Weekly Brief 3rd April 2020
As we all continue working from the comfort of our own homes with the situation reaching its peak this week, it may seem like the universe is playing its own April fool’s day (whose accompanying pranks were cancelled in respect of the situation).
But we should all continue to look for a rainbow of hope shining through the grey in honour of National Find a Rainbow Day today – people making full recoveries, strong responses worldwide, and the ways this has united the world and brought out the best in people. And if you can’t manage to find a real rainbow through this overcast weather, then cast your eyes to windows during your daily hour of exercise for children up and down the country putting up their paintings of rainbows to instil hope and show appreciation for our essential workers.
Client News:
Cora Gold (AIM: CORA) has commenced drilling at Madina Foulbe Permit in Senegal within one of the most prolific African gold regions, following promising recent exploration results. Costs as well as Cora’s carbon footprint will be kept down with the installation of a small solar hybrid power system, which is planned to be used at other camps in the future.
Harvest Minerals Limited (AIM: HMI) announced that as it is the wet season in Brazil, which is usually a quieter period for the company, there has been no significant impact on operations in light of the COVID-19 pandemic. However, the company has implemented a series of precautionary measures to keep its staff, customers and community safe and continues to monitor the situation closely. Harvest is debt free, with a strong balance sheet, and orders are up 150% to the end of February compared to the same period last year. Forecasts suggest a 3% growth in fertilisers this year as Brazilian farmers are taking advantage of the weaker Reais, which has fallen by 17% this year against the US$, meaning they have already pre-sold 20% of this year’s soybean harvest. Naturally, this is driving an increased fertiliser demand and the weaker Reais means that imported fertiliser prices are higher and that the supply chain is currently disrupted, which may strengthen Harvest’s proposition as a local producer. The company is also working toward becoming a carbon free company with the planting of 18,000 native trees during 2020.
Savannah Resources Plc (AIM: SAV) has taken action across all of its operations in response to the global COVID-19 pandemic by closing its offices and suspending field activities in order to protect staff and stakeholders. This action has had minimal impact as employees regularly work remotely and many ongoing critical tasks are able to continue and be completed, including finalising the EIA and Mine Plan for the Mina do Barroso Lithium Project, Portugal, as well as advancing the DFS using data previously collected. Savannah has a robust cash position of £3.5million, sufficient to maintain all current programmes as cash conservation plans take effect in light of the pandemic.
Armadale Capital Plc (AIM: ACP) completed the DFS for its wholly owned Mahenge Liandu graphite project in Tanzania, confirming it as a large, long life, low cost graphite deposit with an estimated pre-tax NPV of US$358m and IRR of 91% and scope for further positive improvement in the near-term through the delivery of an optimised DFS. The study estimates US$882m pre-tax cashflow from the initial 17 year mine life, which utilises just 25% of the resource offering significant further upside. Staged ramp-up is planned to facilitate near term production with 60,000tpa graphite concentrate to be produced for the first four years (Stage 1) before increasing to 90,000tpa (Stage 2). The capital cost estimate for Stage 1 is US$38.6m, which is expected to be paid back in 1.6 years (after tax) based on an average sales price of US$1,179/t. Stage 2 expansion is expected to be funded from cashflow. The Company is now focussed on applying for its Mining Licence, which is planned to commence in Q2 2020, and progressing ongoing discussions for offtake agreements, debt package finance for construction and project level development funding, which the DFS results are expected to support.
Oracle Power Plc (AIM: ORCP) has introduced a new investor communication programme, aiming to give shareholders regular news flow as well as access to the Board and management. This will include updates from the CEO in each quarter, shareholder conference calls, Q & A documents to be regularly posted on the website and announced to the market, and private investor events for new and existing shareholders.
Jangada Mines’ (AIM: JAN) unaudited interim results for the six-month period ended 31 December 2019, confirm that the company is focused on realising value at the Pitombeiras Vanadium Project in Brazil. Having established its strong mineral during the period through an estimated JORC Exploration Target of between 40Mt to 60Mt, the company is now working on defining a JORC compliant mineral resource estimate. The drill programme that started in January is scheduled to be completed in Q2 2020 in support of this. With the significant value and commercialisation potential of Pitombeiras, Jangada’s interest in the Pedra Branca Project has been divested in order to focus on Pitombeiras’ rapid development, but the company retain a strategic interest in the project.
Europa Oil and Gas Plc (AIM: EOG) expects existing cash reserves will be sufficient to finance upcoming activity, including farmout activities offshore Ireland and bringing the Wressle oil field in North Lincolnshire into production later this year at an initial gross rate of 500bopd. This equates to 150bopd net to Europa’s 30% interest which would more than double the Company’s overall net production to over 200bopd. Furthermore with an estimated breakeven oil price of US$17.62 per barrel, production at Wressle will be profitable at today’s oil prices. In response to challenging oil markets and the COVID-19 pandemic, the Company has implemented a programme of corporate cost reductions which includes salary cuts and the cancellation of non-core contracts.
Katoro Gold (AIM: KAT) has raised £215,000 (gross) through a placing and subscription of 17,200,000 new ordinary shares of 1.00p each in the capital of the company at 1.25p per share with new and existing shareholders. The fundraise will provide the company with additional working capital as its continues to advance its strategic portfolio, including the Blyvoor JV gold tailings project.
United Oil & Gas Plc (AIM: UOG) announced that the commencement of gas production at the Al Jahraa Field onshore Egypt has increased overall production to c. 8,400boepd, 1,850 boepd net to UOG’s 22% interest in the Abu Sennan concession. This is more than double the level of production 12 months ago. With US$6.5 per barrel operating costs, production at the field still generates solid margins even at current oil prices. Furthermore, 6,600 barrels of UOG’s monthly share of oil production benefit from downside price protection, as they are effectively hedged at $60/bbl for the next 30 months as part of the Company’s pre-payment facility with BP. Meanwhile c. 20% of United’s net production is gas which is sold under a fixed contract that is relatively insensitive to oil-price changes. United is not taking its relatively strong position for granted though, and has put in place a series of measures to conserve capital during the current period of uncertainty of Covid-19 and low oil prices.
Empyrean Energy (AIM: EME) updated its ongoing operations in reaction to the circumstances of Covid-19. After the highly successful appraisal drilling campaign on their Mako gas field in Indonesia, the commissioned updated view of the gas field is close to being completed and will be delivered shortly. The work on the Block 29/11 in offshore China has not been delayed as a result of the outbreak and work is anticipated to be completed in April. The drilling of the Borba well in California has been put on hold until it can be executed safely. Empyrean currently has sufficient working capital to the end of April, and is paying close attention to the situation as it develops and is monitoring its impact on the company and share prices.
FastFoward Innovations Ltd (AIM: FFWD) provided an update on its investee company Leap Gaming, in which FastForward has a 43.4% interest. Leap Gaming has developed an official virtual tennis product with its strategic partner IMG Arena. IMG Arena is launching the product in partnership with ATP Media, the global sales, broadcast production and distribution arm of the ATP Tour, a worldwide top-tier tennis tour organised by the Association of Tennis Professionals. It will be available in April and is the first of its kind, using top of the line motion capture technology.
Mila Resources Plc (AIM: MILA) announced its interim results for last year which were focused on finding E-Tech as the reverse takeover candidate, presenting a very interesting opportunity with their Eureka rare earth project in Namibia. Despite the global pandemic, the re-listing of the enlarged entity has not been interrupted and the company continues with preparing the documentation for the transaction to be completed by the end of the year.
Some news to brighten your day…
The stories from those that have made a recovery in the UK.
The world’s oceans can be restored within a generation.
Workers for festivals are building coronavirus triage tents instead.
Some tips on working and living during lockdown from those whose jobs have similar circumstances.
The Chase the Rainbow initiative.
Pictures of ‘balcony spirit’ across the world.
We’re Going on Bear Hunt inspired bear hunt to distract children with a fun and safe activity whilst walking through the neighbourhood.
People young and old have got into the Fancy Dress Friday spirit with Joe Wicks, turned Spiderman.
Puppies from the Atlanta Humane Society had a day out at the Georgia Aquarium during its closure.
A round up of zoos with live streams of their residents.
And tips on making working from home work from one of our very own!