Weekly Brief 2nd October
September has flown past in the blink of an eye and October has begun, bringing with it the final quarter of 2020 after our clients have tied up this busy last quarter.
October also marks the beginning of Black History Month in the UK and follows on from one of the most significant events of this year: the mass protests worldwide in support of the Black Lives Matter movement. Its slogan of: ‘Dig deeper, look closer, think bigger’, encourages us to reflect on all aspects of our heritage and culture that we take for granted. Google honoured the start of the month with one of its ‘Doodles’ celebrating Ignatius Sancho – a multitalented British writer, composer, business owner and abolitionist. His most notable achievement was becoming the first person of African descent to cast a vote in a British general election in 1774, qualifying due to his status as a financially independent male homeowner after escaping slavery. Centuries later, his legacy continues to inspire and inform through his fight for equality and his writings that contributed to the abolitionist movement. This is not only an opportunity to look back at the past but it is crucial to look at our present as well as the possibilities that the future holds, and strive to ensure that the events of this year become a catalyst to create a better future for us all.
Client News
Critical Metals Plc entire issued share capital made its debut on the main market of the London Stock Exchange on Tuesday, trading under the ticker CRTM. A strategic metals focussed investment vehicle, this marks a significant milestone for the company and will provide the platform to advance its strategy to identify and invest in operators and near-term production operators in the strategic metals sector in Africa. CRTM intends to search initially for acquisition opportunities in minerals that are perceived to have strategic importance to future economic growth. Commodities such as antimony, beryllium, cobalt, copper, fluorspar, gold, rare earth elements, tin, tungsten and vanadium have been identified by several governments as “critical minerals” and so guaranteeing supplies is seen as a strategic necessity. Find out more about Critical Metals here www.criticalmetals.co.uk
Keras Resources Plc (AIM: KRS) provided an update in light of the resignation of the Togolese Prime Minister Komi Selom Klassou and his government. The Keras Board looks forward to continuing constructive meetings with the incoming government, led by Victoire Tomégah Dogbé, the first woman to hold the position of Prime Minister, and the news is not expected to impact or undermine the significant progress made at the Nayega Manganese Projects.
Scotgold Resources Limited is proving there is truth behind the old mining adage that “the best place to find gold is where it has already been found”. The Scottish miner has already found gold at the Cononish Mine, which is on course to become Scotland’s first commercial gold mine by 30 November 2020 (St Andrew’s Day!), and this week management announced encouraging results from ongoing exploration programmes at Cononish as well as at its Grampian Project. The programmes are focused on increasing the mineral resources at Cononish, advancing the gold and silver anomalies identified at the Beinn Udlaidh and Inverchorachan prospects, and making new discoveries over a large area on the Dalradian belt over which Scotgold holds an option. The latest results include the identification of gold and silver anomalies to the north east of the Cononish mine; the delineation of multiple open-ended anomalies at Beinn Udlaidh, with the highest Au value returned from current sampling at 15.15 parts per billion; and the identification of multiple discrete anomalies at Inverchorachan with values of 22ppb Au and 44 pub Ag returned.
Tirupati Graphite Plc, a fully-integrated, cash generative, specialist graphite and graphene producer with operations in Madagascar and India, announced its potential intention to undertake an initial public offering by applying for admission of its ordinary shares to the Official List of the FCA by way of a Standard Listing and to trading on the Main Market of the London Stock Exchange. As part of this proposed listing, the Company submitted its Registration Document to the UK Financial Conduct Authority, which was subsequently approved. The Document has been published on Tirupati’s website www.tirupatigraphite.co.uk and unconnected sell side research analysts can obtain additional information, including a presentation, by contacting St Brides by emailing info@stbridespartners.co.uk or calling +44 (0) 20 7236 1177.
Armadale Capital Plc (AIM: ACP) announced its unaudited interim results for the six months ended 30 June 2020. During the period, the Mahenge Liandu Graphite Project has been established as a large, long life graphic deposit capable of producing high quality graphite concentrate for the rapidly emerging EV market through its optimised DFS. The enhanced numbers of the study clearly highlight the significant value potential of the asset, with US$985m pre-tax cashflow to be generated from the initial 15 year mine life utilising just 25% of the resource and estimated pre-tax NPV of US$430m and IRR of 91% based on average annual production of large flake high-purity graphite of 109ktpa. Significant interest from a number of commercial parties has been received for the project, with two MoUs progressing into binding offtake agreements for the supply of its graphite product. Moreover, project level funding discussions are advancing with two prospective parties to progress the project through to mine construction once the company is granted the Mining Licence, the application for which commenced in June 2020.
Harvest Minerals Limited (LSE: HMI) provided three news updates comprising its final audited results for the six months ended 31 December 2019 (and the 12 months ended 30 June 2019), a trading update giving a summary of more current trading conditions, and a shareholder Q&A to answer recent investor questions. A strong year-to-date sales performance of 37,436 tonnes is reflective of increasing market traction of KPFértil as a cost effective, high quality remineraliser product, despite the continuing impact of the COVID-19 pandemic that has affected sales. Following cost saving initiatives, the recurring overall cost of operations is the equivalent of sales of approximately 40,000 tonnes per annum of KPFértil and with a revised year-end sales target of approximately 50,000 tonnes for the full year ended 31 December 2020 in light of the COVID-19 impact the company is on track to conclude 2020 by reporting a modest maiden profit before tax. As at 30 September 2020, the unaudited cash balance was AUD$3,723,397 with a positive working capital position of approximately AUD$4,861,723
Dekel Agri-Vision’s (AIM: DKL) H1 2020 financial results showed a major year on year improvement with revenues up 5% to €15.4 million; EBITDA up 36% to €1.9million; and net profits up from a loss of €0.1m to positive €0.4m. A 19.21% increase in the price Dekel received for its crude palm oil (‘CPO’) paired with higher extraction rates more than offset lower CPO volumes produced at the West African focused agriculture group’s palm oil project at Ayenouan in Cote d’Ivoire during H1 2020. Management is confident of a further improvement in the financial numbers as global CPO prices are currently trading back at traditional levels after a COVID-19 induced drop earlier in the year, while the trend of higher extraction rates has been maintained post period. H2 2020 results are therefore set to show a material improvement compared to H2 2019. Meanwhile, construction work at the large scale cashew processing project at Tiebissou in Cote d’Ivoire is advancing with production on course to commence in Q2 2021. At this point Dekel will have two producing assets in its portfolio which also holds a number of earlier stage opportunities including a clean energy project.
BlueRock Diamonds Plc (AIM: BRDD) announced its interim results for the six months ended 30 June 2020. Following its rapid response to the pandemic in South Africa, and after just 6 weeks on care and maintenance, positive outcomes were experienced at Kareevlei when it was reopened in May 2020. Expansion plans at the mine continued to progress and the Company increased its plant size by 20%. During and post period end, BlueRock has strengthened its balance sheet with two over-subscribed placings to increase annual production, and a relationship with Bonas Group, Antwerp was established to help sell Kareevlei diamonds in Europe when South African tender houses were closed.
Ferro-Alloy Resources Limited (AIM: FAR) published its interim results for the six months ended 30 June 2020. FAR experienced record high production during the period with 98 tonnes of vanadium pentoxide in the first half compared with 71 tonnes production in the same period last year, as well as record high shipments to customers of 109.2 tonnes of vanadium pentoxide. Although the hydrometallurgical line closed due to the pandemic for three months, the pyrometallurgical operations continued throughout and the upgrade to local feasibility study at the Balasausqandiq Vanadium Project has continued. Around 100% step-increase in production after period end was achieved with a total of 70 tonnes of vanadium pentoxide produced in the first 2 months of the third quarter compared with an average production of 16.3 tonnes per month in the first half of this year. In addition, technology for the production of electrolyte for vanadium flow batteries has been successfully developed.
Bluejay Mining Plc (AIM: JAY) released its interim results for the six months ended 30 June 2020. The company, which is focussed on commencing near-term production at the world class Dundas Ilmenite Project alongside progressing its wider portfolio in Greenland, has made a number of cost savings during the period under review as part of its response to COVID-19 whilst advancing its projects as much as possible. With work starting to recommence on-site, the company’s focus remains on securing an offtake agreement and commencing production at Dundas at the earliest opportunity to realise the project’s potential and, in the process, prove its high-quality status. Crucially, their confidence is not just limited to Dundas but extends to its wider portfolio, which includes the recently acquired Thunderstone licences where a low-cost fieldwork programme has recently been completed targeting several high-priority gold and base metal geochemical anomalies, and the Disko-Nuussuaq Ni-Cu-Co-PGE-Au Project and Kangerluarsuk zinc-lead-silver project projects, where an extensive exploration and drill programme is planned. Given Bluejay is operating within a supportive jurisdiction, has large scale resources, high grades, a proven processing route, low costs, strong economics, institutional and industry backers, a team with a proven track record of delivery, and access to end markets, the outlook for the Company remains highly positive. The £7m cash balance at the period end excludes £720,000 of receivables due and £914,870 of VAT receivable from an HMRC tribunal claim, so the cash balance remains healthy with little planned cash needs for the rest of this year, aided by the pragmatism of the Greenlandic authorities in easing licence commitments for 2020.
Busy week for Erris Resources Plc (AIM: ERIS). First the Company announced that it is looking to acquire 50% of Deutsche Lithium and its principal asset, the late stage, high value Zinnwald Lithium Project in Germany from Bacanora Lithium Plc. A 2019 Feasibility Study estimated that the Project has a €428 million pre-tax (discounted at 8%) NPV; 27.4% IRR and an average LOM (life of mine) annual EBITDA of €58.5 million. Together with a mining licence already in place, excellent access to fast-growing end markets in Europe; and a relatively low capital cost requirement of €159m, Zinnwald has the potential to transform Erris from a discovery driven consulting and exploration company into Europe’s next lithium producer. Subject to the Zinnwald acquisition being signed off by shareholders, the Board is proposing to spin out its Loch Tay Gold Project to existing shareholders and change the Company’s name to Zinnwald Lithium. Erris’ other existing assets Abbeytown and its Scandinavian projects such as Brannberg will remain owned by the Company and held in care and maintenance whilst it looks for future funding partners. Erris followed that news by releasing its interim results for the six months period ended 30 June 2020.
Secure Property Development & Investment Plc (AIM: SPDI) announced its full year audited financial results for the year ended 31 December 2019. Progress has been made in advancing the Company’s strategy, which is focused on realising the value of its South Eastern Europe property portfolio – €2.0m net cash was generated following the profitable sale of the Victini Logistics asset in Greece, while Stage 1 of the all share sale of SPDI’s property portfolio (excluding its Greek assets) to the Arcona Property Fund N.V. was also completed during the year. The all share deal with Arcona, which values SPDI’s assets to be sold at €29m or 3.2 times the current market value of the company, will see the creation of a significant European focused property company. SPDI currently has four income-producing commercial properties in its portfolio which are predominantly let to tenants operating in defensive industries such as food and telecoms. As a result, SPDI’s tenants have experienced little or no disruption from the COVID-19 crisis. The average occupancy rate at SPDI’s income producing assets properties increased by 10% to 93% during the year.
Katoro Gold Plc (AIM: KAT) provided an update on the planned drilling programme targeting the discovery of nickel and platinum group metals at the Haneti Project in Tanzania, in which it holds a 65% ownership interest. The pre-drill rig mobilisation is now underway in order to finalise preparations for the maiden drilling programme, and the technical team is mobilising to site shortly to liaise with the Tanzania Ministry of Minerals and regional/local government. Previous exploration work delivered nickel values as high as 13.6% and 2.33 g/t combined platinum and palladium, and Katoro is confident that Haneti holds significant potential to host a world class nickel deposit.
Kibo Energy Plc (AIM: KIBO) provided an update on its ongoing negotiations regarding a Power Purchase Agreement (‘PPA’) with Baobab Resources Ltd to supply c.200MW energy to Baobab’s Tete Steel and Vanadium Project in Mozambique. Having completed both a comprehensive integration study and an extensive Engineering, Procurement and Construction review to provide an indicative EPC price, the Company expects to finalise the terms of the PPA in the coming weeks.
In the news this week…
A hydrogen powered train has travelled on Britain’s rail network for the first time and aims to carry passengers by 2021.
A jet suit for paramedics has been tested by the Great North Air Ambulance Service and would allow medics to reach patients in minutes.
Sir David Attenborough joined Instagram and broke the record for the fastest time to reach a million followers – 4 hours and 44 minutes to be precise.
The dachshund bobblehead toy celebrated its anniversary this week.
A ban on single-use plastic straws, stirrers and cotton buds has come into force in England.
Royal Mail postboxes in London, Glasgow, Cardiff and Belfast have been painted as part of Black History Month with each featuring a significant figure in the British black community.
Find out more about Black History Month here, and read more about Ignatius Sancho‘s inspiring life.