Sandon Capital Activist Fund commentary for the second quarter ended June 30, 2025.
The Fund return for June 2025 was -1.8%, bringing total returns (net of all fees and expenses) since inception to the equivalent of 10.6% per annum. Cash levels ended the month at approximately 3%.
The largest positive contributors were COG Financial Services Ltd (COG) (+1.1%), BCI Minerals Ltd (BCI) (+1.0%) and Karoon Energy Ltd (KAR) (+1.0%). These were more than offset by Fleetwood Ltd (FWD) (-1.6%), Southern Cross Media Group Ltd (SXL) (-1.3%), IDT Australia Ltd (IDT) (-0.8%) and QPM Energy Ltd (QPM) (-0.7%).
During the month, Carbon Conscious Investments Ltd (CCIL) sold a number of Australian Carbon Credit Units (ACCUs) at a price of $54 per unit. This is a significant premium to the prevailing generic ACCU price of ~$35 per unit. CCIL’s projects are classified as Environmental Planting carbon farming projects. The ACCUs generated from these projects are considered high-quality and high-integrity, underpinning the significant premium they command. The majority of ACCUs generated from CCIL’s project are subject to off-take agreements with Origin Energy and BP for the next few years. CCIL will receive all future ACCUs once these agreements expire.
QPM, one of the more recent additions to the portfolio, announced a $10 million placement and a $2 million share purchase plan to accelerate development of the 112MW Isaac Power Station (IPS). The Fund participated in the placement. The feasibility study for the IPS highlights attractive economics; a capital cost (excluding contingency) of $196 million, average annual revenue of $71 million and operating margin of $49 million over a 30-year life. The project’s delivery and schedule have been substantially de-risked through the procurement of 2 x 55.8MW gas fired aeroderivative turbines from GE Vernova under a fixed price contract.
KAR secured 100% interests in six Santos Basin blocks offshore from Brazil, including Piracucá near the Neon field and four deepwater blocks near Baúna. We consider this a low-cost option for KAR to potentially add incremental reserves to nearby hydrocarbon fields and infrastructure.
The next two months will encompass reporting season, when companies report their full year results for the 2025 fiscal year. In the absence of other information, our next few monthly reports will provide brief summaries of those results we consider most relevant to the Fund’s prospects.
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