SUMMARY
- The Fund rose 3.1% in April, supported by strong gains in key holdings across critical minerals and mining.
- Standout gains came from MTM Critical Minerals, Brazilian Rare Earths, and IperionX, all benefiting from positive developments and strong sector demand.
- Weakness stemmed from Genetic Signatures, EBR Systems, and Enlitic, which faced near-term setbacks despite having a positive longer-term outlook.
We recently recorded an investor update where Fund Manager James McDonald shares how the Pengana High Conviction Equities Fund is navigating market cycles, covering performance, outlook, key holdings, and investor questions.
COMMENTARY
The Fund rose 3.1% in April.
MTM Critical Minerals rose 53% after announcing two supply agreements in the e-waste market. The company’s technology allows for the efficient recycling of used PCB boards by extracting and separating valuable metals, including gold, copper, and tin, with gold representing 50–80% of the value. It is potentially a very large market—more than $40 billion annually—globally, with currently low recycling rates of about 15%. The U.S. Department of Defense has also expressed interest due to the valuable critical minerals contained in the waste. We believe this business could generate meaningful revenue in 2026.
Brazilian Rare Earths rose 28% after announcing a high-grade bauxite and gallium project adjacent to its rare earth project in Bahia. The deposit was drilled extensively by Rio Tinto prior to the company acquiring the project in 2023. Since that time, the price of bauxite has tripled as China becomes increasingly dependent on imports. The price of gallium has also risen to more than $600,000 per ton after China banned exports to the U.S. We believe the project could have a rapid, low-cost development pathway.
IperionX rose 20% after releasing a detailed quarterly report highlighting progress in manufacturing at its new Virginia plant and customer engagement with eight clients across sectors such as defense, consumer electronics, and automotive. The company also expects to release a plan mid-year for scaling production, which will be of great interest to many investors. With USD 66 million of cash on hand and a recent Department of Defense grant, the company is well funded. Also of note were comments around potential debt guarantees of up to USD 400 million by the state of Virginia, which is highly significant for the company’s future growth plans.
On the negative side, molecular testing company Genetic Signatures fell 19% after releasing its quarterly report. Investors were disappointed that no new customers had been signed for its new enteric gut bug PCR test. However, the company did highlight that several customers are in the late stages of the procurement process. The laboratory testing market in the U.S. is highly consolidated, so contract wins may potentially be significant.
EBR Systems fell 30%, rather surprisingly, despite the FDA approving its WiSE cardiac resynchronisation device. The company is unlikely to generate significant revenue until reimbursement is established in October, but we see the shares as very attractive given the approval.
Medical imaging AI software company Enlitic fell 38% after announcing quarterly results that disappointed the market and a subsequent capital raising in early May. However, the company is making progress with GE—one of the largest medical imaging companies globally—enabling them to migrate billions of images stored on-premise at hospitals to their cloud platform, which should be a major driver of revenue over the coming years.