Noble Capital Markets Research Morning Call

Noble Capital Markets Research Report Friday, July 26, 2024

Companies contained in today’s report:

Ocugen (OCGN)/OUTPERFORM – Ocugen Completes Phase 1 Dosing For OCU410 In Dry AMD
Resources Connection (RGP)/OUTPERFORM – Highlights from the Company’s 10-K Filing
Travelzoo (TZOO)/OUTPERFORM – Entering A New Growth Phase

Ocugen (OCGN/$1.63 | Price Target: $8)
Robert LeBoyer [email protected] | (212) 896-4625
Ocugen Completes Phase 1 Dosing For OCU410 In Dry AMD
Rating: OUTPERFORM

Escalating Dose Stage Has Completed Dosing. Ocugen reported completion of the escalating dose stage of its Phase 1/2 ArMaDa trial testing OCU410 in Geographic Atrophy (GA), a late-stage complication of dry age-related macular degeneration (dry AMD). OCU410 uses Ocugen’s “master regulatory gene” approach, with a single injection to deliver the nuclear receptor gene RAR-related orphan receptor A (RORA). This gene regulates pathways that lead to dry age-related macular degeneration.

Next Stage In Phase 1/2 Trial Expected In 3Q24. The Phase 1/2 ArMaDa trial is testing OCU410 in geographic atrophy (GA), a lesion secondary to dry AMD at 14 retina surgical centers in the US. The first stage of the trial administered three escalating doses of OCU410. The second stage will randomize patients into three arms at a ratio of 1:1:1 to compare the medium and high dosage levels to a control group. Endpoints will be efficacy and safety.

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Resources Connection (RGP/$11.6 | Price Target: $15)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Highlights from the Company’s 10-K Filing
Rating: OUTPERFORM

10-K Filed. We had the opportunity to review the Company’s 10-K filed earlier in the week. Some key takeaways from the 10-K include the Company’s continuation of its pristine balance sheet, solid cash flow generation, and the return of capital to shareholders.

Pristine Balance Sheet. The Company continues to have plenty of liquidity to work with, as RGP’s total liquidity at year end was $283 million, with no outstanding debt. We believe the Company can utilize the liquidity in the balance sheet towards acquisitions should the opportunity present itself to RGP. Outside of acquisitions, management can utilize its liquidity towards organic growth, including its technology transformation initiative, in our view.

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Travelzoo (TZOO/$9.35 | Price Target: $18)
Michael Kupinski [email protected] | (561) 994-5734
Joshua Zoepfel [email protected] |
Entering A New Growth Phase
Rating: OUTPERFORM

In line quarter. Second quarter results were largely in line with our estimates. Q2 revenue of $21.1 million was a touch below our estimate of $22.4 million, and roughly flat with the prior year period. Adj. EBITDA in the quarter was $4.9 million, above our estimate of $4.4 million by roughly 11.0%, as a result of lower marketing expenses and higher gross margin. Gross margins were 88.1%, better than our 86.2% estimate.

A focus on subscribers. The Company introduced an annual $40 paid subscription for its travel deals at the beginning of the calendar year. All of its 30 million legacy members will be introduced to the paid model beginning in 2025. Management plans to add new benefits for the paid membership, although it did not yet identify what those benefits might be.  

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Noble Capital Markets Research Report Thursday, July 25, 2024

Companies contained in today’s report:

Maple Gold Mines (MGMLF)/OUTPERFORM – Hitting its Stride and Gaining Momentum

Maple Gold Mines (MGMLF/$0.06 | Price Target: $0.2)
Mark Reichman [email protected] | (561) 999-2272
Hitting its Stride and Gaining Momentum
Rating: OUTPERFORM

Augmenting the leadership team. Effective immediately, Maple Gold Mines Ltd. appointed Mr. Darwin Green, P. Geo., to its Board of Directors. Mr. Ian Cunningham-Dunlop, P. Eng., has been appointed Vice President, Technical Services effective on or before August 1, 2024. Both have impressive credentials which are summarized in the body of this note. As Mr. Kiran Patankar, CEO, has taken quick actions to reposition the company for successful outcomes, Mr. Green and Mr. Cunningham-Dunlop will strengthen the company’s ability to execute. Maple’s Chief Geologist and Engineer will report to Mr. Cunningham-Dunlop.

Upcoming events. We expect the company to hold a meeting of its Board of Directors ahead of releasing its second quarter financial results to the market in early August. On September 9, the company will host its annual meeting of shareholders at which time Maple Gold shareholders will vote on the recent joint venture restructuring transaction with Agnico Eagle Mines Limited (NYSE: AEM). Maple is also expected to provide a more detailed exploration update and plan later in the year prior to commencement of the company’s drilling program.

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Noble Capital Markets Research Report Tuesday, July 23, 2024

Companies contained in today’s report:

Seanergy Maritime (SHIP)/OUTPERFORM – Two Time Charters with Costamare Bulkers Inc.; Updating Estimates

Seanergy Maritime (SHIP/$9.7 | Price Target: $14)
Mark Reichman [email protected] | (561) 999-2272
Two Time Charters with Costamare Bulkers Inc.; Updating Estimates
Rating: OUTPERFORM

M/V Iconship. In mid-June, Seanergy announced the delivery of the M/V Iconship and the simultaneous commencement of its employment. The M/V Iconship is on a time-charter with Costamare Bulkers, Inc. for ~22 months. The daily hire is based at a premium over the Baltic Capesize Index (BCI). The company has the option to convert the daily hire from index-linked to fixed for a period of two to twelve months based on prevailing Capesize forward freight agreements (FFA).

M/V Lordship. The M/V Lordship, a scrubber-fitted Capesize dry bulk vessel built in 2010, has also been fixed on a time-charter with Costamare. The time-charter is expected to commence around the end of July, following the vessel’s scheduled drydocking, for a period of ~22 months.

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Noble Capital Markets Research Report Monday, July 22, 2024

Companies contained in today’s report:

Resources Connection (RGP)/OUTPERFORM – Full 2024 Review and Updated Projections

Resources Connection (RGP/$11.2 | Price Target: $15)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Full 2024 Review and Updated Projections
Rating: OUTPERFORM

Full Year Results. For the twelve months ended May 25, 2024, RGP posted revenue of $632.8 million, a decline of 18.4% y-o-y. Same day constant currency revenue fell 18.8% y-o-y. Gross margin was 38.9% versus 40.4% in FY23. GAAP net income was $21 million, or $0.62/sh., compared to $54.4 million, or $1.59 last year. Adjusted EPS was $0.93 versus $2.00. Adjusted EBITDA in FY24 totaled $51.5 million, down from $100.2 million a year ago.

Setting Foundation. Management continues to control what they can while setting the foundation for an expected industry upturn. While the timing of the upturn is difficult to predict, we believe clients will become more willing to start spending on new projects as economic certainty becomes clearer. We believe the first interest rate reductions by the Federal Reserve will be a signal of improved clarity and will provide clients comfort to start new projects.

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Noble Capital Markets Research Report Friday, July 19, 2024

Companies contained in today’s report:

Cocrystal Pharma (COCP)/OUTPERFORM – CDI-988 Reaches Milestone In Phase 1 Trial For Norovirus and Coronavirus
Lifeway Foods (LWAY)/OUTPERFORM – The Family Feud Continues
Resources Connection (RGP)/OUTPERFORM – A 4Q24 Beat; Stabilization, Waiting for Upturn

Cocrystal Pharma (COCP/$2.35 | Price Target: $10)
Robert LeBoyer [email protected] | (212) 896-4625
CDI-988 Reaches Milestone In Phase 1 Trial For Norovirus and Coronavirus
Rating: OUTPERFORM

CDI-988 Completes Phase 1 SAD Trial. Cocrystal announced that CDI-988 has completed the single ascending dose stage of the Phase 1 trial for CDI-988, its oral protease inhibitor in development for norovirus and coronavirus. The trial was designed to test the safety and tolerability of CDI-988, as well as its pharmacokinetics. The results justify moving forward to the multiple ascending dose (MAD) stage, expected later in FY2024.

SAD Study Was Designed To Test Basic Safety. The SAD trial was a double-blind trial to test a single oral administration of escalating doses ranging from 100 mg to 600 mg of CDI-988. The objectives were to determine basic safety, tolerability, and pharmacokinetics including food effects. There were no serious adverse events or treatment-emergent adverse events, with no laboratory or exam abnormalities. Safety and tolerability were considered sufficient to continue to the next stage of the trial.

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Lifeway Foods (LWAY/$12.26 | Price Target: $20)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
The Family Feud Continues
Rating: OUTPERFORM

New Demands. Ludmila and Edward Smolyansky renewed their demands for the immediate termination of Lifeway CEO Julie Smolyansky as well as the resignation of the majority of the Board. According to a press release issued yesterday, “The Smolyanskys believe these actions are necessary to avoid further underperformance and mismanagement of Company assets, and that new leadership can deliver swift and significant changes to shareholders.”

More. The release goes on to state, “it is impossible for the brand to achieve its full potential and value in the short and long term, and for Lifeway to move forward,” Julie Smolyansky must get out of the way. The Smolyanskys posted a related presentation at www.lifebacktolifeway.com, but the website did not appear to be working properly when we viewed it. Once again, the Smolyanskys call for an operational and strategic review of the business.

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Resources Connection (RGP/$10.62 | Price Target: $15)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A 4Q24 Beat; Stabilization, Waiting for Upturn
Rating: OUTPERFORM

4Q24 Results. Revenue of $148.2 million was above our forecast of $140 million, consensus $141 million, and management’s $137-$142 million guide. Adjusted EBITDA totaled $13.1 million, or an 8.8% margin, versus our estimate of $5.5 million. GAAP net income was $10.5 million, or $0.31/sh, and adjusted EPS was $0.28. We had forecast a GAAP loss of $0.02/sh and adjusted EPS of $0.07/sh. Consensus was $0.00 and $0.07, respectively.

Drivers. The top line was driven by a stabilization in the overall business, although clients remain cautious on spending on new projects. Gross margin of 40.2% was above the 37.5%-38% guide. Run rate SGA came in at $46.5 million, well below the $50-$52 million guide, and an 11% y-o-y improvement.

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Noble Capital Markets Research Report Wednesday, July 16, 2024

Companies contained in today’s report:

Hemisphere Energy (HMENF)/OUTPERFORM – Increasing Expectations for 2024 and 2025

Hemisphere Energy (HMENF/$1.32 | Price Target: $2.35)
Mark Reichman [email protected] | (561) 999-2272
Increasing Expectations for 2024 and 2025
Rating: OUTPERFORM

Updating estimates. We increased our 2024 adjusted funds flow (AFF) and earnings per share (EPS) estimates to C$44.3 million and C$0.34 from C$40.9 million and C$0.30. Our revisions are driven by higher crude oil price assumptions and a redistribution of quarterly production estimates. While we have assumed higher oil prices in the second and third quarters, our model assumes prices weaken in the fourth quarter. We increased our 2025 AFF and EPS estimates to C$41.1 million and C$0.30, respectively, from C$31.4 million and C$0.21 based on higher production volume and crude oil price assumptions. We think our 2025 estimates could be conservative if the company can increase annual production within its targeted range of 10% to 20%.

Normal course issuer bid (NCIB). Hemisphere renewed its NCIB to purchase up to 8,255,766 common shares, representing ~10% of the current public float, for cancellation. The NCIB commenced on July 14 and will terminate on July 13, 2025. Under its previous NCIB, which authorized the repurchase of 8,670,636 shares and terminated July on 13, the company purchased 4,074,400 shares on the open market at a weighted average price of C$1.425. Shares are generally purchased opportunistically during periods of weakness.

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Noble Capital Markets Research Report Tuesday, July 16, 2024

Companies contained in today’s report:

Comstock Inc. (LODE)/MARKET PERFORM – Comstock Metals Prepares to Scale Up

Comstock Inc. (LODE/$0.16)
Mark Reichman [email protected] | (561) 999-2272
Comstock Metals Prepares to Scale Up
Rating: MARKET PERFORM

Industry-scale facility. Comstock Metals secured a long-term lease on a 100,000 square foot building in Silver Springs, Nevada. The facility, located on the same campus as Comstock’s operating demonstration plant, will be able to process up to 100,000 tons per year of end-of-life solar panels. Comstock Metals recently received approval for a conditional use permit from the Lyon County, Nevada Board of County Commissioners for the operation and material storage of solar panels at this facility. 

On or ahead of schedule. Comstock’s demonstration facility is operating two shifts and expects to add a third shift during the third quarter. The company is advancing the full design and remaining permitting of its first industry-scale facility. Having fully secured the site lease and the county permit, the company has started to work on pre-engineering and state permitting processes so the remaining permit applications can be submitted

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Noble Capital Markets Research Report Friday, July 11, 2024

Companies contained in today’s report:

Aurania Resources (AUIAF)/OUTPERFORM – Crunchy Hill Adds Another Layer of Excitement to the 2024 Exploration Program
AZZ Inc (AZZ)/OUTPERFORM – Increasing Our Estimates and Price Target

Aurania Resources (AUIAF/$0.345 | Price Target: $0.5)
Mark Reichman [email protected] | (561) 999-2272
Crunchy Hill Adds Another Layer of Excitement to the 2024 Exploration Program
Rating: OUTPERFORM

Kuri-Yawi epithermal gold target. Aurania’s 2024 exploration program will focus on the Kuri-Yawi epithermal gold target, including an induced polarization (IP) geophysical survey and drilling three drill holes later in the year totaling approximately 1,800 meters of drilling. 

Awacha porphyry copper target. An Anaconda mapping program has been completed in the southern part of Aurania’s Awacha porphyry copper target area and exploration teams continue to map the remaining area. Having signed an agreement with the indigenous community that allows full access, the northern portion of the Awacha copper porphyry target will be mapped with the goal of preparing it for drilling in the future. 

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AZZ Inc (AZZ/$81.15 | Price Target: $100)
Mark Reichman [email protected] | (561) 999-2272
Increasing Our Estimates and Price Target
Rating: OUTPERFORM

First quarter financial results. For the fiscal year 2025, AZZ reported adjusted first quarter net income of $44.0 million or $1.46 per share compared to $33.4 million or $1.14 per share during the prior year period and our estimate of $38.9 million or $1.32. The consensus EPS estimate was $1.30. Adjusted EBITDA increased 10.2% to $94.1 million representing 22.8% of sales versus 21.8% of sales during the first quarter of FY 2024. Sales of $413.2 million exceeded our $402.6 million estimate and the 24.8% gross margin as a percentage of sales exceeded our estimate of 24.1%.

Balance sheet continues to strengthen. During the first quarter, AZZ generated strong operating cash flows of $71.9 million and further reduced debt by $25 million and is on track to achieve its goal of reducing debt by $60 million to $90 million during the fiscal year. At quarter end, the company’s net leverage was 2.8x trailing twelve months EBITDA. Cash and cash equivalents amounted to $10.5 million. During the quarter, AZZ returned capital to common shareholders in the form of cash dividend payments totaling $4.3 million.

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Noble Capital Markets Research Report Thursday, July 11, 2024

Companies contained in today’s report:

AZZ Inc (AZZ)/OUTPERFORM – Fiscal Year 2025 Starts Off Strong
Unicycive Therapeutics (UNCY)/OUTPERFORM – Patient Survey Data From Pivotal Trial Shows Patients Prefer OLC

AZZ Inc (AZZ/$76.51 | Price Target: $95)
Mark Reichman [email protected] | (561) 999-2272
Fiscal Year 2025 Starts Off Strong
Rating: OUTPERFORM

First quarter financial results. For the fiscal year (FY) 2025, AZZ reported adjusted first quarter net income of $44.0 million or $1.46 per share compared to $33.4 million or $1.14 per share during the prior year period and our estimate of $38.9 million or $1.32 per share. The consensus EPS estimate was $1.30. Adjusted EBITDA increased 10.2% to $94.1 million representing 22.8% of sales versus 21.8% of sales during the first quarter of FY 2024. Sales of $413.2 million exceeded our $402.6 million estimate and a 24.8% gross margin as a percentage of first quarter sales exceeded our estimate of 24.1%. AZZ reiterated its prior fiscal year guidance with sales expected to be in the range of $1.525 billion to $1.625 billion, adjusted EBITDA in the range of $310 million to $360 million, and adjusted diluted EPS in the range of $4.50 to $5.00. 

Balance sheet continues to strengthen. During the first quarter, AZZ generated operating cash flow of $71.9 million and the company further reduced debt by $25 million and is on track to achieve or exceed its goal of reducing debt by $60 million to $90 million during the fiscal year. At quarter end, the company’s net leverage was 2.8x trailing twelve months EBITDA. Cash and cash equivalents amounted to $10.5 million. During the quarter, AZZ returned capital to common shareholders in the form of cash dividend payments totaling $4.3 million.

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Unicycive Therapeutics (UNCY/$0.49 | Price Target: $6)
Robert LeBoyer [email protected] | (212) 896-4625
Patient Survey Data From Pivotal Trial Shows Patients Prefer OLC
Rating: OUTPERFORM

Pivotal Trial Included A Patient Satisfaction Survey. In late June, Unicycive released safety, efficacy, and dosing data from its Pivotal trial for OCL. As discussed on our Research Note on June 26, over 90% of the patients were able to reach target serum phosphate levels. The trial included a pre-specified patient survey asking about ease of use, satisfaction, and overall preference that shows patients prefer OLC over their current phosphate binders. We see this as an important point that could make it the best treatment in a $1 billion drug category.

We Consider Patient Preference To Be A Strong Point. OLC was developed as an improved formulation of Fosrenol (lanthanum citrate) that would require fewer and smaller pills. This was intended to improve compliance and maintain phosphate levels in the proper range. The Pivotal study for the NDA application showed sufficient safety, tolerability, and effective dose levels, with a pre-specified patient survey to collect post-treatment opinions.

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Noble Capital Markets Research Report Wednesday, July 10, 2024

Companies contained in today’s report:

CoreCivic, Inc. (CXW)/MARKET PERFORM – Updated Model
Euroseas (ESEA)/OUTPERFORM – Increasing Estimates Based on Higher Charter Rates
GeoVax Labs (GOVX)/OUTPERFORM – Looking Forward To Continued Progress In 2H24

CoreCivic, Inc. (CXW/$13.22)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Updated Model
Rating: MARKET PERFORM

Model Updates. We updated our model to reflect the upcoming loss of the South Texas contract in mid-August. While a significant loss, we believe the ongoing increase in ICE detainees elsewhere could help soften the South Texas blow and we remain hopeful additional state and local contracts could be signed.

Details. As a reminder, South Texas generates approximately $40 million in quarterly revenue and generates approximately $0.10 per share in quarterly EPS. We assumed half of a quarter impact for 3Q24 and a full quarter impact in 4Q24. We kept the majority of the rest of the model consistent, although there may be some cost savings initiatives CoreCivic is able to put in place. We held our 2Q24 estimates the same.

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Euroseas (ESEA/$38.86 | Price Target: $55)
Mark Reichman [email protected] | (561) 999-2272
Increasing Estimates Based on Higher Charter Rates
Rating: OUTPERFORM

M/V Joanna charter. Euroseas Ltd. executed a new time charter contract for its 1,732 twenty-foot equivalent (teu) feeder containership, M/V Joanna, for a minimum period of 23 months to a maximum period of 25 months at an average gross daily rate of $16,500. The rate is higher than its current charter rate of $13,500 per day which ends in August. The charter for M/V Joanna will commence at the end of October 2024. The charter is expected to contribute EBITDA of ~$6.4 million during the minimum contracted period and increases the company’s remaining 2024 and 2025 charter coverage to 92% and 40%, respectively.

M/V Pepi Star charter. The company executed a time charter contract for the M/V Pepi Star, an 1,800 teu feeder containership currently under construction, for a minimum period of 23 to a maximum period of 25 months at a gross daily rate of $24,250. The time charter contract rate is higher than what we had previously forecast. The new charter will commence in mid-July upon delivery of the vessel from the shipyard. The charter is expected to contribute EBITDA in the amount of ~$12.3 million during the minimum contracted period.

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GeoVax Labs (GOVX/$2.52 | Price Target: $6)
Robert LeBoyer [email protected] | (212) 896-4625
Looking Forward To Continued Progress In 2H24
Rating: OUTPERFORM

GeoVax Reached Important Milestones For Both Platforms During 1H2024. The first half of 2024 has been a transformational period for GeoVax. A Phase 2 trial testing CM04S1 as a booster vaccine for COVID-19 reported initial data in February, then received a BARDA grant to conduct a large Phase 2b in June. The Gedeptin gene therapy program in head and neck cancer reported interim Phase 1/2 data showing successful proof-of-concept. Both programs are moving forward with additional milestones in 2H24.

BARDA Grant Allocates $367 Million For A Phase 2b Trial. In June, GeoVax announced that it has received a grant from BARDA to conduct a Phase 2b trial testing CM04S1 as a booster vaccine to protect healthy patients from COVID-19. As discussed in our Research Note on June 28, the grant terms include payments to GeoVax for clinical supplies and regulatory costs of $24.3 million (which could be increased to $45 million). The balance will be payable to Allucent, the CRO that will conduct the trial.

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Noble Capital Markets Research Report Tuesday, July 9, 2024

Companies contained in today’s report:

Bit Digital (BTBT)/OUTPERFORM – June Numbers Released; Raising Price Target
PDS Biotechnology (PDSB)/OUTPERFORM – Midyear Review: Has PDS Turned The Corner?
Schwazze (SHWZ)/OUTPERFORM – A Move to the OTC Expert Market

Bit Digital (BTBT/$3.77 | Price Target: $5.5)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
June Numbers Released; Raising Price Target
Rating: OUTPERFORM

BTC Mining. Bit Digital produced 61.7 BTC during June, a 2.5% decrease from 63.3 in the previous month. The active hash rate was 2.57 EH/s versus 2.54 EH/s the prior month. We expect to see an increase in active hash rate in the second half of the year as the Company becomes more opportunistic in deploying efficient miners.

AI/ETH. The Company had 256 servers actively running, similar to last month, and earned an estimated $4.1 million of unaudited revenue from its anchor contract during the month. Approximately 17,184 ETH was actively staked as of June 30, 2024, flat with last month. Bit Digital earned 3.5% blended APY on its staked ETH, up from 3.1% last month.

PDS Biotechnology (PDSB/$3.23 | Price Target: $17)
Robert LeBoyer [email protected] | (212) 896-4625
Midyear Review: Has PDS Turned The Corner?
Rating: OUTPERFORM

Amended Phase 3 Clinical Trial Will Test Two Drugs. During 2Q24, the design of the Phase 3 trial testing Versamune HPV with Keytruda added a second treatment arm to test Versamune, PDS01ADC, and Keytruda against the active control arm of Keytruda alone. We believe this new trial design answers several questions that have caused PDSB to stagnate over the past year. A meeting with the FDA to ensure alignment on the trial design is expected during July 2024.

Thoughtful Consideration Has Led To Improved Trial Design. There are several points from the Phase 2 trial data that lead us to believe that adding the third arm to Phase 3 study improves its design. We believe the Triple-combination could have more rapid enrollment, produce data for product approvals, and support extensive use as a first-line therapy.

Schwazze (SHWZ/$0.22 | Price Target: $4)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A Move to the OTC Expert Market
Rating: OUTPERFORM

A Move. We had an opportunity to speak with management regarding the announcement that the OTC Market Group will move trading of SHWZ shares to the OTC Expert Market from OTC QX as a result of the Company’s delinquent 10-Q filing for the period ending March 31, 2024. We believe the move to be temporary and does not have an impact on the long-term investment potential of SHWZ shares.

Why? As we noted previously, Schwazze has been caught up in the BF Borgers case. Schwazze replaced Borgers as the Company’s accountant in April, before the SEC case against Borgers was announced. The Company’s new accountant Baker Tilly is re-auditing Schwazze’s 2023 financial statements, but the review will take longer than the OTC Market Group’s 45 day late filing grace period. We are hopeful the review will be completed in the August/September time frame.

Noble Capital Markets Research Report Monday, July 8, 2024

Companies contained in today’s report:

Harte Hanks (HHS)/OUTPERFORM – Recent Move Improves Free Cash Flow
InPlay Oil (IPOOF)/OUTPERFORM – Expectations for the Remainder of 2024

Harte Hanks (HHS/$8.72 | Price Target: $20)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Recent Move Improves Free Cash Flow
Rating: OUTPERFORM

Terminating pension plan 1. On June 25, the company announced it had executed its plan to terminate its Qualified Pension Plan 1. Notably, the company made a one time contribution of $6.1 million to the plan and transferred $71.9 million of plan assets to Nationwide. The company will make payments to plan members until July 31, and will have no further payment obligations beginning on August 1. We view the successful termination of Plan 1 as a favorable development that should positively impact cash flow.

Benefits of termination. With the termination of  Plan 1 the company’s pension liability payment is expected to be approximately $1.2 million annually, which is a significant reduction from previous years. Prior to the termination of Plan 1, the company was contributing $3.0 million – $4.0 million annually to pension liabilities.

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InPlay Oil (IPOOF/$1.62 | Price Target: $6)
Mark Reichman [email protected] | (561) 999-2272
Expectations for the Remainder of 2024
Rating: OUTPERFORM

Looking ahead. While first quarter production was 5% lower than the prior year period, we expect a stronger second quarter due to wells that went into production in late March and early April and stronger crude oil prices. InPlay plans to drill and bring new production online in the third quarter of 2024 that is focused on high oil-weighted properties. The oil-weighted production from new wells is expected to benefit from higher realized oil prices forecasted for the balance of the year.

Updating estimates. We have increased our 2024 and 2025 EPS estimates to $0.18 and $0.26, respectively, from $0.16 and $0.23. Our estimates reflect modestly higher production in the second and third quarters of 2024 and higher crude oil prices. We forecast adjusted funds flow of $91.0 million in 2024 and $99.4 million in 2025. Depending on the company’s production profile, we think our estimates may prove conservative.

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Noble Capital Markets Research Report Wednesday, July 3, 2024

Companies contained in today’s report:

NN, Inc. (NNBR)/OUTPERFORM – Strengthening the Balance Sheet

NN, Inc. (NNBR/$3 | Price Target: $6)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Strengthening the Balance Sheet
Rating: OUTPERFORM

Facility Sale. Last night after the market closed, NN disclosed the sale of its lone plastics products plant, known as Industrial Molding Corporation (IMC), to Davalor Mold Company, a wholly owned portfolio company of Blackford Capital. Total net cash proceeds will be approximately $16 million. The business was non-core to NN.

Use of Proceeds. NN will use the net proceeds from the sale to pay down debt. At the end of the first quarter, NN had $151.5 million of long-term debt outstanding. All else equal, we would anticipate the Company to pay down its term loan, which had an all in interest rate of 14.3% at the end of 1Q, compared to the ABL rate of 7.42%. A $16 million payment would result in over $2 million of interest cost savings.

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Noble Capital Markets Research Report Tuesday, July 2, 2024

Companies contained in today’s report:

Bit Digital (BTBT)/OUTPERFORM – Noble Consumer Virtual Conference
Comtech Telecommunications (CMTL)/MARKET PERFORM – Noble Consumer Virtual Conference
Information Services Group (III)/OUTPERFORM – Noble Consumer Virtual Conference
Resources Connection (RGP)/OUTPERFORM – Noble Consumer Virtual Conference

Bit Digital (BTBT/$3.39 | Price Target: $4.5)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Noble Consumer Virtual Conference
Rating: OUTPERFORM

Conference. We hosted Bit Digital CEO Sam Tabar at the Noble Capital Emerging Growth Conference on June 27th. The presentation and Q&A session can be found at https://www.channelchek.com/videos/bit-digital-btbt-noble-capital-markets-virtual-consumer-tmt-conference-replay. The following are key highlights of the presentation.

Bit Digital AI. The $100 million annual run rate goal is within reach as the expanded HPC services contract is now at a $92 million annualized revenue run-rate. The pipeline here is growing and we anticipate additional customers before year-end. Notably, HPC revenue generates significantly higher margins than the mining business, partially due to an energy cost that is 15x less. Management’s goal is to become a leading provider of AI infrastructure as a service to the EMEA region.

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Comtech Telecommunications (CMTL/$3.09)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Noble Consumer Virtual Conference
Rating: MARKET PERFORM

Conference. We hosted Comtech Communications CFO Michael Bondi at the Noble Capital Emerging Growth Conference on June 26th. Mr. Bondi’s presentation and a Q&A session can be accessed at https://www.channelchek.com/videos/comtech-telecommunications-cmtl-noble-capital-markets-virtual-consumer-tmt-conference-replay. The following are key highlights of the presentation.

Company Wins. Management highlighted key contract wins of the past twelve months including the $544 million GFSR contract, nearly $50 million of Army SATCOM solutions, and numerous NG911 awards, including Massachusetts, Washington, and North Central Texas. These awards will not only drive future operating results but are a testament

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Information Services Group (III/$3.06 | Price Target: $8)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Noble Consumer Virtual Conference
Rating: OUTPERFORM

Conference. We hosted Information Services Group CEO Michael Connors and CFO Michael Sherrick at the Noble Capital Emerging Growth Conference on June 26th. The entire presentation and Q&A session can be found at https://www.channelchek.com/videos/isg-iii-noble-capital-markets-virtual-consumer-tmt-conference-replay . The following are key highlights of the presentation.

Recurring Revenue. ISG highlighted its goal of reaching $150 million in recurring revenue. The Company had recurring revenue of $125 million in 2023, a 16% uplift from 2022. ISG is already off to a good start in 2024 as approximately half of the Company’s $64.3 million of first quarter revenue was recurring. We believe that the Company can achieve its goal.

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Resources Connection (RGP/$10.66 | Price Target: $15)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Noble Consumer Virtual Conference
Rating: OUTPERFORM

Conference. We hosted Resources Connection CEO Kate Duchene and CFO Jennifer Ryu at the Noble Capital Emerging Growth Conference on June 26th. Management’s presentation as well as a Q&A session can be found at https://www.channelchek.com/videos/resources-connection-inc-rgp-noble-capital-markets-virtual-consumer-tmt-conference-replay. The following are key highlights of the presentation.

Poised to Capitalize on the Upcycle. With client decision timetables extending during 2023, management mitigated costs but retained key consultants in anticipation of a return to normal business trends. North America, which carries a higher margin profile than its International segment, appears poised to break out, with RGP in discussions with clients about budgets and looking at assessments.

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Noble Capital Markets Research Report Monday, July 1, 2024

Companies contained in today’s report:

Haynes International (HAYN)/MARKET PERFORM – Key U.S. Regulatory Approval; Updating Estimates
Schwazze (SHWZ)/OUTPERFORM – Noble Consumer Virtual Conference
Townsquare Media (TSQ)/OUTPERFORM – Virtual Conference Highlights

Haynes International (HAYN/$58.7)
Mark Reichman [email protected] | (561) 999-2272
Key U.S. Regulatory Approval; Updating Estimates
Rating: MARKET PERFORM

Key U.S. regulatory approval. Haynes International announced that clearance has been obtained from the Committee on Foreign Investment in the United States (CFIUS) related to the planned merger with North American Stainless, Inc. The merger remains subject to approvals from regulatory authorities in the United Kingdom and Austria. All other regulatory approvals and clearances have been obtained where the applicable authorities have asserted jurisdiction. The company continues to expect that the merger will close in the fourth calendar quarter of 2024.

Chief Operating Officer appointment. Mr. Marlin (Marty) Losch has been named Chief Operating Officer, a newly created role, and will have responsibility for all commercial and operational activities. Mr. Losch joined the company in 1988 and previously served as Vice President of Sales and Distribution. Mr. Losch has held various positions of increasing responsibility in marketing, quality engineering, and production. Mr. Losch’s expanded role should be helpful to Mr. Michael Shor, President and CEO, as Mr. Shor focuses more attention on closing the company’s merger with North American Stainless Inc, a division of Acerinox S.A. Additionally, we expect the appointment to enhance post transaction integration.

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Schwazze (SHWZ/$0.395 | Price Target: $4)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Noble Consumer Virtual Conference
Rating: OUTPERFORM

Conference. We hosted Schwazze Chairman Justin Dye at the Noble Capital Emerging Growth Conference on June 27th. The entire presentation with Q&A can be found at https://www.channelchek.com/videos/schwazze-shwz-noble-capital-markets-virtual-consumer-tmt-conference-replay. The following are key highlights of the presentation.

Improving Outlook. Schwazze is seeing improvement in both Colorado and New Mexico from a competitive standpoint. In Colorado, pricing continues to stabilize, which will prove positive to both the top line and gross margin dollars. In New Mexico, enhanced enforcement of illegal operators and the illicit market is beginning to produce results, which will benefit Schwazze over the longer-term, in our view.

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Townsquare Media (TSQ/$10.96 | Price Target: $21)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Virtual Conference Highlights
Rating: OUTPERFORM

Virtual conference highlights. On June 26, the company’s CEO Bill Wilson and CFO Stuart Rosenstein presented at Noble’s Virtual Consumer/TMT conference. Mr. Wilson highlighted the company’s transformation to a digital first business, unique value proposition, favorable growth outlook and sizeable return of capital to shareholders. A replay of the company’s presentation can be viewed here.

Favorable outlook. With Q2 nearly finished, Mr. Wilson highlighted the company is on track to hit Q2 guidance, experience sequential revenue growth over Q1, and expectation to hit full year revenue and adj. EBITDA guidance. Notably, we anticipate the company will gain positive momentum and experience sequential growth in the back half of the year, as high margin political revenue kicks in.

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Noble Capital Markets Research Report Friday, June 28, 2024

Companies contained in today’s report:

FreightCar America (RAIL)/OUTPERFORM – Poised for Greater Scale and Margin Expansion
GeoVax Labs (GOVX)/OUTPERFORM – CRO Partnership For Clinical Trial Allows Sponsored Phase 2b Trial To Move Forward

FreightCar America (RAIL/$3.66 | Price Target: $4.5)
Mark Reichman [email protected] | (561) 999-2272
Poised for Greater Scale and Margin Expansion
Rating: OUTPERFORM

Initiating coverage with an Outperform rating. FreightCar America, Inc. is a diversified manufacturer of railroad cars and rail car components. The company designs and manufactures a broad variety of railroad car types for the transportation of bulk commodities and containerized freight products primarily in North America. These include open top hoppers, covered hoppers, gondolas, and intermodal and non-intermodal flat cars. FreightCar America and its predecessors have been manufacturing railroad cars since 1901.

Unique competitive advantages. FreightCar America is a pure play manufacturer that has unique manufacturing capabilities that allow it to respond to customer orders with short lead times due to its ability to set up a production line to batch produce orders and quickly change over to the next line for a different product type. Its engineering capabilities allow it to offer tailored solutions in areas unmet by competitors.

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GeoVax Labs (GOVX/$3.55 | Price Target: $6)
Robert LeBoyer [email protected] | (212) 896-4625
CRO Partnership For Clinical Trial Allows Sponsored Phase 2b Trial To Move Forward
Rating: OUTPERFORM

Partnership For BARDA-Funded Trial Announced. GeoVax announced a partnership with Allucent, a global clinical management organization (CRO), to conduct the Phase 2 clinical trial for CM04S1. The trial has been awarded approximately $357 million in funding through Project NextGen, with about $24.3 million going to GeoVax and the balance to fund the clinical trial costs. We see the partnership as an important step toward the start of the clinical trial, as well as another scientific validation for CM04S1 and the GeoVax manufacturing technologies.

The Partnership Allows The Trial To Begin As Expected. Under the grant, GeoVax is the trial sponsor with responsibility for manufacturing and providing vaccine supplies. The grant also requires a CRO to conduct the trial and manage its clinical operations. The announcement of the partnership with Allucent, a global CRO that can provide these services allows the trial to move forward with a possible starting date during summer 2024.

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Noble Capital Markets Research Report Thursday, June 27, 2024

Companies contained in today’s report:

Comtech Telecommunications (CMTL)/MARKET PERFORM – New Award from Texas
The GEO Group (GEO)/OUTPERFORM – A Resolution for Lawton

Comtech Telecommunications (CMTL/$3.17)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
New Award from Texas
Rating: MARKET PERFORM

New Contract. Comtech announced the Company has been awarded a contract from North Central Texas Emergency Communications District to provide NG911 services. The Company will be assisting in further modernizing the district’s infrastructure. The contract carries a five-year base award with three two-year option periods, and a maximum value of $30 million.

Continued Relationship. The district’s contract with Comtech continues an established relationship of over 10 years. Currently, the Company provides call routing and call handling technologies and serves over two million people in the state of Texas. With the contract, the district will have the ability to fully migrate to a new NG911 system, and the Company will also help in enhancing the region’s call routing capabilities.

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The GEO Group (GEO/$13.26 | Price Target: $17)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A Resolution for Lawton
Rating: OUTPERFORM

Resolution. In a quick turnaround, The GEO Group and the State of Oklahoma Department of Corrections (ODOC) reached an agreement on a one-year contract to continue operating the Lawton Correctional and Rehabilitation Facility (LCRF) through June 2025. The Board of Correction approval allows the contract to move forward in the process to be approved by the Attorney General’s office and executed by ODOC.

Changes. As part of the agreement, ODOC will reduce the number of inmates housed at LCRF to 2,388 from a current 2,616. With the population reduction, GEO has pledged to actively work to reduce violence, provide more access to programs, and grant more out-of-cell time for the inmates.

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Noble Capital Markets Research Report Wednesday, June 26, 2024

Companies contained in today’s report:

Bit Digital (BTBT)/OUTPERFORM – AI Contract Expansion Finalized
Unicycive Therapeutics (UNCY)/OUTPERFORM – The Moment We’ve Been Waiting For: OLC Pivotal Trial Meets Endpoints For Phosphate Control

Bit Digital (BTBT/$3.395 | Price Target: $4.5)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
AI Contract Expansion Finalized
Rating: OUTPERFORM

Finalized Terms. Yesterday, Bit Digital announced the Company finalized an agreement to supply its anchor AI client with an additional 2,048 GPUs. With the expansion, the client will now be supplied 4,096 GPUs. The contract now has total revenue of approximately $275 million, or $92 million on an annualized basis.

Purchasing More Servers. Bit Digital is purchasing 256 servers from Dell Technologies with a total of 2,048 Nvidia HGX H100 GPUs. Expected to be delivered in July 2024, the servers will be deployed to the Company’s Iceland datacenter and are expected to start generating revenue in August 2024. Management intends to finance the purchase with a mixture of cash and digital assets, and has entered into a sale-leaseback agreement for 1,024 of the GPUs with a third party entity. Recall, management previously noted an additional $60 million of capital would be needed for the purchase.

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Unicycive Therapeutics (UNCY/$0.5 | Price Target: $6)
Robert LeBoyer [email protected] | (212) 896-4625
The Moment We’ve Been Waiting For: OLC Pivotal Trial Meets Endpoints For Phosphate Control
Rating: OUTPERFORM

Side Effect Rates Were Low. Unicycive announced top-line results from its pivotal study to determine OLC (oxylanthanum carbonate) tolerability, safety, and dosing. The trial met its tolerability and safety endpoints with data that compares favorably with Fosrenol (lanthanum carbonate). Over 90% of the patients were able to lower their serum phosphate to target levels, with 70% reaching target at the lowest dose tested. An NDA filing is expected in 3Q24.

Low Discontinuation Rate Met The Primary Endpoint. Tolerability, the rate of discontinuations due to treatment related adverse events (TRAEs), was the primary endpoint. The Evaluable Population of 71 patients had only 1 TRAE discontinuation, a rate of 1.4%.  In the Safety Population, a total of 3 patients out of 86 discontinued due to TRAEs, a rate of 3.5%. In total, 5 patients discontinued due to AEs in the Safety Population, 3 were related to OLC and 2 were deemed unrelated to OLC.

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Noble Capital Markets Research Report Tuesday, June 25, 2024

Companies contained in today’s report:

Comstock Inc. (LODE)/MARKET PERFORM – Comstock Metals Receives Conditional Use Permit for its First Planned Industry Scale Facility
Maple Gold Mines (MGMLF)/OUTPERFORM – Restructuring Transaction Provides a Clear Path to Development
NN, Inc. (NNBR)/OUTPERFORM – A CFO Change

Comstock Inc. (LODE/$0.17)
Mark Reichman [email protected] | (561) 999-2272
Comstock Metals Receives Conditional Use Permit for its First Planned Industry Scale Facility
Rating: MARKET PERFORM

Taking the next step. The company’s demonstration facility has enabled the acceleration of the design and permitting of the first industry scale facility targeting 100 thousand tons per year of waste solar panel processing capacity. Comstock Metals is engaged with major, large-scale customers for high-volume, longer-term commitments that will be able to be serviced with expanded storage capacity and a planned industry-scale site.

Conditional use permit. The Lyon County, Nevada Board of County Commissioners unanimously approved a conditional use permit for the operations and material storage of solar panels at Comstock Metals first planned industrial scale facility in Silver Springs, Nevada. The facility will serve the expanding solar industry in the western United States. Once the company demonstrated its ability to recycle and reuse 100% of the recycled materials, it accelerated permitting for the expansion, both for storage and industry-scale operations.

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Maple Gold Mines (MGMLF/$0.06 | Price Target: $0.2)
Mark Reichman [email protected] | (561) 999-2272
Restructuring Transaction Provides a Clear Path to Development
Rating: OUTPERFORM

JV restructuring transaction. Maple Gold and Agnico Eagle Mines Limited (NYSE: AEM) entered into an agreement pursuant to which: 1) the existing joint venture agreement dated February 2021 between Agnico and Maple will be terminated, 2) Maple will obtain a 100% ownership interest in the Douay Gold and Joutel Gold Projects, 3) Maple will grant Agnico a 1.0% net smelter return royalty associated with the properties, and 4) Agnico Eagle will retain certain options to acquire a 50% ownership interest in the projects.

Agnico back-in option. Agnico’s option to acquire a 50% interest in the projects will be exercisable by Agnico following the closing of the restructuring transaction until 90 days following receipt of a notice from Maple Gold that its board of directors has authorized the development of a mine complex at the project. The mine will need to be supported by a preliminary feasibility study or feasibility study affirming a C$300 million net present value. If the option is exercised, Agnico will be required to make a cash payment to Maple Gold equal to 200% of expenditures incurred by Maple Gold, along with C$12 million.

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NN, Inc. (NNBR/$3 | Price Target: $6)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A CFO Change
Rating: OUTPERFORM

A CFO Change. Yesterday, NN, Inc. announced the appointment of Chris Bohnert as Chief Financial Officer, effective June 25, 2024. Mr. Bohnert assumes the position from Mike Felcher, who will stay on as a consultant, most likely through the second quarter reporting season.

Why? In a word, experience. According to management, NN needed a “been there, done that” to of finance person and Mr. Bohnert’s background fit the bill. Mr. Bohnert had been working with NN on an advisory basis in the refinancing process and previously worked with CEO Harold Bevis at Commercial Vehicle Group  (CVG). We believe his appointment will enable CEO Bevis to push for faster change, both operationally and financially.

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Noble Capital Markets Research Report Monday, June 24, 2024

Companies contained in today’s report:

Graham Corp (GHM)/OUTPERFORM – Mission Critical Supplier With Solid Growth Prospects
The GEO Group (GEO)/OUTPERFORM – A Contract Termination
Vince Holding Corp. (VNCE )/OUTPERFORM – Fashioning A Growth Company

Graham Corp (GHM/$28.41 | Price Target: $35)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Mission Critical Supplier With Solid Growth Prospects
Rating: OUTPERFORM

Initiating Research Coverage. We are initiating research coverage of Graham Corporation with an Outperform rating and a $35 price target. GHM is a provider of  mission critical fluid, power, heat transfer, and vacuum technologies for the defense, space, energy, and process industries. The Company’s expanding business with the defense industry, specifically the U.S. Navy, has reduced cyclicality, while enabling the Company to target other, high growth end markets.

Improving Margins. With the completion of first order units for the U.S. Navy and the implementation of a strategic plan, Graham is well positioned to drive increased profitability. In fiscal 2024, gross margin expanded by 570 bp to 21.9%, which is expected to grow to 22%-23% in fiscal 2025.

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The GEO Group (GEO/$12.56 | Price Target: $17)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A Contract Termination
Rating: OUTPERFORM

Lawton Termination. GEO announced the discontinuation of its contract with the Oklahoma Department of Corrections for the company-owned, 2,600-bed Lawton Correctional and Rehabilitation Facility, which is set to expire on June 30, 2024, unless extended for an additional three months under terms proposed by GEO.

Why? In our discussions with management, the facility is not performing up to GEO expectations due to inadequate current funding levels provided by the State and difficulty in attracting sufficient staffing, a problem across the State DOC. GEO noted a closure would not have a material impact on financial guidance for 2024. It is our view that by providing notice to the State, GEO is hopeful a realistic funding solution can be found with the State, either as currently operated or, potentially, with GEO entering into a lease of the facility with the State operating the facility.

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Vince Holding Corp. (VNCE /$1.36 | Price Target: $3)
Michael Kupinski [email protected] | (561) 994-5734
Patrick McCann, CFA [email protected] |
Fashioning A Growth Company
Rating: OUTPERFORM

Initiating coverage. The company appears to be well on its way toward favorable revenue growth and improving margins, along with a healthier balance sheet. We believe that investors have not yet caught up to the story of the company’s transformation. We are initiating coverage with an Outperform rating and a $3 price target. 

Attractive position in the fashion industry. The company offers luxury, high quality men’s and women’s apparel that is in a fashion growth category of sophisticated, unstructured, casual wear. We believe that there is a significant price umbrella with other designer brands that should allow the company to reduce discounting, raise prices and increase its market share in the premium brand space. 

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Noble Capital Markets Research Report Friday, June 21, 2024

Companies contained in today’s report:

Cocrystal Pharma (COCP)/OUTPERFORM – Cocrystal Updates Studies On Influenza and Bird Flu
Tonix Pharmaceuticals (TNXP)/OUTPERFORM – Tonix Announces Positive Pre-NDA Meeting – NDA Submission On Schedule

Cocrystal Pharma (COCP/$2.55 | Price Target: $10)
Robert LeBoyer [email protected] | (212) 896-4625
Cocrystal Updates Studies On Influenza and Bird Flu
Rating: OUTPERFORM

Potential Efficacy Against A New Strain Of Avian Influenza. Cocrystal has announced that studies of its influenza drug, CC-42344, have shown efficacy against the new avian influenza strain H5N1. Cocrystal has used its proprietary technology to determine the strain’s mutations and structure, then conduct preliminary tests. The binding site for CC-42344 was not changed and can block reproduction of the new strain, making it an effective vaccine against the virus. 

Avian Influenza Strain Has Begun To Infect Humans. Avian influenza H5N1 has caused significant illness in commercial bird flocks since 2003. Its impact was limited until recent outbreaks in dairy cattle and infections in diary workers. This ability to mutate and infect other species is a significant step toward causing widespread outbreaks in humans, elevating it to a public health concern.

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Tonix Pharmaceuticals (TNXP/$1.35 | Price Target: $1.5)
Robert LeBoyer [email protected] | (212) 896-4625
Tonix Announces Positive Pre-NDA Meeting – NDA Submission On Schedule
Rating: OUTPERFORM

NDA For Tonmya Expected In 2H24. Tonix announced that it has received written feedback from the FDA from its pre-NDA meetings. The meetings covered the CMC (chemistry, manufacturing, and controls) section of the Tonmya new drug application (NDA). Based on the written feedback, Tonix believes it is in alignment with the FDA on important issues. This keeps the NDA filing on schedule for submission in 2H24.

Tonix Reaches CMC Agreement and Alignment. Topics of the meetings included the proposed drug substance and commercial specifications, shelf-life assignment, manufacturing, and commercial drug packaging. We see this as a significant milestone toward the NDA submission and approval, as many NDA applications have been delayed or received Complete Response Letters (CRLs) due to issues with manufacturing and the CMC section.

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Noble Capital Markets Research Report Thursday, June 20, 2024

Companies contained in today’s report:

Comstock Inc. (LODE)/MARKET PERFORM – Subsidiary-Level Financing to Fund Growth
Comtech Telecommunications (CMTL)/MARKET PERFORM – Finally, the Refi is Done. And 3QFY24 Results
Kelly Services (KELYA)/OUTPERFORM – More Details on Motion Recruitment Partners

Comstock Inc. (LODE/$0.17)
Mark Reichman [email protected] | (561) 999-2272
Subsidiary-Level Financing to Fund Growth
Rating: MARKET PERFORM

Shareholder update. In a letter to shareholders, Comstock provided additional details regarding how the company expects to finance its growth initiatives across its business segments. Comstock intends to minimize the issuance of equity by using alternative sources of funding at the subsidiary level. Additionally, Comstock expects to commence sales of its real estate holdings in Silver Springs, Nevada and its interest in the Sierra Springs Opportunity Fund in the coming months. Proceeds from the asset sales will fund, among other things, advancing mine development plans for the company’s Dayton-Spring Valley resource areas.

Comstock Metals. Comstock intends to secure debt and equity capital at the subsidiary level to fund the construction of Comstock Metals’ first two industry-scale facilities. Discussions are ongoing with multiple counterparties interested in participating in primarily debt financing with agreements expected in the third quarter of 2024. Comstock Metals recently commissioned its first demonstration-scale photovoltaic recycling facility in Silver Springs, Nevada, secured revenue generating contracts, and began receiving end-of-life solar panels. 

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Comtech Telecommunications (CMTL/$4.07)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Finally, the Refi is Done. And 3QFY24 Results
Rating: MARKET PERFORM

A Refinancing. Comtech announced a new $222 million credit facility, replacing the previous facility which was due this October. The refi removes a significant uncertainty, in our view, and will enable a return to a normal operating environment over time. The interest rate is a blended 14%, up from the 10% under the previous facility.

3Q Results. Supplier and customer worry about Comtech’s financial status resulted in a push to the right for sales, negatively impacting 3Q24 results. Revenue was $128.1 million, down from $136.3 million last year and below our $139 million projection. Adjusted EBITDA totaled $11.9 million, or a 9.3% margin, compared to $12.5 million and a 9.2% margin in 3Q23. Comtech reported a net loss of $1.0 million, or a loss of $0.04/sh, compared to a loss of $9.2 million, or $0.33/sh last year.

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Kelly Services (KELYA/$21.21 | Price Target: $27)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
More Details on Motion Recruitment Partners
Rating: OUTPERFORM

MRP Call. On Tuesday, Kelly management held a conference call to discuss the completion of the Motion Recruitment Partners (MRP) deal. Management provided additional details regarding the financial profile of MRP and how it will integrate into Kelly, valuation details regarding the deal, and the Company’s goal of reducing debt as a result of the acquisition.

Improved Financial Profile. Kelly improves on both its gross and adjusted EBITDA margins with the deal. MRP had a 30% gross margin and 7% adj. EBITDA margin for fiscal year 2023 compared to Kelly’s 20% and 2.3%, respectively. Like the rest of the staffing industry, MRP’s fiscal 2023 was impacted by the macro environment as margins decreased from 33% gross and 9% adj. EBITDA for the 2022 fiscal year. We believe that MRP’s financial performance will be beneficial in the short-term for Kelly, but more so in the future when the environment starts to normalize.

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Noble Capital Markets Research Report Tuesday, June 18, 2024

Companies contained in today’s report:

GeoVax Labs (GOVX)/OUTPERFORM – GeoVax Receives BARDA Award For COVID Vaccine Trial

GeoVax Labs (GOVX/$1.11 | Price Target: $6)
Robert LeBoyer [email protected] | (212) 896-4625
GeoVax Receives BARDA Award For COVID Vaccine Trial
Rating: OUTPERFORM

Grant Provides Up To $367 Million Funding For The Phase 2b Trial. GeoVax announced that it has been selected to receive a Project NexGen grant to test CM04S1 in a Phase 2b study for prevention of COVID-19. The study will test CM04S1 against an approved vaccine in a randomized trial enrolling 10,000 volunteers. GeoVax will receive about $24.3 million for manufacturing, materials, and trial preparations, which can be increased to $45 million. About $343 million will be awarded to a CRO to conduct the trial.

Phase 2b Trial Will Have A Large Enrollment. The trial is designed as a Phase 2b double-blind study comparing GeoVax CM-04S1 to an approved mRNA COVID-19 vaccine. Enrollment will have an estimated 10,000 healthy volunteers to determine efficacy, safety, and immunogenicity of the vaccines. Previous trials with CM04S1 have shown both humoral and cellular immunity

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Noble Capital Markets Research Report Monday, June 17, 2024

Companies contained in today’s report:

Aurania Resources (AUIAF)/OUTPERFORM – Take-Aways from the Annual General Meeting

Aurania Resources (AUIAF/$0.28 | Price Target: $0.45)
Mark Reichman [email protected] | (561) 999-2272
Take-Aways from the Annual General Meeting
Rating: OUTPERFORM

Annual shareholder meeting. Shareholders approved all resolutions at the company’s annual meeting on June 13. These included approving the financial statements for the year-ended December 31, 2023, the report of the auditors, the appointment of auditors, election of directors, and the company’s incentive stock option plan for the upcoming year.

Corporate update. Dr. Keith Barron, CEO and Director, provided a corporate update highlighting key priorities in 2024 and 2025. These include: 1) exploration at the Lost Cities project in Ecuador, 2) advancing the company’s application for an exploration license in the Brittany Peninsula of northwestern France, 3) advancing joint venture and strategic partnership discussions, and 4) expanding community access agreements and community projects in Ecuador. At least one major mining company has been active in Aurania’s data room and in discussions with the company.

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Noble Capital Markets Research Report Friday, June 13, 2024

Companies contained in today’s report:

Alliance Resource Partners (ARLP)/OUTPERFORM – Revising Estimates Following Successful Note Offering

Alliance Resource Partners (ARLP/$23.74 | Price Target: $27)
Mark Reichman [email protected] | (561) 999-2272
Revising Estimates Following Successful Note Offering
Rating: OUTPERFORM

Senior notes offering. Alliance recently completed a $400 million private offering of 8.625% senior unsecured notes due in 2029. A portion of the net proceeds will fund the redemption of its outstanding 7.5% senior notes due in 2025. Alliance delivered a notice of redemption for all outstanding 2025 notes. The redemption price for the 2025 notes is 100% of the principal amount plus accrued and unpaid interest to the redemption date, which is expected to be June 28. As of March 31, senior notes outstanding were $284.6 million.

Second quarter coal shipments. The partnership’s April 2024 coal sales volumes declined 15% to ~2.4 million tons versus ~2.9 million tons during the prior year month. In Appalachia, coal sales volumes decreased 48.2% compared to April 2023 due to the loss of 10 shipping days as a result of high-water events that impacted loading at the Tunnel Ridge complex, along with deferred shipments due to the Francis Scott Key Bridge collapse. In the Illinois Basin, coal sales volume remained relatively consistent with April 2023. Lower volumes at River View due to slowing barge traffic were almost entirely offset by higher volumes at Gibson South due to spot export sales. Volumes deferred at River View and Tunnel Ridge amounted to 420,000 tons and 77,000 tons, respectively, and are expected to be shipped throughout the balance of 2024.

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Noble Capital Markets Research Report Thursday, June 13, 2024

Companies contained in today’s report:

Kelly Services (KELYA)/OUTPERFORM – Further Portfolio Optimization

Kelly Services (KELYA/$21.39 | Price Target: $27)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Further Portfolio Optimization
Rating: OUTPERFORM

Portfolio Optimization. Continuing its strategic actions to optimize its operating model and unlock capital, Kelly has sold the Ayers Group, a division of KellyOCG, to Keystone Partners, a Silver Oak Services Partners LLC portfolio company. While financial terms were not disclosed, the transaction further allows the Company to focus resources on specialties where KellyOCG is well positioned to compete and win over the long term, in our view.

Ayers Group. A provider of outplacement, executive coaching, and leadership development solutions to employers, Ayers was acquired by Kelly in 2006 for $4.6 million, with another $1.3 million of potential earnouts. Ayers was generating about $10 million of revenue at the time and while Kelly does not break out Ayers’ current revenue contribution, various sources estimate current revenue in the $20 million range.

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Noble Capital Markets Research Report Wednesday, June 12, 2024

Companies contained in today’s report:

CoreCivic, Inc. (CXW)/MARKET PERFORM – A Significant Loss – Moving to Market Perform
Euroseas (ESEA)/OUTPERFORM – Favorable Time Charter Contract for the M/V Stephania K
The GEO Group (GEO)/OUTPERFORM – An Incremental Net Positive

CoreCivic, Inc. (CXW/$11.86)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
A Significant Loss – Moving to Market Perform
Rating: MARKET PERFORM

South Texas. ICE has informed CoreCivic of its intention to terminate the existing agreement for use of the South Texas Family Residential Center effective August 9th. This is a major blow, at least in the short-term, to CoreCivic. We are lowering our rating to Market Perform from Outperform as a result until the smoke clears.

Financial Impact. The 2,400 bed South Texas is CoreCivic’s most important contract, in our opinion. In 2023, the facility generated over 8% of overall revenue. Management estimates the annualized EPS impact to be a reduction of $0.38-$0.41 due to the closure. The Company has suspended its 2024 financial guidance. Facility population as of June 9th was 1,561.

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Euroseas (ESEA/$37.37 | Price Target: $53)
Mark Reichman [email protected] | (561) 999-2272
Favorable Time Charter Contract for the M/V Stephania K
Rating: OUTPERFORM

New time charter contract. Euroseas Ltd. executed a time charter contract for M/V Stephania K at a gross daily rate of $22,000 for a minimum period of 23 months to a maximum period of 25 months at the option of the charterer. The M/V Stephania K is a newbuild 1,800 twenty-foot equivalent unit (TEU) feeder container ship. Recall that TEU is a unit of cargo capacity that is based on the volume of a 20-foot-long intermodal container that can be transferred between different carriers. The new charter will commence upon delivery of the vessel from the shipyard which is expected to take place on June 28.

Favorable charter rate. The charter is expected to contribute EBITDA of roughly $11.0 million for the minimum contracted period and improves Euroseas’ remaining 2024 charter coverage to 90%. Based on the rate and duration, the charter represents a significant improvement compared to its sister vessel, the M/V Monica, which was recently chartered for 12 months at a rate of $16,000 per day.

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The GEO Group (GEO/$13.44 | Price Target: $17)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
An Incremental Net Positive
Rating: OUTPERFORM

More Available Funding. ICE’s termination of competitor CoreCivic’s South Texas contract (see our report on CoreCivic) will provide funding for additional beds. According to ICE, “Closing this facility will enable ICE to reallocate funding to increase the overall detention bed capacity across the system by an estimated 1,600 beds to better support operational needs. This additional bedspace is being pursued across the country and is expected to be available immediately.”

The Opportunity. First, we expect some portion of the nearly 1,600 detainees at South Texas may need to be re-homed. Second, as noted, the freed up funding will increase overall detention bed capacity by 1,600 beds. The Agency stated, “Today’s announcement will provide an overall increase in bedspace and operate at or above the FY24 appropriated 41,500 minimum bed requirement…” With the current detainee population just over 37,300, ICE could now access nearly 6,000 more beds. GEO has ample capacity, both at existing and idled facilities, to assist ICE.

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Noble Capital Markets Research Report Tuesday, June 11, 2024

Companies contained in today’s report:

AZZ Inc (AZZ)/OUTPERFORM – Upgrading to Outperform Based on Strengthening Cash Flow Profile and Outlook
Comstock Inc. (LODE)/MARKET PERFORM – Comstock Expands the Scope of its Partnership with RenFuel in Europe
Conduent Inc (CNDT)/OUTPERFORM – Well-Priced Share Repurchase Takes Out Activist

AZZ Inc (AZZ/$76.6 | Price Target: $95)
Mark Reichman [email protected] | (561) 999-2272
Upgrading to Outperform Based on Strengthening Cash Flow Profile and Outlook
Rating: OUTPERFORM

Upgrading our rating to Outperform. We have raised our investment rating to Outperform based on an increasingly favorable cash flow growth profile. With the new greenfield plant construction in Washington, Missouri expected to be completed in fiscal year 2025, we expect the facility to contribute to top-line growth while capital expenditures associated with organic growth initiatives could decline in fiscal year 2026. Once its effort to deleverage the balance sheet is complete, we think AZZ could more aggressively pursue acquisitions to enable the company to expand geographically and broaden its product and service offerings.

New manufacturing facility in Washington, Missouri. AZZ Precoat Metals’ new 250,000 square foot manufacturing facility is expected to contribute to earnings beginning in fiscal year 2026. Approximately 75% of the facility’s production is already committed that we estimate could generate approximately $60 million in revenue. We expect EBITDA margins to be at the high end of the company’s stated 17% to 22% range for the precoat metals segment.

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Comstock Inc. (LODE/$0.22)
Mark Reichman [email protected] | (561) 999-2272
Comstock Expands the Scope of its Partnership with RenFuel in Europe
Rating: MARKET PERFORM

Amending agreements with RenFuel. Comstock Inc. is amending agreements with RenFuel K2B AB pertaining to the development of RenFuel’s planned biorefinery project at a pulp and paper mill in Sweden. RenFuel is liquidating a subsidiary originally formed to administer its previously planned Swedish biorefinery as part of a joint venture with Preem. While not having any impact on Comstock other than Comstock declining its option to enter the joint venture, the amendments are expected to broaden the scope of Comstock’s partnership with RenFuel in Europe.

A powerful combination. Comstock utilizes RenFuel’s patented catalytic esterification technology to refine its proprietary Bioleum derivatives into hydro-deoxygenated bioleum oil (HBO). Advanced biofuel refineries use HBO for blending with, diversifying, and extending conventional hydro-processed fat, oil, and grease feedstocks to produce sustainable aviation fuel and renewable diesel fuel. Comstock holds the exclusive license to RenFuel’s refining technologies in North America, Central America, and South America.

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Conduent Inc (CNDT/$3.52 | Price Target: $7)
Patrick McCann, CFA [email protected] |
Michael Kupinski [email protected] | (561) 994-5734
Well-Priced Share Repurchase Takes Out Activist
Rating: OUTPERFORM

Carl Icahn exits. Yesterday the company announced that it repurchased roughly 38 million shares controlled by Carl Icahn for $3.47/share ($132 million). The purchase price was based on the close on June 7th. With the transaction, Carl Icahn no longer has a beneficial interest in the company’s common equity. In addition, the 3 Icahn sponsored board members resigned. We expect the company to seek replacements for the retired board members with members that could support its growth initiatives. 

Backstory. Carl Icahn played an activist role in spinning out Conduent from Xerox in 2017 and had been a CNDT shareholder ever since. We believe that Icahn was supportive of the company’s asset sales and its current transition plan, but likely chose to focus on his larger positions. Notably, Icahn exited his Xerox stake last year.

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Noble Capital Markets Research Report Friday, June 7, 2024

Companies contained in today’s report:

QuantaSing Group Limited (QSG)/OUTPERFORM – Taking a More Sober View

QuantaSing Group Limited (QSG/$2.26 | Price Target: $8)
Michael Kupinski [email protected] | (561) 994-5734
Jacob Mutchler [email protected] |
Taking a More Sober View
Rating: OUTPERFORM

Q3 results disappoint. The company reported Q3 revenue of RMB945.6 million, beating our estimate of RMB860.0 million by 10%. But, adj. EBITDA in the quarter was RMB12.2 million, well below our recently lowered estimate of RMB86.0 million. Notably, the lower than expected adj. EBITDA was due to increased sales and marketing expenses, which likely influenced the revenues in the quarter.

Adjusting business strategy. The company plans to invest more heavily into its new growth verticals, such as e-commerce products geared towards its existing user base, including its private label Chinese liquor sales. Additionally, the company is investing in its overseas learning markets, and in-person teaching locations. 

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Noble Capital Markets Research Report Thursday, June 6, 2024

Companies contained in today’s report:

Bit Digital (BTBT)/OUTPERFORM – May Production Numbers Released

Bit Digital (BTBT/$2.81 | Price Target: $4.5)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
May Production Numbers Released
Rating: OUTPERFORM

BTC Side. Bit Digital produced 63.3 BTC during the month of May, a 47% decrease from 119.3 BTC the prior month. The ‘halving’ is the main contributor to the decrease. The active hash rate as of May 31, 2024, was 2.54 EH/s down from 2.76 EH/s last month due to the Company curtailing some of its machines.

AI and ETH. The Company had 256 servers actively running on its AI contract and earned an estimated $4.2 million of revenue during the month of May 2024. On the staking side, Bit Digital had approximately 17,184 ETH actively staked in native staking protocols, flat from last month. The Company earned a blended APY of 3.1% on its staked ETH.

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Noble Capital Markets Research Report Wednesday, June 5, 2024

Companies contained in today’s report:

Cadrenal Therapeutics (CVKD)/OUTPERFORM – Data Presentation From LVAD Study Points Out The Need For Tecarfarin
Hemisphere Energy (HMENF)/OUTPERFORM – Continuing its Record of Returning Capital to Shareholders
MAIA Biotechnology (MAIA)/OUTPERFORM – THIO-101 Data Update Shows Continued Efficacy
QuantaSing Group Limited (QSG)/OUTPERFORM – Fiscal Q3 Preview

Cadrenal Therapeutics (CVKD/$0.48 | Price Target: $4)
Robert LeBoyer [email protected] | (212) 896-4625
Data Presentation From LVAD Study Points Out The Need For Tecarfarin
Rating: OUTPERFORM

Patients With LVADs Need A New Anticoagulant. A new analysis of anticoagulant regimens from a study in cardiovascular devices patients was presented at the International Society of Heart and Lung Transplantation Annual Meeting. The presentation included data from the ARIES-HM3 study testing anticoagulation with warfarin and aspirin against warfarin alone. We believe the data highlights the need for tecarfarin in left ventricular assist device (LVAD) patients.

Abbott Has An Interest In LVAD Patient Outcomes. The ARIES-HM3 study was sponsored by Abbott (ABT, Not Rated), maker of the HeartMate3 LVAD. Patients with these devices cannot take DOAC anticoagulant drugs, leaving them with only warfarin. The study tested warfarin (a vitamin K antagonist, VKA) with and without aspirin. The findings showed lower time in the therapeutic range (TTR) is a predictor of excessive bleeding events, and warfarin patients are typically below target values.

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Hemisphere Energy (HMENF/$1.23 | Price Target: $2.25)
Mark Reichman [email protected] | (561) 999-2272
Continuing its Record of Returning Capital to Shareholders
Rating: OUTPERFORM

Special dividend. Excluding special dividends, Hemisphere Energy pays a base dividend of C$0.025 per share per quarter, or C$0.10 per share on an annual basis. Hemisphere Energy recently declared a special dividend of C$0.03 per common share. The special dividend will be paid on July 26 to shareholders of record on July 12. In May, the company’s board of directors approved a quarterly cash dividend of C$0.025 per share that will be paid on June 28 to shareholders of record on June 20.

Return of capital to shareholders. To date in 2024, Hemisphere has committed to returning C$10.7 million to shareholders, including shares repurchased and canceled under the company’s normal course bid, quarterly dividend payments in February and June, and the special dividend payment in July. Returns of capital are funded entirely with free cash flow supported by ultra-low decline rates, low operating expenses, low capital-intensive assets, long life reserves and minimal decommissioning liabilities.

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MAIA Biotechnology (MAIA/$3.76 | Price Target: $14)
Robert LeBoyer [email protected] | (212) 896-4625
THIO-101 Data Update Shows Continued Efficacy
Rating: OUTPERFORM

Presentation At ASCO Updates Phase 2 THIO-101 Trial. MAIA presented data from its Phase 2 THIO-101 trial at the American Society of Clinical Oncology (ASCO) 2024 Annual Meeting. The new data includes additional patients followed for longer time periods, giving more observation points. We believe the data continues to show that THIO shows meaningful improvements over published data in several important measures of efficacy. 

Third Line Treatment Shows Disease Control and Tumor Response. Patients had advanced non-small cell lung cancer (NSCLC) and were treated with the combination of THIO and cemiplimab (Libtayo, an anti-PD-1 checkpoint inhibitor from Regeneron) after failing 2 or more standard-of-care therapy regimens. The data included 20 patients who had failed two previous lines of therapy including platinum chemotherapy and checkpoint inhibitors, with a group dosed at 60 mg (n=12) and a group dosed at 180 mg (n=8). The 180 mg dose was selected as the optimal dose for further studies.

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QuantaSing Group Limited (QSG/$2.6 | Price Target: $10)
Michael Kupinski [email protected] | (561) 994-5734
Patrick McCann, CFA [email protected] |
Fiscal Q3 Preview
Rating: OUTPERFORM

A shift in business strategy. We believe the company plans to invest more heavily into its new growth verticals, such as e-commerce (private label Chinese liquor sales), overseas learning markets, and in-person teaching locations. This is a shift in its priority from its online adult learning services business, which appears to be maturing. As such, we are adjusting our revenue and cash flow outlook for the company. 

Fiscal Q3 preview. We are lowering our fiscal Q3 revenue forecast from RMB930.0 million to RMB860.0 million because of anticipated slower revenue growth in its online learning business. Adj. EBITDA is expected to be slightly better than our previous estimate. 

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Noble Capital Markets Research Report Tuesday, June 4, 2024

Companies contained in today’s report:

Eledon Pharmaceuticals (ELDN)/OUTPERFORM – Data Update From Phase 1b Trial Shows Continued Tegoprubart Benefits
Kelly Services (KELYA)/OUTPERFORM – Motion Recruitment Partners in the Fold
V2X (VVX)/OUTPERFORM – Capital Structure Enhancement

Eledon Pharmaceuticals (ELDN/$2.8 | Price Target: $10)
Robert LeBoyer [email protected] | (212) 896-4625
Data Update From Phase 1b Trial Shows Continued Tegoprubart Benefits
Rating: OUTPERFORM

Data From Phase 1b Trial Updated. Eledon presented data from the Phase 1b trial testing tegoprubart, its drug for prevention of kidney transplant rejection, at the American Transplant Congress. We found the data to continue to show improved kidney function during the first year after transplantation, a strong indicator of organ survival, with continued safety and tolerability.

Kidney Function Measures Continue To Show Improvements Over Tacrolimus. The Phase 1b data included 13 patients who had reached 30-day post-transplant evaluation. Their mean eGFR was above 60 mL/min/1.73m² at each reported time point. The overall mean eGFR after day 30 reached 70.5 mL/min/1.73m².  This is an improvement over standard-of-care immunosuppressive regimens that have eGFR rates around the 50ml/min/1.73m² level during the first year after the transplant.

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Kelly Services (KELYA/$22.1 | Price Target: $27)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Motion Recruitment Partners in the Fold
Rating: OUTPERFORM

Completed. Kelly Services has completed the acquisition of Motion Recruitment Partners, LLC (“MRP”), from Littlejohn & Co., LLC, a private investment firm. As we highlighted in past reports, this is a transformational acquisition for Kelly, the largest in its history. We believe MRP will be a key driver in Kelly posting a higher revenue growth rate as well as continued expansion of Kelly’s adjusted EBITDA margin.

MRP Refresher. MRP is the parent company to a group of leading global talent solution providers. The acquisition of MRP strengthens the scale and capabilities of Kelly’s staffing and consulting solutions across technology, telecommunications, and government specialties in North America, and recruitment process outsourcing solutions globally.

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V2X (VVX/$47.17 | Price Target: $62)
Joe Gomes, CFA [email protected] | 561-999-2262
Joshua Zoepfel [email protected] |
Capital Structure Enhancement
Rating: OUTPERFORM

Repricing and Extension. Yesterday, V2X announced a repricing and extension of its $907 million First Lien term loan. The actions are another step by management to enhance the capital structure, in our view, and should lead to lower interest costs and additional financial flexibility.

Details. Under the repricing, the annual interest margin was reduced by 50 basis points to 2.75%. Additionally, the 10-basis point credit spread adjustment was eliminated from the Company’s Secured Overnight Financing Rate, further improving the anticipated savings from the repricing. The company also extended the maturity of the loan by two years to December 2030.

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Noble Capital Markets Research Report Monday, June 3, 2024

Companies contained in today’s report:

Aurania Resources (AUIAF)/OUTPERFORM – Private Placement Financing Successfully Closed
Haynes International (HAYN)/MARKET PERFORM – Acquisition Expected to Close in the Fourth Calendar Quarter of 2024

Aurania Resources (AUIAF/$0.21 | Price Target: $0.4)
Mark Reichman [email protected] | (561) 999-2272
Private Placement Financing Successfully Closed
Rating: OUTPERFORM

Third and final tranche closed. Aurania closed the third and final tranche of its non-brokered private placement financing. With the third tranche, the company raised gross proceeds of C$724,400.00 with the sale of 3,622,000 units at a price of C$0.20 per unit. In total, the private placement raised gross proceeds of C$3,743,222.40 with the sale of 18,716,112 at a price of C$0.20 per unit. The proceeds will fund exploration and target refinement at the Kuri-Yawi target area in Ecuador, along with general working capital needs.

Exploration plan. Aurania’s 2024 exploration program will focus on the Kuri-Yawi epithermal gold target. In 2020 and 2021, nine scout holes were drilled, totaling 4,957 meters, to test soil geochemistry anomalies and one of the geophysical anomalies detected during a MobileMT survey in 2021. The results revealed intense and pervasive hydrothermal clay mineral alteration and silica-carbonate veinlets exhibiting epithermal textures which are features consistent with proximity to an epithermal system. While Aurania’s property package offers an abundance of promising targets, Kuri-Yawi may offer the quickest path for a successful outcome based on work that has already been completed.

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Haynes International (HAYN/$58.82)
Mark Reichman [email protected] | (561) 999-2272
Acquisition Expected to Close in the Fourth Calendar Quarter of 2024
Rating: MARKET PERFORM

Merger receives regulatory scrutiny in the United Kingdom and in Austria. The Competition and Markets Authority in the United Kingdom (CMA) intends to conduct a formal investigation into Haynes’ proposed merger with North American Stainless, Inc., a wholly owned subsidiary of Acerinox S.A. This follows the Austrian Federal Competition Authority’s referral to the Austrian Cartel Court for a Phase II investigation of the transaction (See our research note dated May 3).Closing expected in the fourth calendar quarter of 2024. Haynes’ management remains optimistic that the regulatory reviews will be positively resolved, and the required clearances will be obtained. Based on the expected timeline of the U.K. formal investigation and the Austrian Phase II investigation, Haynes now expects the merger will close in the fourth calendar quarter of 2024. While the timeline has been extended one calendar quarter, we remain confident that the new timeline will allow enough time for both examinations to run their course with outcomes that support a fourth calendar quarter closing.

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