Breakout #5 CEM's TSX Venture Growth 🏆 Results

A renewed sense of opportunity, driven by the Bank of Canada's recent interest rate cuts, set the stage for CEM's 5th annual TSX Venture Growth Capital Event in sun-drenched Kelowna last weekend.

The anticipated tailwinds from this monetary policy shift — the second consecutive interest rate cut in two months with the central bank hinting at more — underlined much of the high-level networking and deal-making between scores of TSX Venture Exchange company officials and investors, who had gathered for the mid-summer event.

In this electrifying atmosphere, the hunt for small and mid-cap investment opportunities was intense.

Attendees eagerly dissected the potential benefits of reduced borrowing costs, increased retail spending, enhanced valuations and new equity offerings, during curated one-on-one sessions at the Delta Grand Okanagan Resort.

The heightened investor appetite led to a diverse array of companies being highlighted as Top Picks at the Investor Break Exchange – the hallmark conclusion of CEM events.

Here are the Top 5 Picks from Kelowna that are poised to keep your portfolios sizzling long after the summer heat fades.

Top Picks:

TSX-V: MMA / OTC: MDNGF

Midnight Sun Mining Corp.

Midnight Sun is focussed on the exploration and discovery of world class copper deposits in the heart of the prolific Zambia-Congo Copperbelt. Its vast 506² km Solwezi Project in Zambia represents multiple distinct opportunities for the discovery of transformative, multi-generational copper deposits. The Solwezi Project surrounded by world-class operating mines is located adjacent to the largest copper mine in Africa – First Quantum’s Kansanshi Mine. Led by an experienced geological team with multiple discoveries and mines around the world to their credit, Midnight Sun intends to find and develop Africa’s next big copper deposit.

Why it was picked:

• Midnight Sun has partnered with KoBold Metals, a cutting-edge, AI-driven mining and exploration company from the U.S., backed by tech luminaries such as Bill Gates and the renowned Silicon Valley venture capital firm Andreessen Horowitz. Together, they will explore Dumbwa, one of four prime targets within Midnight Sun's Solwezi copper project located in the heart of Zambia's Copper Belt. KoBold is committing US$15 million to exploration over the next four years and will also make cash payments totaling $500,000 to Midnight Sun, in exchange for earning a 75% interest in the target.
• The Solwezi Project is surrounded by world-class copper mines and top-tier mining companies including First Quantum, Barrick, Rio Tinto, Ivanhoe and Anglo American. First Quantum’s Kansanshi Mine, Africa’s largest copper producer, is located right next door. Midnight Sun has signed a cooperative exploration plan with First Quantum Minerals to jointly define potential feed sources for First Quantum’s SX/EW oxide copper circuit at the Kansanshi mine. Midnight Sun has also already made drill discoveries across its project, with similar geological characteristics and grades to the operating mines that surround its property.
• The relevance of copper in renewable energy technologies, electric vehicles (EVs), and infrastructure development is particularly critical. For instance. an average EV typically requires over 132 pounds of copper, as opposed to just 52 pounds for the average gas-powered car. Electrification is expected to increase annual copper demand to 36.6 million metric tons by 2031, with supply forecast to be around 30.1 million tons, creating a 6.5-million-ton shortfall at the start of the next decade, predicts consulting firm McKinsey & Co. According to the International Energy Agency, global copper mines will only meet 80% of the world's copper requirements by 2030.

TSXV:VOL / OTCQB:VLTTF

Volatus Aerospace Corp.

Volatus Aerospace Corp., an innovator of aerial intelligence solutions, specializes in introducing green and innovative drone solutions to supplement and replace traditional aircraft and helicopters for long-linear inspections such as pipeline, energy, rail, and cargo services. It serves civil, public safety, and defense markets with imaging and inspection, security and surveillance, equipment sales and support, training, as well as R&D, design, and manufacturing. Through its subsidiary Volatus Aviation, Volatus also carries on the business of aircraft management, charter sales, and cargo services using piloted, remotely piloted, and autonomous aircraft.

Why it was picked:

• In May, Volatus announced it had joined forces with Drone Delivery Canada Corp. (DCC) to create a global leader in drone technology and services. This 50/50 merger of equals aims to leverage Drone Delivery Canada’s advanced cargo solutions and Volatus’ established position in piloted and remotely piloted aircraft systems. The combined entity is anticipated to be cash flow neutral by the fourth quarter of 2024 and aims for profitability by 2025.
• DCC has several key revenue-generating initiatives underway with Volatus Aerospace. The duo recently announced the beginning of a collaboration to commercialize the Volatus Aerieport Drone Nesting Station in concert with DDC's Remote Operations Center. This is expected to boost both equipment sales and introduce recurring service revenue from managed services from the Remote Operations Center. Volatus has also finalized the sale of a comprehensive drone solution and training package to a North American Disaster Response Entity. The package included drones and associated ground support equipment totalling $2.4M CAD.
• The increasing adoption of UAVs in commercial applications in core sectors such as agriculture, logistics & transportation, and healthcare is projected to fuel the demand for drone services over the coming years. The global market is valued at US$58.4 billion according to a Markets & Markets 2021 report. The company’s vertical integration initiatives enable it to address all segments of the market, including equipment sales, services, training, R&D, manufacturing and solutions engineering. The company has shown strong revenue growth (Q2 2022 C$6.5M(E), 92% growth over Q2 2021) and a network of over 1,200 contract pilots across North America

TSXV:NSCI / OTC:NSCIF

Nanalysis Scientific Corp.

Nanalysis Scientific Corp. operates two primary business segments: Scientific Equipment and Security Services. Within its Scientific Equipment business, the company develops and manufactures portable Nuclear Magnetic Resonance (NMR) spectrometers or analyzers for laboratory and industrial markets. The company's devices are used in many industries (oil and gas, chemical, mining, pharma, biotech, flavor and fragrances, agrochemicals, law enforcement, and more) as well as numerous government and university research labs around the world. The Company continues to exploit new global market opportunities independently and with partners.

Why it was picked:

• In 2022 the Company was awarded a five-year, $160 million contract to provide maintenance services for passenger screening equipment in Canadian airports. This has resulted in the expansion of the Company's Security Services business, including commercial security equipment installation and maintenance services to a variety of customers in North America. The company has also acquired K'(Prime) Technologies Inc. (KPrime), which maintains a North American sales and service company of over 40 individuals who cover scientific instrumentation for pharma, food, chemical and oil & gas customers, as well as imaging systems for security applications. Additionally, the Company has a 43% ownership in Quad Systems, a Zurich-based Nuclear Magnetic Resonance (NMR) company focused on high-field NMR for pharmaceutical and other vertical markets.
• The company’s first-quarter results for the period ending March 31, 2024, showed it achieving 139% year-over-year revenue growth to $11.2 million in Q1. Product sales showed continuous recovery through the latter half of 2023 culminating in $5.5 million in sales during the fourth quarter, which is seasonally the Company's strongest quarter of the year. This momentum was carried into the first quarter of 2024 which remained strong. The Company's Security Services business, now performing maintenance of passenger screening imaging and detection equipment across all of Canada, is beginning a scale up phase to increase revenue.
• The Company has a strong innovation pipeline. It is currently receiving advisory services and up to $1.45 million in non-repayable, non-dilutive funding from the National Research Council of Canada Industrial Research Assistance Program (NRC IRAP), to develop Artificial Intelligence based software tools to detect illicit substances. This project, scheduled for three years, will not only identify known illicit drugs but will also identify unknown drugs that are derivatives of known illicit substances also referred to as designer drugs or new psychoactive substances.

Private

Light AI Inc.

Light AI is an emerging Artificial Intelligence company specializing in advanced medical imaging technologies designed to differentiate between bacterial and viral infections, in real-time. The company’s solutions scan for disease markers present in the mouth and provide instant feedback to indicate whether the subject is clear of infection or needs additional support from healthcare professionals. The company boasts decision support solutions that are immediately accessible, inexpensive, non-invasive, pain-free and accurate.

Why it was picked:

• The increasing threat from global health issues, including pandemics and ensuring the population remains healthy while reducing the risk of spreading an infectious disease, is the new reality today. Light AI’s technology is easily implemented anywhere rapid screening is required including transportation hubs, hospitals and long-term care facilities, resorts and amusement parks and sports and entertainment venues.
• With 15 million pharyngitis cases annually in the US and an average cost per visit of $270, Light AI is targeting a substantial market opportunity. Their technology could potentially help avoid 13.5 million of these visits, representing significant cost savings for the healthcare system.
• Light AI mentions a 4 billion smartphone footprint, as it develops mobile-based solutions. This approach could provide access to enormous populations and offer convenient, affordable home diagnostics, potentially disrupting traditional healthcare delivery models.

TSXV: RECO / OTCQX: RECAF

Reconnaissance Energy Africa Ltd.

ReconAfrica is a Canadian-based oil and gas company working collaboratively with national governments to explore oil and gas potential in Northeast Namibia and Northwest Botswana – the Kavango Basin. To date, ReconAfrica has been granted licenses by Namibia and Botswana to explore and confirm the presence of their hydrocarbon resources. Subject to declaring commerciality, the Company is entitled to a long-term production licence to develop conventional hydrocarbons. This project aims to prove potential reserves that could lead to economic stimulus, funding local and regional jobs and other socio-economic benefits such as increased infrastructure, potable water access and investments in environmental and wildlife conservation.

Why it was picked:

• ReconAfrica is exploring the newly discovered Kavango Sedimentary Basin in northeastern Namibia and northwestern Botswana. The company states this basin has potentially expansive resources, including an estimated 2.3 billion barrels of undiscovered oil-in-place and 28 trillion cubic feet of undiscovered gas-in-place. If these estimates prove accurate, it could represent a substantial opportunity for the company.
• A new team led by Brian Reinsborough, a 35-year veteran in oil and gas exploration and production has identified high-impact exploration plays that are large and attractive to potential joint venture partners. The joint venture process is nearing completion, and ReconAfrica is currently reviewing multiple proposals. If a joint venture agreement is successfully completed, it would de-risk the financing of a multi-well exploration program and the current planned drilling program could be expanded, increasing the chance for an economic discovery.
• ReconAfrica operates in a region, considered to be one of the world's largest undeveloped hydrocarbon basins. It holds a 90% interest in 6.3 million contiguous acres onshore in Namibia, along with a 100% interest in 1.9 million acres in Botswana, directly adjacent to its Namibian holdings. It has successfully completed the drilling of three wells, which has confirmed a working hydrocarbon system. This foundational work has confirmed multiple high-quality reservoirs, setting the stage for further exploration.

Honourable Mentions:

Below is a list of companies whose fundamentals and growth trajectories also garnered the attention of the Investor Breakout Exchange in Kelowna:

Our post-event analysis shows that several of the participating companies have already experienced significant deal flow over the past few days. This surge in activity, bolstered by the Bank of Canada's interest rate cuts, is prompting investors to step off the sidelines and engage more actively with companies offering a compelling value proposition.

To capitalize on this momentum, the companies that captivated the Investor Breakout Exchange are now headed to a wider audience. Keep an eye out for a deep dive into what made them stand out in Kelowna, which will be brought to you in a series of special Spotlight Features over the coming weeks.

Next Stop - Muskoka

Mark your calendars! CEM’s 12th annual Muskoka Capital Event, a premier networking summit, will be held on September 27 - 29, 2024. This exclusive gathering is a catalyst for innovation and investment, connecting high-potential growth-stage companies in Resource, Technology, Biotech, and Special Situations sectors with elite capital finance leaders.

Designed to forge powerful partnerships and drive transformative deals, this September weekend retreat provides an unparalleled platform for visionary entrepreneurs and discerning investors to shape the future of emerging industries.

Warm Regards and Happy Investing,
Fabian Dawson