean Lavernia has received numerous scholastic awards. He has also been awarded grants from several agencies including the National Science Foundation, the Office of Naval Research, the U.S. Department of Energy, NASA, and the Air Force Office of Scientific Research.
Dean Lavernia will receive 100,000 incentive stock options at a price of $0.11 CAD per share as compensation for joining the Board. The options are governed by the company's stock option plan as approved at the last annual meeting on October 18, 2013 and as such vest over three years and are exercisable over a term of five years. All options offered by the company are subject to TSX Venture Exchange (TSX-V) approval.
Dean Lavernia brings to Cal Nano a vast network of contacts and unparalleled expertise in the field of material science. To further support the commercialization of the Company, Dean Lavernia will provide consulting services to develop new and advance existing commercial projects. The addition of Dean Lavernia to the Cal Nano team will provide additional insight and expertise into the commercial world of Nanotechnology. We look forward to many additional opportunities and commercial successes to come, stated Christopher Melnyk, CEO.
California Nanotechnologies plans to put forward a larger slate of directors at the annual meeting to be held in Calgary this fall. At that time, it will be possible for Mr. David Grant to return to the Board.
QIS Capital: This is a significant announcement for Cal Nano as Dean Lavernia is probably one of the most famous researchers in the nanotechnology field worldwide. He is commercially oriented and wants to help the company commercialize several projects. This announcement is another step forward for Cal Nano as the company works to commercialize its suite of products.
Newlox Gold Ventures Corp. (LUX:CSE)
Current Price: $0.04 (coverage commenced March 31/14 - $0.05)
Newlox Gold Ventures Corp. has announced the installation of a new ball mill and flotation circuit.
Newlox Gold Ventures Corp. is working in collaboration with the Norman B. Keevil Institute of Mining Engineering at the University of British Columbia and is rapidly establishing a precious metals producing operation in Central America.
Having raised initial capital in February, the company installed a gravity concentrator at its pilot plant in Costa Rica. 2.5 tonnes of valuable concentrate grading +500 grams per tonne gold has been produced to date. The concentrate is growing at approximately 35 kilos per day and is being stockpiled for further processing and/or eventual sale.
In accordance with recommendations presented by the University of British Columbia a new ball mill and a new 6- Cell Denver Flotation Circuit, has been purchased and installed at the plant. This new equipment is designed to recover fine gold, which is not currently recovered by the gravity concentration. The UBC lab testing has identified this additional recovery as the primary value driver in the tailings material. The company has reliable water availability and ample supply of grid power. As phase two progresses further updates will be provided.
The company has access to a number of high-grade historical tailings stockpiles and plan to deploy processes designed to remove contamination left behind by inefficient historical production while liberating the precious metals. With the material stockpiled on surface, the operation is expected to achieve remarkably low production costs given that exploration, mining and crushing, the most expensive components of a traditional gold producing operations, is entirely unnecessary.
Newlox’s environmental reclamation approach is intended to provide valuable environmental and social benefits to local stakeholders while simultaneously generating meaningful revenue.
In addition to reprocessing of material from surface deposited waste dumps, the company has fielded a gold trading program whereby the company purchases gold from various sources in the field before reselling the metal through established networks. By employing a rapid turnaround on purchases and a high frequency of trades, Newlox has been able to generate meaningful revenue based upon modest margins per transaction while mitigating risk associated with commodity price volatility. The company’s gold trading program is progressing well. Margins are within expectations and volumes are increasing satisfactorily.
QIS Capital: Once the new ball mill and floatation circuit are fully operational, Newlox will be able to increase throughput and gold concentrate production. Development has been slow due to restrained capital in the small-cap resource market but Newlox appears to be on the verge of significant positive cash flow in the next few months. The company’s market capitalization is currently only $1.8 million.
Quinsam Capital Corp. (QCA:CSE)
Current Price: $0.10
Quinsam Capital Corp. has provided an update on activities for July 2014.
In July, Quinsam increased its position in Tuscany Energy Ltd. on its recent new issue. Tuscany is about to embark on what we see as a relatively low risk heavy oil drilling program which if successful we expect will increase production to more than 1,000 bbls per day. With the recent equity raise which deleveraged Tuscany, and the current stability in heavy oil prices, we see this as a compelling small cap oil and gas investment.
We acquired a small position in DataWind Inc. after it traded down after its recent IPO. DataWind offers a very interesting technology to the developing world that allows users to obtain unlimited internet access at a cost of about $8 per year. We see this as a compelling value proposition and expect rapid growth in revenue.
We opportunistically traded two new issues in July. We exited the first of the positions at a profit which was in line with our expectations. The second transaction has not yet closed but also appears poised to be profitable on settlement.
We are hopeful that one of our largest position, Enerdynamic Hybrid Technologies Inc., will commence trading on the TSX Venture Exchange in August. Enerdynamic offers a number of compelling alternative energy technologies and services and we are hopeful that the stock will trade at over our acquisition cost. We also hold a large warrant position in this company providing upside leverage.
Quinsam would also like to take this opportunity to update investors on the company's recent performance.
The company closed the month with a total portfolio exceeding $1.8 million. As at the end of June 2014, the unaudited total value of the Quinsam's cash and equity investments was approximately $1.9 million. The last few days of July were choppy in the small cap market, which impacted our portfolio value, although we do not expect the impact to be enduring.
An important leg in our business strategy is the accumulation of purchase warrants at little or no cost. We are pleased to report Quinsam now holds over 1.9 million warrants with an aggregate basic exercise value of approximately $1 million. The exercise value is not an indication of the economic value of the warrants; we provide it to investors so they can understand the amount of upside leverage that we are accumulating through our warrant portfolio. As at the end of July, the carrying value on our books of our warrant portfolio was $39,000, which was wholly attributable to the Atico warrants purchased in June.
Virtutone Networks Inc. (VFX:TSX-V)
Current Price: $0.27 (coverage commenced Sep. 9/11 - $0.10)
Virtutone Networks Inc. has recently announced that the company has generated over $15.8 million in revenue for the month of July.
Our revenues have been stable for the past 3 months and now with the new line of credit, we are anticipating another jump in revenues this fall said Jason Allen, Chief Executive Officer of Virtutone. Even without the additional line of credit in place, our team was able to generate another record month.
QIS Capital: Another record revenue month for Virtutone as the company just doesn’t seem to be slowing down on the revenue front. Management is predicting another significant boost in revenues with the new line of credit announced last month. Revenues in Q2 (ended July 31) are expected to exceed $45 million compared to just $28 million in Q1. Virtutone was modestly earnings positive on the $28 million.
Disclaimer: This article is for informational purposes only. The information contained within this article should not be construed as offering investment advice. Those seeking direct investment advice should consult a qualified, registered, investment professional. BOEs may be misleading, particularly if used in isolation. A BOE conversion ratio of 6 Mcf: 1bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. The company profiled assumes no liability for the information presented. This is not a direct or implied solicitation to buy or sell securities. Readers are advised to conduct their own due diligence prior to considering buying or selling any stock. The author(s) owns directly or indirectly 414,500 shares and 100,000 warrants of California Nanotechnologies Corp., 927,000 shares of Newlox Gold Ventures Corp., 900,000 shares of Quinsam Capital Corp., and 487,000 shares and 212,500 warrants of Virtutone Networks Inc. QIS Capital may have a financial relationship with these companies and may trade in the stocks mentioned. No stock exchange has approved or disapproved of the information contained herein. Copyright © 2003 - 2014 QIS Capital Corporation.