KeyStone’s Stock Talk Show Episode 249. 

Great to be back in the saddle after a successful research trip to New York City.  To start the show, I will hit the viewer mailbag to answer a question on Tantalus Systems Holding Inc. (GRID:TSX), a provider of smart grid solutions to public power and electric cooperative utilities. The stock has more than doubled year to date and a viewer asks us if this Electrification stock still has wings. Aaron answers a viewer question on Perion Network Ltd. (PERI:NASDAQ), a technology firm specializing in digital advertising and monetization solutions across multiple platforms, websites, search engines, and social media. The viewer is curious to hear our take on this small cap tech stock, that despite consistent growth trades at a PE of 10 and stock momentum has been ugly. The viewer asks Aaron what he is missing on this one? Brett takes a look at NanoXplore Inc. (GRA:TSX) which provides standard and custom graphene-enhanced plastic and composite products to various customers in transportation, packaging, electronics, and other industrial sectors. The end market for their productions are driven by the energy transition, so EVs and renewables. While revenues have been increasing, the company is not yet profitable and shares are down 21% in the past year. Is it an opportunity – Brett will let you know. Finally, Brennan answers a question on Major Drilling Group International (MDI:TSX), provides contract drilling services for mining and mineral exploration companies with a fleet of over 600 drills operating in over 20 countries. Despite gold trading at record highs, Major Drillings stock is flat to slightly down over the past year – the viewer asks if this company is a way to play the uptick in gold.

Let’s get to the show – we welcome my cohost, Mr. Aaron Dunn and the killer B’s, Brett and Brennan.

Tantalus Systems Holding Inc. (GRID:TSX)

Stock Price$1.86
Market Cap$83.84 M


What does Tantalus do?

A provider of smart grid solutions to public power and electric cooperative utilities. The company’s hardware devices, software applications, and related services are designed to automate, monitor, and control power flow, consumption, and quality to improve grid reliability.

This slide should give you a snapshot of the business over the past 7 years.

There has been moderate consolidated revenue growth, but nothing spectacular and operating income has been primarily negative.

Share count over the same time horizon:

Significant increase over that time – the company is in a growth phase and when you don’t make money, you must fund operations via debt and/or issuing shares, and the company has done both.

Q4 and 2023 Annual Highlights

Tantalus generated the highest annual revenue in its history of US$42.1 million (CND$56.8 million), a 6% increase over 2022. Revenue contributions from the Utility Software Applications and Services segment (Software & Services) in 2023 and Q4 hit 35%, representing the highest percentage contribution in the Company’s history.

Annual Recurring Revenue (ARR): record by growing ARR to approximately US$11.5 million (CND$15.2 million) as of December 31, 2023, representing 17% growth year-over-year. Recurring Revenue recognized in the Q4 represented approximately 24% of total revenue generated.

Adjusted EBITDA: Positive Adjusted EBITDA of US$0.35 million (approximately CND$0.5 million) in Q4 compared to positive Adjusted EBITDA of US$0.1 million (approximately CND$0.1 million) for the prior year period. Adjusted EBITDA for FY 2023, approached a point of neutrality at a loss of US$29k (approximately negative CND$40k) compared to a loss of US$2.4 million (negative CND$3.1 million) for the prior year. The Adjusted EBITDA result for 2023 includes approximately US$5.0 million (approximately CND$6.8 million) of further investment in the TRUSense Gateway™ product offering made throughout the year.

Small-loss on an adjusted basis and headed in the right direction, but still not generating positive cash flow.

Balance Sheet:

Cash: $5.2 Million.

Debt: $11.4 Million.

Lease Oblig: $3.0 Million.


EV/aEBITDA (TTM): 65x.

EV/aEBITDA (FY 2024e): 23x

PE (TTM): Nil

PE (FY 2024e): 180x


The positives: 

  • Tantalus provides leading grid modernization technology that allows utilities to collect, manage, and analyze data.
  • The company’s platform directly supports decarbonization and the electrification of everything and is gaining traction with its strong value proposition to regional co-op utilities, municipalities, and some investor-owned utilities.
  • The TRUSense Gateway is the future of GRID’s product offering and provides the utility next generation advanced meter infrastructure (AMI) capabilities, improved power quality analytics, and most interestingly behind-the-meter access (among others). Initial feedback from GRID’s nine-member advisory committee and other early adoptions has been very positive and confirms that the product is addressing the challenges they told GRID they needing help managing Decarbonization, Electrification, and Aging Infrastructure.  Tantalus’s product plays into these long-term trends well.

We like the business and the potential for growth, but Annual Recuring revenue is still just $15.4 million Canadian. And Tantalus remains cash flow negative over the past year. Our minimum criterion for investment is positive cash flow. We continue to monitor it, but have found more profitable ways to investing in electrification and aging infrastructure with a name like Hammond Power.


Major Drilling Group International (MDI:TSX)

YSOT – Michael who is a client sent in a question on Major Drilling. He says, “Would like your opinion on MDI.TO /Major Drilling seems to have good numbers as far as I can tell but seems range bound love your podcast.”


Price: $9.51

Market Cap: $757 Million.

Company Description:

Major Drilling Group International Inc. provides contract drilling services for mining and mineral exploration companies with a fleet of over 600 drills operating in over 20 countries.

The customer and commodity pie graphs shown on the screen are from the company’s March 2024 Investor presentation, with about 80% of drilling revenue coming from seniors and 62% of drilling revenue split evenly between Gold and Copper.

Slide #2

As Michael mentioned, the stock has been essentially range bound between the $7-$11 range. So let’s dig into what is keeping the stock range bound.

Slide #3

Looking at the last quarter (Q3 2024) which is seasonally the company’s weakest quarter:

  • Revenue was down 11% to $132 million year-over-year.
    • U.S. drilling operations decreased by 21.7%, due to a seasonal shutdown of certain drill programs earlier than in previous years due to budgets being spent quicker as a result of inflationary pressures, and a lack of junior and intermediate financing, which has driven a more competitive pricing environment.
    • South and Central American revenue increased by 4.6% with growth in the region supported by busy markets in Chile and Brazil, but was slightly offset by slowdowns in Argentina due to the elections, and Mexico as a result of overall investment sentiment.
    • Australasian and African revenue decreased by 1.3%
  • Gross profit was down 29% to $18.9 million or a gross margin of 14.2%.
  • EBITDA was down 44% to $11.4 million.
  • Net loss was ($2.3) million or $(0.03) per share, compared to a gain of $6.3 million or $0.08 per share in Q3 2023.
    • One of the primary reasons for the loss was due to an FX loss of $2.3 million due to the Argentina peso depreciating due to economic reforms implemented by the new Argentinian government.

And looking at the balance sheet, it remains quite healthy with net cash position of $96.4 million. Which equates to about $1.18 per share.

Looking on a valuation basis, for the Price-to-Adj. EPS figure, I removed the negative FX of $2.3 million in Q3, which provides a multiple of about 11.9x. An EV/EBITDA of 5.0x and a P/CFO of 7.3x.

Slide #4

The shares outstanding have stayed quite stable over time, which is positive to see as management is not diluting shareholders. And in the recent press release in relation to the company’s strong balance sheet, management noted that they continue to invest in the rig fleet, with capex of $21.4 million during the quarter, including 6 new drills, while disposing of 3 older, less efficient drills, bringing the total fleet count to 605.

As well, the business spent $2.7 million in the quarter acquiring and cancelling 317,400 shares at a weighted average price of $8.45 per share.”

They were questioned on the conference call whether they would increase the activity of the NCIB given the strong cash balance, but management noted that Growth remains their primary focus given the strong demand in terms of Copper and Gold Activity with the strong commodity prices.

Slide #5

Growth in 2021 & 2022 was significant given easy access to funding. But slowdown in financing is affecting these regions (primarily North America) especially Juniors. With all current growth coming from Senior Companies.

Strong commodity prices (Gold & Copper) bode well for Seniors to continue to drill.

Fundamentally the business is strong:

  • Remains profitable despite headwinds to growth.
  • Strong balance sheet.
  • Buying back shares.
  • Continue to Invest in Rig Fleet.
  • Reasonable Valuations.

Why is it stuck in the range? I think that generally it has to do with the moderation of growth from the strong levels which we saw over 2020-2022 when access to funding was very easy. So the stock ran up to its current range after experiencing that growth but has struggled to move higher given some of these headwinds in funding which are leading to a bit of a slowdown.

Overall though, I think Major Drilling is a decent company. The balance sheet is robust, and for someone who thinks the business will benefit from increased copper and gold prices – I think it could be an option. But as clients know, we have a different driller under coverage which possesses attractive fundamentals.

YSOT NanoXplore (GRA:TSX)


Nanoxplore symbol GRA on the TSX provides standard and custom graphene-enhanced plastic and composite products to various customers in transportation, packaging, electronics, and other industrial sectors. The company has 11 production facilities across the US, Canada and Switzerland. The end market for their productions are driven by the energy transition, so EVs and renewables.

The stock is at $2.39 down 21.6% over the past year with a market cap of $410 million.


Looking at the last quarter, fiscal Q2 2024,

Revenue is down 8% to $29.1 million. The company attributes this to a six-week strike at one of its major OEM customers. The company believes sales would have been higher than the previous year without the strike. The estimated strike variance was $3 million so the estimated revenue removing the strike impact would have been $32.1 million or 1% growth year-over-year.

Gross margin improved to 19.4% from 17.8%. Or up to $6 million from $5.9 million in the prior year despite lower sales. Which is good to see as it reflects operational efficiency.

However, the company had an increased operating loss to a loss of $2.6 million from a loss of $1.7 million. R&D, SG&A and depreciation all ticked up.

NanoXplore had a loss of $2.4 million effectively no change year over year. This comes out to a loss of $0.01 a share.

The company does guide revenue of $130 million for the year, an uptick in the second half of the year due to the expansion of existing programs adding $30 million in incremental annual revenue.


The company has a net cash position including leases of $5 million. However, this will shift significantly into debt as the company will be taking on significant debt to execute its 5-year plan, which is expected to cost between $140 and $150 million. The company will have government support but the exact details have not been announced at this time, so that will be something to watch out for.


The 5-year plan is targeting to expand capacity significantly from 4,000 tons per annum to 16,000 in 2026 and 20,000 in 2027 of combined graphene and battery materials capacity. The bulk of the capex is expected to begin to come online in 2026 in 2026 which is for graphene, and battery and battery materials facility which is expected to add $140 million in revenue. The lightweight compositive facility is expected to add $80 million in revenue starting in 2025. Additionally, the company may see additional growth from its VoltaXplore segment which is graphene-enhanced lithium ion batteries.


The company has had some dilution over the last few years but nothing unsustainable which you do see in emerging manufacturing companies at times. The only substantial increase was in 2021, but related to acquisitions, so overall share structure is not a concern at this time.


The company is expensive, as the company does not have profit or even consistent material positive adjusted EBITDA  you need to look at sales. Which it is at roughly 3.2 times the forward sales. Which for a manufacturer is quite expensive even if it were profitable. Yes the growth is expected to uptick in the second half of the year but the company has seen effectively no growth over the past year for the bottom or top line. Looking at the 5-year plan revenue it comes out to a ball-park figure of 39% compounded annual growth of revenue from the expected fiscal 2024 revenue, assuming it hits the targets with no additional revenue growth or sources which ends up at $350 million revenue at the end of 2027.



The company is speculative at this time. The growth has been lacklustre over the past year, the expected uptick is positive, as well as the improved gross margins. But the growth is low given the current valuation, the real growth is really connected to its 5 year plan the compounded annual growth until 2027 which is not bad.  But that is only for revenue and for the company to be successful it needs to be able to transition the revenue growth to the bottom line, especially given that it is taking on debt to complete the plan.

As well, there are of course the risks of it being an emerging technology, competition, customer uptake, and general end industry slowdowns, notably the electric vehicle industry.

For now, I wouldn’t enter, I would wait to see how the 5-year plan hits the financials in an accretive manner after taking on additional debt.



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