Author: therawinformant

I believe that the best way to generate significant wealth is to buy quality ASX shares and hold them for the long term.

It is worth noting that some of the world’s richest people, such as legendary investor Warren Buffett, have used this investment strategy to build their fortunes and there is nothing to stop readers from following suit.

With that in mind, here are three ASX shares that I think would be quality buy and hold options:

Altium Limited (ASX: ALU)

The first option to consider buying and holding is Altium. It is a printed circuit board-focused design software company which I believe is well-positioned to be a market-beater over the long term. This is because the company’s award-winning platform is exposed to the rapidly growing artificial intelligence and Internet of Things (IoT) markets. In respect to the latter, according to a recent presentation, global technology spending on IoT is expected to reach US$1.2 trillion in 2022. As the majority of IoT devices have printed circuit boards inside them, Altium appears well-placed to benefit.

REA Group Limited (ASX: REA)

Another ASX share to consider buying and holding is REA Group. I think the owner and operator of the realestate.com.au website could be a great long-term option due to its dominant ANZ market position and growing international operations. In addition to this, cost cutting, price increases, and new revenue streams appear to have positioned the company perfectly for growth once the COVID-19 crisis eases.

SEEK Limited (ASX: SEK)

A final buy and hold option to consider is SEEK. The job listings giant has been investing heavily in future growth opportunities in recent years. Whilst this has been limiting its short term profit growth, I believe it has set up the company for strong long term growth. Combined with the job-focused Federal Budget and its rapidly growing China-based business, I believe SEEK’s outlook is looking very positive. Overall, I believe the SEEK share price could generate market-beating returns over the next decade and beyond.

More reading

• Why I think the Seek (ASX:SEK) share price is primed to surge in 2021
• Is the Altium (ASX:ALU) share price a strong buy?
• Which ASX share may benefit from the jobs-led recovery Budget?
• ASX 200 up 0.4%: Big four banks push higher, Westpac upgraded, ARB impresses
• Why a2 Milk, Afterpay, ARB, & SEEK shares are pushing higher today

James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Altium. The Motley Fool Australia has recommended REA Group Limited and SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Kelly Partners Group Holdings Ltd (ASX: KPG) share price had a mixed trading day today. After hitting a 52-week high of $1.45 in early trading, the Kelly Partner’s share price dropped back to close flat at $1.30. Let’s take a closer look.

Why is the Kelly Partners share price on the move?

Kelly Partners announced last month it was conducting an on-market share buyback. The chartered accounting network plans to buy back up to 45.3 million shares or 10% of its shares outstanding. 

The company reported it was experiencing continued growth. Senior management also recently purchased 344,417 shares from CEO Brett Kelly to align management interests with the company’s performance. The CEO maintains a holding of 50.01%.

According to Kelly Partners, the company has experienced revenue growth of 32% per year since its inception in 2006, and revenue growth of 15% per year since its initial public offering (IPO) in 2017. Dividend growth has been at 10% per year since its IPO.

Kelly Partners said it expected to reach revenue of $80 million per year by the 2024 financial year. The company also anticipates earnings before interest, tax, depreciation and amortisation (EBITDA) of $28 million per year by FY 2024. The company forecasts that it will double its net profit after tax and amortisation (NPATA) to $8 million per year by FY 2024.

About the Kelly Partners share price

Kelly Partners provides accounting services to small to medium-sized businesses and private clients. The company has offices in NSW, Victoria and Hong Kong.

In the year to 30 June 2020, Kelly Partners increased its net profit after tax to $4 million, up 64.8% compared to the prior year. The company had revenue of $46.4 million in the 2020 financial year, an increase of 16% compared to FY2019. The company’s underlying EBITDA in FY 2020 was $13.7 million, up 26.1% compared to the prior year.

In June, Kelly Partners acquired an accounting firm based in Bathurst, NSW. The acquisition was expected to deliver recurring revenue of $270,000 and add $130,000 to EBITDA. The acquired firm was set to move into Kelly Partners existing office in Bathurst. The company also announced that it was in acquisition discussions with several other firms.

The Kelly Partners share price is up 132.14% since its 52-week low of 56 cents, and has increased 30% since the beginning of the year. The Kelly Partners share price is up 34.02% since this time last year.

More reading

• iCollege (ASX:ICT) share price drops despite record performance
• ASX 200 rises 1% again, Zip (ASX:Z1P) soars 8%
• AVZ Minerals (ASX:AVZ) share price rockets 20% higher today before trading halt
• What’s driving the PayGroup (ASX:PYG) share price higher today
• Why the 4DMedical (ASX:4DX) share price is reaching new highs

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The iCollege Ltd (ASX: ICT) share price has fallen today despite the company reporting record results in its quarterly report. The iCollege share price finished the day 4.17% lower, slumping to a price of 11.5 cents.

What iCollege does

iCollege comprises seven businesses which deliver accredited and non-accredited vocational education and training solutions throughout Australia and internationally.

iCollege is currently expanding business offerings both in terms of scope of delivery and geographical locations. It currently operates campuses in Brisbane, Gold Coast, Adelaide, Perth, Sydney and Canberra.

Record results

The company delivered record revenue and earnings for the quarter with revenue of $4.1 million and earnings before interest, tax, depreciation and amortization (EBITDA) of $686,000. 

Cash collections were $3.8 million which included a $602,000 contribution from JobKeeper. In a positive leading indicator of the company’s improving performance, iCollege will no longer qualify for JobKeeper payments from Q2 FY2021 as revenue continues to improve.

The company strived to focus on careful financial management as a result of uncertainty arising from the COVID-19 pandemic. As a result, iCollege delivered a cash surplus of almost $500,000 and ended the quarter with $1 million in the bank.

Despite the record results, the company did suffer some operational headwinds, such as the lack of international students. However, domestic student enrolment has come some way in making up for this with $2.3 million generated over the quarter.

Furthermore, the company announced a new campus in Perth during the quarter. The campus is in close proximity with public transport and has already seen its first enrolments.

What now for the iCollege share price?

Despite the strong results, the iCollege share price fell 4.17% in today’s trading session. This suggests that investors were expecting more from the education company.

iCollege managing director Ash Katta said:

Q2 FY2021 has commenced well and we anticipate revenue from new government-funded health, aged care and infection control training programs and other courses we have introduced. iCollege has emerged from the initial COVID–19 challenges good shape and poised to continue strong organic growth.

More reading

• ASX 200 rises 1% again, Zip (ASX:Z1P) soars 8%
• AVZ Minerals (ASX:AVZ) share price rockets 20% higher today before trading halt
• What’s driving the PayGroup (ASX:PYG) share price higher today
• Why the 4DMedical (ASX:4DX) share price is reaching new highs
• Should you fear the federal government’s $1 trillion debt bomb?

Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) went up by 1.1% to 6,102 points today. It was a strong day for most of the share market.

Among the top performers in the ASX 200 was buy now, pay later operator Zip Co Ltd (ASX: Z1P) which jumped 8% after updates from its competitors:

Sezzle Inc (ASX: SZL)

Sezzle reported a strong set of numbers in its update in the quarter for the three months to 30 September 2020.

The BNPL operator reported underlying merchants sales (UMS) increased 231.5% year on year to US$228 million, up 21.4% quarter on quarter.

Merchant fees as a percentage improved to 5.8%, up from 5.6% from at June 2020 and 5.2% from 30 September 2019. Rising margins is a good sign for Sezzle.

Active consumers rose 178.1% year on year to 1.79 million (and was up 21.5% quarter on quarter) and active merchants rose by 178.3% year on year (and grew 29.7% quarter on quarter).

One of the most pleasing aspects of the BNPL company’s update was that its active consumer repeat usage grew to 89%, which meant that repeat usage has increased for 21 straight months. This is an important part of lowering loss rates and improving the net transaction margin. Sezzle now has an annual run rate of almost US$1 billion.

The Sezzle share price went up by 3.6% today, though it was above $8.70 earlier in the day.

Splitit Ltd (ASX: SPT)

Splitit is another high-growth BNPL operator and it reported a strong set of growth numbers.

It said that merchant sales volume (MSV) grew by 214% year on year to US$70.9 million. This helped gross revenue soar 318% to US$2.4 million.

Total merchants jumped 117% year on year to 1,400 and total shoppers grew 97% year on year to 362,000.

Splitit said that self-onboarding is now live in the US, it added over $3 billion of addressable online merchant sales in the third quarter of FY20 and it has expanded into the professional services vertical in the US and Australia.

The Splitit share price ended 4.7% lower, though it was up earlier in the day.  

CSL Limited (ASX: CSL)

ASX 200 business CSL announced that its subsidiary, Seqirus, has signed a final agreement with the Commonwealth of Australia for the supply of 51 million doses of the University of Queensland COVID-19 vaccine candidate called V451, if clinical trials are successful.

The agreement includes and up-front financial commitment from the government to support the clinical and technical development activities that CSL will need to carry out in order to progress V451.

CSL said that the large-scale phase 2b/3 clinical study for V451 is almost ready which will evaluate efficacy, immunogenicity and safety in adults aged 18 years and above. The first subject is expected to be enrolled in December 2020 with the goal of completing recruitment by March 2021.

The ASX 200 share said it’s committed to demonstrating the vaccine is safe and effective prior to availability in the market. However, CSL isn’t able to calculate the financial impact to the company relating to the vaccines.

The CSL share price went up 2.4%.

Netwealth Group Ltd (ASX: NWL)

The Netwealth share price jumped by 8.8% today after announcing its quarterly update for the three months to 30 September 2020.

Funds under administration (FUA) was $34 billion at 30 September 2020, up 8% for the quarter, which included positive market movements of $0.6 billion. FUA net inflows was $1.9 billion for the quarter, an increase of 25.4% for the quarter.

The ASX 200 share’s funds under management (FUM) was $8.1 billion at 30 September 2020. FUM net inflows for the quarter was $0.8 billion, including managed account net inflows for the quarter of $0.7 billion. The managed account balance was $6.5 billion at 30 September 2020, an increase of $3.4 billion compared to the prior corresponding period.

More reading

• Which ASX ETFs offer the most diversification?
• Look through short-term unpredictability for long-term ASX share price gains
• Why Downer, ELMO, Netwealth, & Sezzle shares are storming higher today
• BNPL ASX shares are running hot today
• ASX 200 up 0.8%: Big four banks higher, CSL rises on vaccine update, Zip rockets

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and ZIPCOLTD FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of Netwealth. The Motley Fool Australia has recommended Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The AVZ Minerals Ltd (ASX: AVZ) share price went through the roof today, gaining 20% by 3pm when trading in the shares was halted at the company’s request.

Today’s run higher is enough to put AVZ’s share price up 56% since 2 January. By comparison, the All Ordinaries (INDEXASX: XAO) is down 7%.

AVZ’s share price reached a 2020 high of 10 cents per share on 21 February before falling 50% through to 17 February during the COVID driven market rout. At the time of the trading halt, shares were worth 7.8 cents.

What does AVZ Minerals do?

AVZ Minerals is a mineral exploration company with a primary focus on lithium. The company states that its Manono Project may be one of the largest lithium-rich LCT (lithium, caesium, tantalum) pegmatite deposits in the world. Manono is located in the Democratic Republic of Congo (DRC).

What next for AVZ’s share price after the trading halt?

AVZ requested the trading halt this afternoon as it prepares an announcement in response to the ASX price query it received as well as an operation update announcement.

There is no market information available about what AVZ’s pending operation update may detail. Judging by the sharp run higher in the share price today the company may have some good news to share. Whether or not that warrants today’s share price surge remains to be seen.

Longer-term the company finds itself in a good space, provided its Manono project proves successful.

The global demand for lithium, a highly conductive metal, is forecast to grow strongly over the next decade as the transition to electric vehicles and battery storage for energy grids accelerates.

Another tailwind for Australian critical mineral miners came courtesy of US President Donald Trump.

Last week Trump took the historically extraordinary step of greenlighting US government investments into critical minerals projects in Australia. This comes as Trump continues to work to move the US away from its reliance on Chinese sources.

There’s no indication that AVZ Minerals is already a direct recipient of any US funding. But the AVZ share price will certainly be one to watch when the company releases its operation update and response to the ASX, expected either tomorrow or before market open on Monday.

More reading

• ASX 200 rises 1% again, Zip (ASX:Z1P) soars 8%
• What’s driving the PayGroup (ASX:PYG) share price higher today
• Why the 4DMedical (ASX:4DX) share price is reaching new highs
• Should you fear the federal government’s $1 trillion debt bomb?
• Here’s why the Karoon Energy (ASX:KAR) share price is up 22% this week

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The PayGroup Ltd (ASX: PYG) share price is higher today following the release of its H1 FY21 trading update.

The update sent the PayGroup share price storming up to a 60 cent high in opening trade, before dropping to settle at 56 cents, up 3.7% at the time of writing. In comparison, the All Ordinaries Index (ASX: XAO) is up 0.9% to 6,294 points.

Let’s take a look at PayGroup and its performance for the first-half of the financial year.

What does PayGroup do?

Headquartered in Melbourne, PayGroup provides payroll and human capital management solutions. The company operates in 11 countries, servicing more than 995 client entities and processing more than 5 million payslips per annum.

For the period ending September 30, PayGroup announced that it had achieved record contract growth for H1 FY21. The result was $5.4 million in contract wins, up 93% on the prior corresponding period, and 98% of its entire FY20 total contract value.

The company advised that COVID-19 has provided structural tailwinds, drawing new businesses to help digitise their payroll systems. PayGroup added 80 new contracts which included existing client upsells and new customers.

Growth areas

PayGroup’s treasury services segment continued its strong growth trajectory since product launch in Q2 FY20. For the period, total treasury services rose by 279% for the first-half of the year.

In H2 FY21, the company plans to launch its ‘Accessing Wages Earned’ module. The new platform will allow employees to access their accrued wages before payday, and will join PayGroup’s financial wellness program. The addition is anticipated to further drive revenue momentum, particularly in the current climate.

The company’s global partner program expanded during H1 FY21, servicing more than 39 countries. PayGroup’s increased presence seeks to capitalise on the addressable market to cross-sell its human capital management and payroll services.

Company outlook

PayGroup managing director Mark Samlal welcomed the result, saying:

We’re very pleased with the performance that we have achieved in the last six months, despite the challenging environment. We are continuing to follow the government protocols in each of our regions with respect to operating and re-opening safely, with employee welfare and client service satisfaction as our key priority. Our service standards have not been compromised during this period.

Mr Samlal said the new contract wins achieved this half year were a significant increase on the previous half. They reflected “strong underlying demand” for the company’s mission-critical SaaS and SwaS products across Asia Pacific and the Middle East.

We are well positioned to weather the current business environment and are increasingly seeing clients seeking to outsource HR and payroll functions to drive greater business efficiencies. Our successful capital raise in September 2020 will allow us to more rapidly capture these growing business opportunities.

More reading

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The 4DMedical Ltd (ASX: 4DX) share price jumped higher today as the company was involved in Goldman Sachs Healthcare Forum. Despite only listing 2 months ago, 4DMedical has taken no time to grab investors’ attention, surging almost 20%.

4DMedical shares pushed 14.11% higher to close at a price of $1.90.

What 4D Medical does

Founded in 2012, 4DMedical is a Melbourne based software technology company focused on creating a change in the capacity of physicians to diagnose and manage patients with diseases involving their lungs.

The imaging company is focused on commercialising its ‘4D’ lung imaging technology, which uses patented algorithms to convert X-ray images into quantitative scan data. Unlike existing respiratory diagnostic procedures, its technology provides a non-invasive way of understanding regional lung motion and airflow in real-time. The company’s major focus is on US market commercialisation.

So What

The respiratory diagnostic sector represents a global market of over US$31 billion per annum according to Goldman Sachs.

Furthermore, Goldman points out that existing lung diagnostics are outdated. Over the last 200 years, advances in medical diagnostic technology have delivered dramatic benefits for mankind whilst advancements in lung diagnostics have stagnated. The current gold standard modality to diagnose lung dysfunction (Spirometry) was invented in the 1860s.

4DMedical uses its XV technology to change this. Its XV Technology allows physicians to understand airflow within the lung better. The technology leverages existing hardware and software in hospitals to deliver its XV Technology quicker and at a lower cost to existing procedures.

Moreover, the technology operates through a cloud based Software as a Service platform that fully integrates with existing X-ray equipment, alleviating the requirement for hospitals and clinics to make a capital investment.

The Goldman Sachs report outlines the investment opportunity and many investors clearly like what they hear as the 4DMedical share price soars.

Now what

Despite being early days for 4DMedical, the company has wasted no time in getting important TGA approval. This was perhaps aided as a result of the strong tailwinds provided by Covid-19 due to its damaging nature to the lungs.

As if the company doesn’t already have enough going for it, 4DMedical also boasts backing by Dr. Sam Hupert, the Co-founder and CEO of Pro Medicus Limited (ASX: PME).

More reading

• 3 ASX shares I’d buy if the share market crashes again
• ASX 200 up 1.6%: CBA higher on COVID-19 loan deferrals update, Reliance rockets
• 3 ASX growth shares to buy with $3,000 in October
• Grow rich with these excellent ASX shares
• Could this be the large cap version of the Brainchip (ASX:BRN) share price? 

Daniel Ewing owns shares of Pro Medicus Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Treasurer Josh Frydenberg is throwing everything and the kitchen sink at reflating the economy. And the FY21 federal budget papers shows he’s leaving a record $1 trillion debt hole behind.

He says it’s worth it to get Australia out of the COVID-19, even if it means that net debt will peak at just under that obscene level in FY24. On a gross basis, debt is tipped to peak at $1.7 trillion something over the next 10 years!

Should you be worried? And how will this impact on your ASX share portfolio?

After all, those horrifying projections may reflect the best-case scenario given Treasury’s prediction is based on some optimistic assumptions.

Is debt a four-letter word?

We have often been told that high levels of debt can lead us to financial ruin. What’s bad for the goose must surely cook the gander.

But before you hit the panic button, it’s important to note that government debt is not the same as household debt.

Lenders are happy to give governments a lot more leeway as the risk of a default by a developed nation is extremely low.

Key difference between government and consumer debt

While the federal government can adjust taxes and spending (similar to how you or I can change our income and expenses), it also the Reserve Bank of Australia (RBA) to act as a guarantor.

The central bank can print money to buy government bonds, and that gives Treasurer Josh Frydenberg a lot of room to borrow.

Mind you, there’s a limit to how much money the RBA prints, but it’s a very big limit. International investors have a high regard for Australia sovereigns and we are only one of 11 countries with the highest AAA credit rating from the three major ratings agencies.

This means our government debt is more highly rated (seen as safer) than the United States.

Why debt may not be so bad

This brings me to the second point. The US has three times more debt than Australia and has long had a large debt load, most of which was accumulated during the GFC.

But this hasn’t hampered its economy, neither has it dethroned the US as the global investment benchmark.

It helps that the US dollar is regarded as the world’s reserve currency, but another big reason why a heavy debt load isn’t an issue is because investors can’t get enough of it.

Australia may not quite be in the same category despite our stronger credit rating, but I have little doubt that investors are happy to keep lending us cash for a very extended period.

The upside from having more debt

This may sound contradictory, but having more debt may actually be in our country’s interest! When ex-Treasurer Peter Costello repaid all of the Howard Government’s debt, it effectively shut down our bond market.

Bond fund managers were left distressed as international investors went away. Then the GFC hit, and the Australian government had to restart the bond market.

That not only took more time, but some investors were reluctant to return due to worries that the bond market would again disappear when the good times returned.

But with the growing pool of bonds that have to be issued under the current 10-year plan, credit investors can at least take heart that they will have a reasonably large and liquid pool to play in.

Foolish takeaway

As long as there’s confidence that Australia can repay its loans, this love affair can go on into perpetuity.

With the amount of excess cash slushing around in the global financial market and record low interest rates, there has never been a better time for the Morrison government to borrow big to reflate our depressed economy.

More reading

• Here’s why the Karoon Energy (ASX:KAR) share price is up 22% this week
• Why the Estrella (ASX:ESR) share price has rocketed 450% today
• Why the Temple & Webster (ASX:TPW) share price is sinking lower
• Why growth investors still have a lot to like about the Magellan (ASX:MFG) share price
• Which ASX ETFs offer the most diversification?

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Karoon Energy Ltd (ASX: KAR) shares are up 8% in afternoon trading today, bringing the the company’s share price gains for this week to nearly 22%.

The string of daily gains this week follow Karoon’s ASX announcement on Monday, updating investors on its Baúna oil field acquisition in the Santos Basin off the coast of Brazil.

This week’s big gains in the Karoon share price will come as welcome news to the company’s shareholders.

It certainly hasn’t been an easy year for companies involved in the oil and gas business. To give you just one benchmark, Brent crude oil (as priced in US dollars) tumbled 72% from early January through to mid-March this year as the pandemic dried up demand. Despite doubling since then, to today’s price of US$42.10 per barrel, Brent crude is still down 39% since 6 January.

Crashing energy prices were clearly mirrored in the Karoon share price, which fell 74% from 21 February through to 19 March. Despite this week’s big gains, Karoon shares remain down more than 25% year to date.

For comparison, the S&P/ASX 300 Index (ASX: XKO) is down 8% since 2 January.

What does Karoon Energy do?

Karoon Energy is an international oil and gas explorer headquartered in Melbourne. The company has projects in Australia, Brazil and Peru. Karoon was founded as an exploration company but is transforming into a global energy producer.

The Karoon share price first began trading on the ASX in June 2004. Since then, its market capitalisation has grown from $8 million to $469 million.

What’s moving the Karoon share price?

On Monday, Karoon announced a promising update to its Baúna oil field acquisition. The company first announced the signing of a binding sale and purchase agreement (SPA) for the oil field in July 2019, stating the acquisition “moves Karoon directly into production, marking a new phase in Karoon’s history”. The effective date of the transaction was 1 January 2019.

Monday’s announcement reiterated that certain remaining conditions need to be met to complete the transaction. These include: “outstanding third party/regulatory conditions precedent: (i) Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (“ANP”) approval, and (ii) FPSO charter assignment”.

Karoon reported significant progress on the ANP approval, citing only minor administrative issues remain.

The company also reported progress with the FPSO charter assignment, and expects that to be ready for execution once the ANP approval is received. Karoon forecasts the transaction will be complete in the latter half of October 2020 and is preparing to market its first Baúna cargo.

Judging by this week’s action on the Karoon share price, if the company is able to announce it’s successfully completed all the remaining conditions for the transaction by the end of this month, shares could move considerably higher.

More reading

• Why the Estrella (ASX:ESR) share price has rocketed 450% today
• Why the Temple & Webster (ASX:TPW) share price is sinking lower
• Why growth investors still have a lot to like about the Magellan (ASX:MFG) share price
• Which ASX ETFs offer the most diversification?
• Here’s why the shares of this Nearmap (ASX:NEA) rival are surging higher today

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Estrella Resources Ltd (ASX: ESR) share price has been reinstated to the market today with a bang. It comes as the exploration company found a significant amount of nickel sulphide in Western Australia.

Following a recent trading halt, Estrella’s share price is trading 457% higher today, up to a price of 7.8 cents.

What’s powering the Estrella share price?

The driver behind Estrella’s share price gain is a significant nickel sulphide discovery at Carr Boyd. The discovery announced this morning represents a major change of fortune for the company’s T5 project that was initiated in 2019. It comes after the company’s drill team spent the last 7 weeks on the ground drilling and setting up at T5.

CEO Chris Daws said:

It is certainly an unprecedented time for all those involved with Estrella and the Carr Boyd Rocks Ni-Cu Project. Modern science, technology, belief, and persistence has led to this highly significant discovery which is now beginning to unlock the true potential of T5.

The company is still drilling and expects to find more high grade nickel deposits. Other miners such as Poseidon Nickel Ltd (ASX: POS) and Chalice Gold Mines Limited (ASX: CHN) have also had recent success in Western Australia.

What now

The discovery could be perfect timing for the mineral exploration company as batteries take front stage around the world. Nickel is essential in powering the electric vehicle revolution, providing higher energy capacity than other substances.

The Estrella share price is currently trading a 457% higher at the time of writing, after reaching a high of 8.4 cents in earlier trade.

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Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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