Author: cpereira@noblefcm.com

Orion Group Holdings (ORN) – 3Q22 First Look

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Thursday, October 27, 2022

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

3Q22 Revenue. Revenue totaled $182.6 million, up 30.5% from $139.9 million in the third quarter of 2021. The increase was primarily driven by the start of large jobs awarded in the fourth quarter of 2021 in the marine segment, higher volume in the concrete segment, and the impact from claims and unapproved change orders recognized related to work primarily incurred in previous periods.

Gross Profit. Gross profit was  $13.4 million, as compared to  $6.6 million last year. Gross profit margin was 7.4%, as compared to 4.7%. The increase in gross profit dollars and margin was primarily driven by the impact from claims and unapproved change orders recognized related to work primarily incurred in previous periods, the release of discretionary project bonuses, and increased dredging activity as compared to the prior year period.


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Defense Metals Corp. (DFMTF) – 2022 Drilling Program Outcomes Bode Well for a Robust Preliminary Feasibility Study

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Thursday, October 27, 2022

Defense Metals Corp. is a mineral exploration and development company focused on the acquisition, exploration and development of mineral deposits containing metals and elements commonly used in the electric power market, defense industry, national security sector and in the production of green energy technologies, such as, rare earths magnets used in wind turbines and in permanent magnet motors for electric vehicles. Defense Metals owns 100% of the Wicheeda Rare Earth Element Property located near Prince George, British Columbia, Canada. Defense Metals Corp. trades in Canada under the symbol “DEFN” on the TSX Venture Exchange, in the United States, under “DFMTF” on the OTCQB and in Germany on the Frankfurt Exchange under “35D”.

Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Resource and geotechnical drilling completed. Defense Metals completed resource delineation and pit geotechnical diamond drilling for the 2022 exploration season. A total of 5,500 meters of diamond drilling was completed in 18 holes. The drilling program included five pit slope geotechnical and hydrogeologic holes totaling 1,150 meters. Geotechnical drilling will aid optimizing the open pit slope design. Results from the program will support the Preliminary Feasibility Study (PFS) expected to commence this quarter with completion expected in the first half of 2023.

Recent assay results. Defense Metals released assay results from one additional core hole, totaling 383 meters, collared within the northern area of Defense Metals’ Wicheeda Deposit. Infill hole WI22-70 was drilled southwest within the northern area of the deposit and intersected a broad zone of mineralized dolomite carbonatite averaging 2.50% total rare earth oxide (TREO) over 113 meters.


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Sierra Metals (SMTS) – Third Quarter Production Disappoints; Rating Lowered to Market Perform

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Wednesday, October 26, 2022

Sierra Metals Inc. is a diversified Canadian mining company with Green Metal exposure including increasing copper production and base metal production with precious metals byproduct credits, focused on the production and development of its Yauricocha Mine in Peru, and Bolivar and Cusi Mines in Mexico. The Company is focused on increasing production volume and growing mineral resources. Sierra Metals has recently had several new key discoveries and still has many more exciting brownfield exploration opportunities at all three Mines in Peru and Mexico that are within close proximity to the existing mines. Additionally, the Company also has large land packages at all three mines with several prospective regional targets providing longer-term exploration upside and mineral resource growth potential.

Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Operational challenges negatively impact production. During the third quarter, Sierra Metals produced 6.3 million pounds of copper, 3.9 million pounds of lead, 10.8 million pounds of zinc, 2.2 thousand ounces of gold, and 669 thousand ounces of silver. On a sequential basis, copper and gold production declined 24% and 16%, respectively, while lead, silver, and zinc production increased 16%, 10%, and 4%, respectively. On a copper equivalent basis, production declined 7% sequentially and was below our estimate. Production was negatively impacted, among other things, by a mudslide  at the Yauricocha mine and flooding in the NorthWest Zone at the Bolivar mine.

Updating estimates. We have lowered our 2022 EBITDA and EPS estimates to $29.9 million and $(0.08) per share from $44.6 million and $(0.01) per share. We have lowered our 2023 EBITDA and EPS estimates to $76.1 million and $0.12 per share. Operational uncertainty associated with production at the company’s mines clouds our confidence in 2023 estimates. Sierra will release third quarter results after the market close on November 14 and will host an investor call on November 15 at 11:00 am ET.


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Avivagen Inc. (VIVXF) – Securing More Financing

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Tuesday, October 25, 2022

Avivagen is a life sciences corporation focused on developing and commercializing products for livestock, companion animal and human applications that, by safely supporting immune function, promote general health and performance. It is a public corporation traded on the TSX Venture Exchange under the symbol VIV and is headquartered in Ottawa, Canada, based in partnership facilities of the National Research Council of Canada. For more information, visit www.avivagen.com. The contents of the website are expressly not incorporated by reference in this press release.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Issuing New Shares. Last Friday, Avivagen announced the closing of a first tranche of a non-brokered private placement of shares. The total amount of common shares issued in the first tranche was 2.15 million for approximately $430,000, or $0.20 per share. The total amount of the placement financing is up to $1 million. We expect the Company to issue the full amount in the private placement.

Use of Financing. The use of the funds will be for funding research and development expenses, sales and marketing costs, product registration, interest expense, working capital, and general corporate purposes. We anticipate the use of the funding will be for product expansion as the Company is continuing to work towards a No Objection Letter in the U.S., targeting an expansion in the European Union, and is seeing increased interest in South America.


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FAT Brands Inc. (FAT) – Third Quarter Results

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Monday, October 24, 2022

FAT Brands (NASDAQ: FAT) is a leading global franchising company that strategically acquires, markets, and develops fast casual, quick-service, casual dining, and polished casual dining concepts around the world. The Company currently owns 17 restaurant brands: Round Table Pizza, Fatburger, Marble Slab Creamery, Johnny Rockets, Fazoli’s, Twin Peaks, Great American Cookies, Hot Dog on a Stick, Buffalo’s Cafe & Express, Hurricane Grill & Wings, Pretzelmaker, Elevation Burger, Native Grill & Wings, Yalla Mediterranean and Ponderosa and Bonanza Steakhouses, and franchises and owns over 2,300 units worldwide. For more information on FAT Brands, please visit www.fatbrands.com.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Joshua Zoepfel, Research Associate, Noble Capital Markets, Inc.

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3Q22 Results. FAT Brands reported 3Q22 revenue of $103.2 million, up from $102.8 million in the second quarter, and compared with $29.8 million in 3Q21. The increased revenue reflects the 2021 acquisitions. FAT reported adjusted EBITDA of $24.6 million in the quarter, down from $29.5 million in 2Q22. Net loss for the quarter was $23.5 million, or $1.42 per share and adjusted net loss was $16.3 million, or $0.98 per share. We had projected revenue of $104.3 million and a net loss of $14.9 million, or $0.90 per share.

Expanding Organic Growth Opportunities. FAT reported another 38 restaurants opened in the third quarter with over 100 opened year-to-date. Management is expecting an additional 25 units to open in 4Q22. The pipeline now exceeds 1,000 units, which will add some $60 million of incremental adjusted EBITDA once opened.


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Seanergy Maritime (SHIP) – Model Fine Tuned For Lower Shipping Rates and Higher Interest Rates

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Friday, October 21, 2022

Seanergy Maritime Holdings Corp. is the only pure-play Capesize ship-owner publicly listed in the US. Seanergy provides marine dry bulk transportation services through a modern fleet of Capesize vessels. The Company’s operating fleet consists of 17 Capesize vessels with an average age of approximately 12 years and aggregate cargo carrying capacity of approximately 3,011,083 dwt. The Company is incorporated in the Marshall Islands and has executive offices in Glyfada, Greece. The Company’s common shares trade on the Nasdaq Capital Market under the symbol “SHIP” and its Class B warrants under “SHIPZ”.

Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

We are making adjustments to our models to reflect lower shipping rates. Dry bulk shipping rates have been weak in the third quarter. As a result, we are lowering the assumed rate for uncommitted ships to $19,500/day from $23,650/day. Management guided analysts to a $23,650/day number when reporting second quarter results but now believes the rate will be below $20,000/day. Every $1,000 reduction in uncommitted daily TCE rates reduces net income by $1.1 million or $0.01 per share.

We are also raising our interest expense estimate to reflect higher interest rates. We are raising our third quarter interest expense estimate to $5.0 million from $3.5 million to reflect higher LIBOR rates. LIBOR rates have increased from 0.1% to more than 4.0% in the last twelve months.  We are also formally incorporating the $28 million term loan that was announced last week into our models.


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Pangaea Logistics (PANL) – Model Fine Tuned To Reflect Lower Shipping Rates

Posted on by cpereira@noblefcm.com


Friday, October 21, 2022

Pangaea Logistics Solutions Ltd. (NASDAQ: PANL) provides logistics services to a broad base of industrial customers who require the transportation of a wide variety of dry bulk cargoes, including grains, pig iron, hot briquetted iron, bauxite, alumina, cement clinker, dolomite, and limestone. The Company addresses the transportation needs of its customers with a comprehensive set of services and activities, including cargo loading, cargo discharge, vessel chartering, and voyage planning. Learn more at www.pangaeals.com.

Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

We are adjusting our models to reflect lower shipping rates in the third quarter. Although shipping rates remains high relative to historical levels, they have decreased relative to peak levels reached this spring. 

We are lowering our revenue, cashflow and earnings estimates in response. We now project third-quarter and 2022 revenues of $158.6 million an $714.1 million, respectively, down from our previous estimates of $182.3 million and $752.2 million. Our new EBITDA estimates are $9.6 million and $112.2 million, down from $33.31 million and $142.4 million. We now estimate earnings per share of $(0.08) and $1.27 as compared to $0.45 and $1.93.


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Labrador Gold Corp. (NKOSF) – Big Vein Target Continues to Deliver

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Friday, October 21, 2022

Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Drilling continues at the Big Vein target. Labrador Gold released results from recent drilling associated with its 100,000-meter drill program at its 100%-owned Kingsway gold project targeting the Appleton Fault Zone over a 12-kilometer strike length. A total of 58,265 meters have been drilled to date with assays pending for samples from approximately 3,100 meters of core. Currently, one rig is drilling at the Golden Glove target while two rigs are drilling at Big Vein to test for extensions of mineralization in both directions. With drilling at the CSAMT target completed, a third rig is being deployed at Big Vein.

High grade assay results. Hole K-22-190 from the north end of Big Vein returned an intersection of 30.67 grams of gold per tonne over 1.1 meters from 208.85 meters depth that included 99.31 grams of gold over 0.3 meters. At Big Vein Southwest, Hole K-22-184 intersected 4.67 grams of gold per tonne over 1.64 meters from 336.25 meters depth that included 8.97 grams of gold per tonne over 0.75 meters. Drilling has returned several significant intercepts at the north end of Big Vein, including 6.07 grams of gold per tonne over 19 meters in Hole K-21-111. Results from Hole K-22-190 underscore the high-grade prospectivity of the area.


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Indonesia Energy Corp (INDO) – Latest Well Looks Successful, Future Drilling Delayed

Posted on by cpereira@noblefcm.com


Friday, October 21, 2022

Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Kruh Well 28 finds oil formation in addition to previously announced gas reservoir. Indo reported reaching final depth in its fourth well in the Kruh field. As has been the case with the other three wells, oil has been discovered, this time with a wider oil band that had been expected. The company previously reported discovering natural gas at shallower levels as had been the case in Kruh Well 27.  We view drilling in the Kruh Field as largely developmental so the successful discovery of hydrocarbons was not a surprise. It will take at least a month to complete the well before we can learn flow rate information, but management maintains that the wells have a twelve-month payback at current oil prices.

Well success prompts further seismic studies. Indo is planning to conduct new seismic operations across the entire Kruh Block to optimize drilling locations. The company still plans on drilling 18 wells in the block (four have been completed). Seismic studies will push back the drilling program twelve months into the 2024-25 time frame and will not begin until Kruh 27 and 28 have been brought on line. We had modeled six wells in 2023 and eight in 2024 and are pushing all drilling back a year. Indonesia Energy has faced a series of delays in its drilling program due to COVID, weather, and other factors.


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Genco Shipping (GNK) – Model Fine Tuned To Reflect Lower Shipping Rates

Posted on by cpereira@noblefcm.com


Friday, October 21, 2022

Genco Shipping & Trading Limited, incorporated on September 27, 2004, transports iron ore, coal, grain, steel products and other drybulk cargoes along shipping routes through the ownership and operation of drybulk carrier vessels. The Company is engaged in the ocean transportation of drybulk cargoes around the world through the ownership and operation of drybulk carrier vessels. As of December 31, 2016, its fleet consisted of 61 drybulk carriers, including 13 Capesize, six Panamax, four Ultramax, 21 Supramax, two Handymax and 15 Handysize drybulk carriers, with an aggregate carrying capacity of approximately 4,735,000 deadweight tons (dwt). Of the vessels in its fleet, 15 are on spot market-related time charters, and 27 are on fixed-rate time charter contracts. As of December 31, 2016, additionally, 19 of the vessels in its fleet were operating in vessel pools.

Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

We are adjusting in response to lower third-quarter shipping rates. Our third-quarter and 2022 revenues estimates for Genco have been modestly reduced to $130.6 million and $535.2 million. Our third-quarter and 2022 EBITDA estimates are now $68.7 million and $258.0 million, down from $70.8 million and $264.3 million. Our third-quarter and 2022 EPS estimates are now $1.21 and $4.52, down from $1.25 and $4.66.

Our rating on the shares of Genco remains Outperform with a $28 price target. Lower shipping rates will adversely affect near-term results but does not change our long-term positive view of the shipping industry and Genco, in specific.


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EuroDry (EDRY) – Model Fine Tuned To Reflect Lower Shipping Rates

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Friday, October 21, 2022

EuroDry Ltd. was formed on January 8, 2018 under the laws of the Republic of the Marshall Islands to consolidate the drybulk fleet of Euroseas Ltd. into a separate listed public company. EuroDry was spun-off from Euroseas Ltd. on May 30, 2018; it trades on the NASDAQ Capital Market under the ticker EDRY. EuroDry operates in the dry cargo, drybulk shipping market. EuroDry’s operations are managed by Eurobulk Ltd., an ISO 9001:2008 and ISO 14001:2004 certified affiliated ship management company and Eurobulk (Far East) Ltd. Inc., which are responsible for the day- to-day commercial and technical management and operations of the vessels. EuroDry employs its vessels on spot and period charters and under pool agreements.

Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

We are lowering our assumed TCE shipping rate for non-fixed vessels. We are lowering third-quarter TCE rates to $20,000/day from $23,000/day to reflect weaker shipping rates in the quarter. The impact on EuroDry cash flow and earnings is somewhat muted relative to other shipping companies given fixed rates for the bulk of its fleet. Nevertheless, we are adjusting downward our estimates to reflect the impact on ships tied to market prices.

Revenues, EBITDA and EPS estimate all come down slightly. Our new third quarter and 2022 revenues estimates are $25.4 million and $96.3 million, down from $26.1 million and $98.4 million. Our new third quarter and 2022 EBITDA estimates are $13.1 million and $55.5 million, down from $13.7 million and $57.1 million. Our new third quarter and 2022 EPS estimates are $3.27 and $14.88, down from $3.48 and $15.44.


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Eagle Bulk Shipping (EGLE) – Model Fine Tuned To Reflect Lower Shipping Rates

Posted on by cpereira@noblefcm.com


Friday, October 21, 2022

Eagle Bulk Shipping Inc. (“Eagle”) is a US-based drybulk owner-operator focused on the Supramax/Ultramax mid-size asset class, which ranges from 50,000 and 65,000 deadweight tons in size; these vessels are equipped with onboard cranes allowing for the self-loading and unloading of cargoes, a feature which distinguishes them from the larger classes of drybulk vessels and provides for greatly enhanced flexibility and versatility- both with respect to cargo diversity and port accessibility. The Company transports a broad range of major and minor bulk cargoes around the world, including coal, grain, ore, pet coke, cement, and fertilizer. Eagle operates out of three offices, Stamford (headquarters), Singapore, and Hamburg, and performs all aspects of vessel management in-house including: commercial, operational, technical, and strategic.

Michael Heim, CFA, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

We are lowering our estimates for Eagle Bulk Shipping to reflect lower shipping rates. We have lowered our assumed TCE shipping rates to reflect recent pricing. In response, we are lowering our third quarter and 2022 revenue estimates to $168.9 million and $710.9 million respectively, down from $193.2 million and $760.0 million.

Lower revenues means lower EBITDA and EPS estimates. Adjusting our models for lower pricing and revenues results in a decline in third quarter and 2022 EBITDA to $93.2 million and $362.7 million, down from $117.6 million and $411.8 million. EPS for the quarter and year are reduced to $4.24 and $15.55, down from $5.49 and $18.07.


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Alliance Resource Partners (ARLP) – Outlook Remains Favorable; Nudging Up 2022 Estimates

Posted on by cpereira@noblefcm.com


Friday, October 21, 2022

ARLP is a diversified natural resource company that generates operating and royalty income from coal produced by its mining complexes and royalty income from mineral interests it owns in strategic oil & gas producing regions in the United States, primarily the Permian, Anadarko and Williston basins. ARLP currently produces coal from seven mining complexes its subsidiaries operate in Illinois, Indiana, Kentucky, Maryland and West Virginia. ARLP also operates a coal loading terminal on the Ohio River at Mount Vernon, Indiana. ARLP markets its coal production to major domestic and international utilities and industrial users and is currently the second largest coal producer in the eastern United States. In addition, ARLP is positioning itself as an energy provider for the future by leveraging its core technology and operating competencies to make strategic investments in the fast growing energy and infrastructure transition.

Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.

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Updating estimates. Coal prices continued to exhibit strength during the third quarter and we believe the outlook for oil and gas prices remains favorable. We have increased our 2022 adjusted EBITDA and adjusted EPU estimates to $951.9 million and $4.90 from $945.3 and $4.85, respectively. Our 2023 estimates remain unchanged. We have assumed the partnership declares third and fourth quarter per unit cash distributions of $0.45 and $0.50, respectively. 

New Ventures team. Alliance recently announced the formation of a New Ventures team, led by Andrew Woodward and Matthew Lewis, to make strategic investments in energy and infrastructure that promote decarbonization. The team will identify, develop, and execute commercial opportunities outside of the company’s existing businesses to enhance growth and the company’s ability to serve the evolving energy needs of the market.


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