Australia

• On the 31st October, AustralianSuper (with 13.67% of shares out and Origin Energy (ORG AU)‘s largest shareholder) argued the Brookfield/EIG-backed Consortium Offer remained substantially below its estimate of fair value.
• Brookfield/EIG have now increased their Offer by 8% to $9.53/share from $8.81/share, which now comprises cash components of A$6.59/share and US$1.86/share. A consideration-reducing fully-franked dividend of A$0.39/share is expected.
• The Offer is declared “best and final.” It is above the top-end of the IE’s valuation range. AustralianSuper should accept the revised terms. But they say no.

• Origin Energy (ORG AU)  has disclosed a best and final offer from Brookfield/EIG at A$6.59 and US$1.86 per share, which implies A$9.53 per share, 8.1% higher than the previous offer.
• AusSuper will vote against the final offer. Taking advantage of the share price dip, AusSuper is said to have further increased its shareholding to 14.98% of outstanding shares.
• The scheme will likely fail as a minority YES vote turnout of 88% is required to pass. Brookfield/EIG could return with an off-market takeover offer, but it also faces issues. 

• Ventia (VNT AU) (VSG)’s two largest shareholders, Apollo Global Management and CIMIC Group, aim to raise around US$174m via selling 11.7% of the company.
• The two investors have pared their stake thrice this year and this will be the final cleanup sale. All the past deals have done ok.
• In this note, we will talk about the deal dynamics.

• Empire Energy Group Limited (ASX:EEG) is an oil and gas producer/developer, with onshore Northern Territory (NT) and US oil/gas production assets.
• EEG has the largest tenement position in the highly prospective Greater McArthur Basin, which includes the Beetaloo Sub-basin.
• The investment case is building with the development model becoming more defined after the completion of the Carpentaria-3H testing campaign. 

SenSen’s Q1 update signals positive momentum following record FY23 results. Q1 saw customer receipts exceed operating costs on a trailing 12-month basis, a key milestone towards its target to reach profitability this year. Encouraging FY24 lead indicators include a recent tender announcement, potentially one of SenSen’s most significant smart cities deals yet, and the settlement of the Angel dispute, which marks SenSen’s gaming exit. Proceeds from Angel’s investment in SenSen and the ongoing rights issue should support the company to more actively pursue the much larger smart cities opportunity, which is now the group’s sole focus.

Paradigm announced Q1 results (for the quarter ending 30 September) and a A$30m capital raise to potentially extend its cash runway through to mid CY25. Management attributed increased spending in the quarter to increased clinical and recruiting activity, which translated into a higher net cash outflow from operating activities of A$22.5m (vs A$17.1m in Q423). With the PARA_OA_008 programme now concluded, as well as the upcoming completion of the mucopolysaccharidosis (MPS) VI Phase II trial and anticipated lower costs for PARA_OA_002, management expects R&D spend to decline in Q224, from A$21.9 in Q124 (vs A$16.1m in Q423). At the quarter end, the company had a cash balance of A$33.6m.

• Back on the 22 September, Superloop Ltd (SLC AU) lobbed a best and final cash/scrip NBIO for Symbio Holdings (SYM AU) with an implied price of A$2.85/share.
• Aussie Broadband Pty Ltd (ABB AU) then tabled a cash/scrip Offer, with an implied price of  A$3.151/share. Symbio was supportive, if terms were firmed. Superloop’s Offer subsequently lapsed.
• ABB returned with a reduced cash/scrip Offer of A$2.99-$3.04/share. Symbio has unanimously recommended the Offer (at A$3.011/share) and they entered into a Scheme agreement. A partially/fully franked dividend is permitted.

• Symbio Holdings (SYM AU)‘s binding proposal with Aussie Broadband Pty Ltd (ABB AU) is at A$2.26 cash and 0.192 ABB shares per SYM share, 3.2% lower than its earlier proposal.
• The key condition is shareholder approval. The scheme booklet will be despatched on 22 December, with a scheme meeting in early February 2024.
• While the offer is light compared to long-term historical prices and multiples, there seem to be no signs of dissent from institutional or retail investors. 

• • 3Q23 production was 3,683 boe/d, slightly below the company’s guidance due to maintenance, turn-around operations at two of the production facilities and unscheduled downhole maintenance on pumping equipment on a few of the more productive wells. 
• This is more than offset by the high current production of ~4,100 boe/d following Pisces 10 and 11 being brought into production.
• Calima forecasts 4Q23 production of 4,028 boe/d and we have increased our 4Q23 production forecast of 3,740 boe/d to 4,030 boe/d to be in line with Calima’s guidance.

• Shareholders have approved Invocare Ltd (IVC AU)‘s acquisition by TPG and IVC is expected to stop trading after the close on 3 November.
• Invocare Ltd (IVC AU) will be replaced by Emerald Resources Nl (EMR AU) in the S&P/ASX 200 (AS51 INDEX) at the close on 3 November.
• Boss Resources (BOE AU) misses out this time but should be added to the index late November or at the regular rebalance in December.

• Treasury Wine Estates (TWE AU) aims to raise up to US$525m (A$825m) via a renounceable fully underwritten entitlement offer.
• Proceeds from the placement will be used to part fund the acquisition of DAOU Vineyards, a luxury wine brand based in California.
• In this note, we will talk about the deal dynamics.

• ________________________________________ ADX Energy (ADX AU)C; target price of A$0.80 per share: Two high impact wells to commence drilling by YE23 – ADX is expected to start drilling the Anshof-2 appraisal well in November.
• Anshof is also estimated to hold 5.5 mmboe net 3C contingent resources (net to ADX).
• We have changed our target price to A$0.80 per share as we incorporate the recently announced 10 for 1 share consolidation.

• • 3Q23 production of 324 boe/d and cash of A$5.7 mm at the end of September were near our expectations.
• This includes 101 bbl/d gross production for Anshof that was shut-in on 19 September after reaching the regulatory limit for test production.
• Anshof-3 production will recommence after the drilling of the Anshof-2 well and the installation of a permanent production facility in February.

On 30 October, Lepidico announced the updated economics of its 2020 definitive feasibility study (DFS) on its integrated lithium hydroxide mine and chemical plant to show a base case NPV8 of US$457m post-tax, which equates to 9.4 Australian cents per share on a pre-funding basis. In our January 2019 report Gold stars and black holes, we calculated that companies with completed DFSs typically have an EV/NPV ratio of 30.9%, which would imply a pre-funding valuation for Lepidico of 2.9c/share, to which its shares are currently trading at a significant 69.0% discount.

• SOE-Backed Zhaojin Mining Industry H (1818 HK), China’s fourth largest integrated gold producer, has tabled a non-binding Offer for Aussie-listed West African gold miner Tietto Minerals Ltd (TIE AU).
• The A$0.58/share cash Offer is a 36% premium to undisturbed. Zhaojin is seeking 50.1% of shares out, with 7.02% already held.
• Conditions include a raft of PRC and Côte d’Ivoire regulatory approvals. None of these should face opposition. 

• Tietto Minerals Ltd (TIE AU) has disclosed a conditional proposal from Zhaojin Mining Industry H (1818 HK) at A$0.58 per share, a 36.5% premium to the undisturbed price of A$0.425.
• The offer is conditional on China and Cote d’Ivoire regulatory approvals (should be forthcoming) and a 50.1% minimum acceptance condition (which can be waived).
• The offer is light compared to peer resource multiples and recent share prices. The presence of large Chinese shareholders is a stumbling block for a rival offer. 

• Kinatico Ltd (ASX:KYP) is a ‘Know Your People’ reg tech company providing work for compliance monitoring and management technology and services.
• KYP has reported a5% year-on-year increase in Q1 FY24 revenue to $7.25m, and a 176% year-on-year increase in SaaS revenue to $2.02m.
• SaaS revenue accounted for 28% of total revenue for the quarter, compared to 11% in Q1 FY23. 

• Wrkr Ltd (ASX: WRK) offers compliance solutions for Australian super annuation contributions and payroll including member onboarding, super payments, messaging and employee validation.
• The company has released its Q1 FY24 activities report, with key highlights including 43% growth in cash receipts on the previous corresponding period (pcp), 42% growth in revenue, and a cash burn runway of eight quarters before any R&D tax rebates or new customer transactions are considered.
• Revenue has been boosted by development and planning work for major customers ART and Link Group respectively. 

• Recent underperformance of Newmont Mining (NEM US) vs Peers appears to be part of a “perfect storm”. 
• PCCW Ltd (8 HK) has an attractive yield on its side; and Richard Li has been buying. But a 6% premium to NAV is unsustainable for this holding company structure.
• Palliser Capital’s straightforward request is for a 35% reduction in Keisei Electric Railway Co (9009 JP)‘s Oriental Land (4661 JP) holding reflects a strategic urgency. 

• Cobalt Blue Holdings Ltd (ASX:COB) is a mining and mineral processing company focused onadvancing cobalt mining and refining operations in Australia.
• The company is developing the Broken Hill Cobalt Project (BHCP) in far west NSW and concurrently in planning on a Kwinanacobalt refinery in WA with a definitive feasibility study underway.
• Cobalt Blue Holdings wasfounded in 2016 and listed on the ASX in early 2017. 

• Akora Resources Ltd (ASX:AKO) is an exploration company engaged in the development of three iron ore projects, Bekisopa, Tratramarina and Ambodilafa, in Madagascar.
• The company has initially focused on Bekisopa, which has a maiden resource of 194.7Mt with the potential for significant high-grade lump direct ship ore (DSO).
• The Indicated DSO is 4.4Mt at 61% Fe, “Green Steel” 34Mt at 58% DTR to 69% Fe concentrate. 

• Resources & Energy Group Ltd (ASX:REZ) is an exploration company engaged in the development of its flagship East Menzies gold project, 130km north of Kalgoorlie, Western Australia.
• The company has been operating as a gold, nickel and cobalt exploration and development company since 2015 and currently has gold and silver resources of 183koz gold and 862koz silver.
• REZ recently announced (17-Oct) that optimisation studies at the Goodenough and Maranoa gold prospects within the East Menzies district had confirmed an opportunity for a low cost, near- term open cut mining operation at Goodenough, which had previously been worked as an underground resource with historic production of ~21,532t at 14.91g/t. 

• When lithium mining play Azure Minerals (AZS AU) was halted this week “regarding a potential change of control transaction“, Sociedad Quimica y Minera (SQM/B CI) was the obvious suitor.
• This was confirmed this morning with a A$3.52/share Offer, a 44.3% premium to undisturbed, by way of a Scheme. A concurrent conditional off-market takeover at A$3.50/share is also present. 
• $3.50 is locked in, no matter what. Gina may take her stake up to 19.9%, but it won’t affect the A$3.50 floor. But it may kickstart a competitive bidding situation. 

• Azure Minerals (AZS AU) has entered a scheme implementation deed with Sociedad Quimica y Minera de Chile (SQM US) at A$3.52 per share, a 44.3% premium to the undisturbed price.
• To avoid a repeat of the Albemarle Corp (ALB US)/Liontown Resources (LTR AU) situation, if the scheme fails or is terminated, SQM will launch an off-market takeover offer at A$3.50.
• Gina Rinehart is rumoured to have built a 14.5% stake, suggesting the final offer is an off-market takeover. The offer is conditional on FIRB approval. 

• Carly Holdings Limited (ASX:CL8) operates a vehicle subscription business, which it launched in March 2019, leveraging existing operations, strategic relationships, and technology.
• Car subscription allows business and retail customers to pay a single monthly fee to access a car for 30 days or more and is an alternative to purchasing or financing a vehicle.
• Carly has attracted larger automotive industry businesses as shareholders, with a direct offering and services to support automotive manufacturers and dealers to generate revenue from car subscriptions. 

• Lithium mining play Azure Minerals (AZS AU) went into a trading halt Monday (23 October) “regarding a potential change of control transaction“. That halt has been extended to Friday morning. 
• The obvious suitor is Sociedad Quimica y Minera de C (SQM/B CI) with 19.9%, who approached Azure with a $2.31/share Offer in August but was rejected.
• Mark Creasy, a major shareholder in Azure and also a direct stakeholder in Azure’s flagship mine, is the key. Should a firm Offer unfold, expect a chunky premium. 

Actinogen is refining the design of its XanaMIA Phase IIb study of lead candidate Xanamem in patients with cognitive impairment (CI) associated with mild-to-moderate Alzheimer’s disease (AD). The study will forego the 5mg dose group and will concentrate on the 10mg dose, which has already shown effectiveness in the subgroup analysis of XanADu as reported in Q422. The XanaMIA Phase IIb study will continue to assess c 110 AD patients in the 10mg dose cohort, as well as a placebo arm, and will concentrate on Australian test sites for the first 100 enrolled patients. These measures are expected to significantly reduce study costs, as Actinogen expects c A$30m in cost savings between now and June 2025 compared to its initial plan. Given that US sites may not begin recruitment for another c 12–18 months, we are pushing back our projection for study completion until CY26 (from H2 CY25 previously) and our timeline for potential Xanamem commercialisation in AD to CY29 (from CY28 previously). In September, Actinogen completed a A$10m rights offering and we now expect the company to be funded into Q424 (Q2 CY24). We determine a new risk-adjusted net present value (rNPV) of A$528m, versus A$645m previously.

Paradigm reported favourable quantitative MRI data from the six-month analysis of the Phase II trial (PARA OA 008) evaluating a single six-week course of injectable pentosan polysulfate sodium (iPPS) treatment at 2mg/kg twice weekly in knee osteoarthritis (kOA) patients. This analysis provides more precise numerical measurements from the semi-quantitative analysis shared in April. In both studies treated patients exhibited increased cartilage thickness and volume in knee joints in patients, while the placebo group experienced reductions in both. The reversal of structural changes in the cartilage (structural changes in the knee joint are associated with the natural course of kOA) resulted in reduced bone marrow lesions and synovitis intensity as well as enhanced joint function. While the range of responses was not shared, and the number of treated patients is small (n=15), the recent data, coupled with the 12-month durable clinical responses disclosed last week, support iPPS as a potential disease-modifying treatment for kOA and address an unmet need. The company reiterated its plans to file a Provisional Approval application to the Australian regulatory authority and use the identified optimal dose of iPPS in the registration programmes.

Freelancer achieved a key profitability target in Q323 by delivering positive operating EBITDA across divisions, leading to positive operating cash flow generation and an uplift in gross cash. Despite lower group gross merchandise value (GMV), revenue likely grew given the higher take rate of the marketplace division, where GMV increased. Near-term pipeline highlights include accelerating Enterprise momentum from US expansion and a Chinese retailer partnership, Loadshift’s ongoing marketplace transition and new Escrow.com partnerships to drive diversification.

• Newcrest Mining (NCM AU) saw its shareholder meeting vote through the Scheme, then on teh 18th, the Special Div went ex-. 
• Since then, as gold has rebounded sharply, Newmont Mining (NEM US) has underperformed peers and juniors (VanEck Gold Miners ETF/USA (GDX US)) since gold has spiked.
• Thursday is the last day of trading and there is a LOT of NEM to trade.

• In this insight, we explore the potential trade idea to Long GMG and Short DXS, among Australia REITs
• We propose this trade on the back of long-term attractive thematic and strong fundamentals of logistics sector and continued weakness of office sector, as well as company specific drivers
• GMG focuses on logistics and is a fund manager, and will continue to be strong. DXS is primarily driven by Sydney office market, which is facing multiple headwinds

• Millennium Services Group Ltd (ASX:MIL) has released its Q1 FY24 cash flow incorporating updated revenue commentary.
• Contracted revenue rose 14.3%, an acceleration on Q4 FY23 on the back of new contract wins and wage inflation.
• Total growth was 12.6%, the strongest growth since H2 FY18. Operating cash flow was negative $3.6m, a 23% improvement on the pcp (implying improved gross margins) with both impacted by the timing of collections and an additional fortnightly wage payment.