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Despite the absence of new drilling activity, Trinity's Q3/20 production has remained robust, averaging 3,135bopd - an 11.3% YoY increase (Q3/19: 2,816bopd). YTD 2020 average production volumes have averaged 3,232bopd, a 9.8% YoY increase (YTD 2019: 2,943bopd), with 2020 production guidance remaining unchanged at 3,100-3,300bopd. Oil price realisations YTD 2020 have averaged US$37.3/bbl and, as a result, no Supplemental Petroleum Tax (SPT) will be payable in respect of the first three quarters of 2020. Cash as at 30 September 2020 was US$22.2m (30 June 2020 US$19.7m). Elsewhere, we view the proposed Budget reforms to the SPT regime as an important step forward by the Trinidad and Tobago Government and a recognition that SPT needs reforming. The proposed reforms will enhance cash flows between US$50-US$75/bbl and therefore allow companies to invest to grow production and deliver attractive returns for shareholders. We update our valuation and reiterate our price target at 31p per share, a 250% premium to the current share price.
Companies: Trinity Exploration & Production Plc
Notwithstanding COVID-19, Pan African’s (PAF) normalised financial results for FY20 were materially ahead of our expectations, driven by a US$9.9m positive variance in the direct cost of production (see Exhibit 3). In consequence, the group announced a more than fivefold increase in its proposed dividend for the year in US dollar terms to a record ZAR312.9m, putting it among the top 14 dividend-paying precious metals companies globally in terms of yield (see Exhibit 15). While FY20 represented a step change in PAF’s profitability compared with FY19, we believe that another step change is possible in FY21 under the influence of higher gold prices, close control of costs as new projects come on stream, a benign foreign exchange environment, a rising production profile and the maturity of all remaining hedging contracts prior to December 2020.
Companies: Pan African Resources PLC
Shanta Gold (AIM: SHG) has announced this morning its production and operational results for the quarter ended 30th September 2020 – see Fig 1. Overall this was a robust performance (from one of the most consistent operators in the sector) in the face of the pandemic and a very busy quarter for the company at corporate level. QoQ production fell to 19,973 oz and AISC rose to $883/oz – both caused by a temporary drop in grade – but the ongoing strength in the gold price resulted in a 16% and 46% increase in EBITDA QoQ and YTD respectively. There was an increase in net debt to $5.1m which can be explained by the $7.1m cash outlay for the West Kenya projects as well as the reduction in the hedge book (they also have $5.9m of gold dore in the gold room). The company remains on track to hit its full year guidance of 80-85koz of production at an AISC of $830-880/oz which would make it the third year in a row they have hit their unaltered guidance for the year. This would be a remarkable achievement for a major gold miner operating in a developed market let alone one operating in the South West corner of Tanzania. Likewise the fact the company has recorded zero lost time injuries makes it nearly three years in a row with no LTIs. With the greenlight for Singida and a scoping study completed for the West Kenya Project during the quarter, the company can look forward to leveraging this operational expertise across a larger and longer life production base (c.220Koz of annualised production). We continue to believe the market is still to wake up to this given a market cap of US$219m, next to no debt and EBITDA annualising at $90m.
Companies: Shanta Gold Limited
Talitha Kuparuk resource update
Companies: Pantheon Resources plc
Salt Lake's September 2020 Quarterly update reported that the Lake Way project is now 63% complete. Construction of the process plant is on-schedule with practical completion and first SOP production planned for the March quarter 2021.
Drawdown of the Senior Facility Agreement funds and repayment of the Taurus bridge loan is expected in November.
Companies: Salt Lake Potash Limited
Shanta Gold (AIM: SHG) has announced this morning results of its Scoping Study for the West Kenya Project, which it recently acquired from Barrick Gold (for US$14.5m). The scoping study concludes with a post-tax NPV8% of US$340m and IRR of 110% at a gold price of $1700/oz. We expect this will be seen as an extremely positive result by both management and the market, which is currently valuing the company at US$209m or GBp19/sh v GBp31/sh equivalent value of the post-tax US$340m NPV for the West Kenya Project alone. The West Kenya Project is located in western Kenya in the county of Kakamega – see Fig 1 overleaf. The project lies within the Liranda Corridor some 300 kilometres northwest of Nairobi, the capital of Kenya, and 30 kilometres north of the town of Kisumu. The Project comprises two greenfield deposits – Isulu and Bushiangala – which have a total NI 43-101 compliant inferred resource of 1.18 Moz Au at 12.6 g/t. These are the most advanced assets within the company’s 1200km2 license area.
Another impressive drilling result from Touchstone, which has announced a significant gas discovery with the Chinook-1 well on the Ortoire block, onshore Trinidad; its third in a row. This well exceeded pre-drill expectations again and further confirms the accuracy of the company’s geological model. This not only de-risks the upcoming Cascadura Deep and Royston prospects but also opens up significant follow-on exploration opportunities. Touchstone has already identified 21 additional prospects on the Ortoire block representing five years of drilling inventory, for which we currently give zero value…this story has legs!
Companies: Touchstone Exploration Inc
Jubilee today announces its quarter to September operational results which were a record – in terms of both production and financial performance. In all, 15koz of Platinum Group Metals were produced along with 136,1kt of chrome concentrate. Record high production led both to high attributable revenues of $23.1m and high attributable earnings of $15.2m for the quarter; we expect this performance to continue.
Companies: Jubilee Metals Group PLC
Altus Strategies* (ALS LN) – BUY, Target 115p – 5,000m trenching programme launched at the Laboum Gold Project, Cameroon | Arc Minerals* (ARCM LN) – Annual report describes transformational year for Arc as it focusses on Zambian copper prospects | BlueRock Diamonds (BRD LN) – Third quarter figures highlight substantial improvement in volume and grade | Keras Resources* (KRS LN) – Progress in Togo and Utah | Power Metal Resources* (POW LN) – Launch of website galley | Shanta Gold (SHG LN) – West Kenya Scoping Study confirms attractive project economics | Yamana Gold (AUY LN) – Admission to London’s Official List
Companies: ALS ARCM BRD KRS POW SHG
i3 Energy has announced that it has published an Admission Document in respect of the proposed acquisition of Toscana Energy Income Corporation.
As previously announced, the Toscana acquisition is to be consummated via a plan of arrangement. Due to its size and nature when it was announced on 23 June 2020, the Toscana Acquisition constitutes a reverse takeover of the company pursuant to the AIM Rules. As a result, the Toscana Acquisition requires approval by i3 Shareholders by way of an ordinary resolution at a general meeting of the Company to be held on 29 October (amongst other conditions).
Companies: i3 Energy Plc
Oil posted a small weekly gain on tentative signs that demand is picking up even as a new wave of coronavirus cases casts a shadow over the market.
Futures in New York edged lower on Friday, but still managed to record an advance of 0.7% this week on shrinking US crude stockpiles and signs of improving demand in China and India. Gains were capped by record new virus cases from Germany to Portugal and the biggest surge in US daily infections in two months.
Crude futures in New York have clung close to the $40-a-barrel mark since September amid uncertainty around a demand recovery as the virus rages. Meanwhile, OPEC producers and allies see a risk of an oil surplus next year if Libya's production rises and demand remains depressed.
At the same time, the market's structure continues to strengthen, with the spread between Brent's nearest contracts at its narrowest since late July. For West Texas Intermediate futures, the prompt spread rallied to its tightest contango in a month.
West Texas Intermediate for November declined 8 cents to settle at $40.88 a barrel.
Brent for December settlement lost 23 cents to $42.93 a barrel. The contract rose 0.2% this week.
Prices pared earlier losses on Friday after American retail sales and consumer sentiment indicators topped estimates.
The Organization of Petroleum Exporting Countries and its allies are facing pressure to postpone their plans for tapering output cuts. Given the uncertainty over the oil demand outlook, the right course of action is to wait for now, JPMorgan analysts including Natasha Kaneva wrote in a report. The move to add another 2 million barrels of day onto the market in January could be postponed by a quarter, the report said.
OPEC+ is also contending with the unexpected return of Libyan oil output, which hit 500,000 barrels a day this week. The group forecasts that global oil supplies could increase by 200,000 barrels a day next year if Libya manages to revive supply and the pandemic hits demand harder than expected, according to a document seen by Bloomberg.
Companies: FOG PVR 88E DGOC EME TRIN UOG
Increase in North Kelsey stake
Companies: Union Jack Oil Plc
Jersey Oil & Gas has provided a technical presentation and video which summarises much of the subsurface and developmental analysis undertaken by the company as part of the concept select stage. These materials have been made available on the company's website and we encourage investors and potential investors to watch the 5 minute video. We will review the material and comment in due course. The video is available at: https://www.jerseyoilandgas.com/media/videos/
Companies: Jersey Oil & Gas PLC
We are updating our estimates following Iofina’s Q3 2020 update to factor in the recent COVID-19 related demand slowdown and iodine price-easing first flagged at its interim results. This is the first time we have adjusted estimates since the pandemic, so this may be viewed as overdue, certainly the share price would say so. What remains clear is that Iofina’s underlying business continues to perform well in the face of COVID-19 challenges. Its balance sheet has been dramatically improved by the recent refinancing, and while the pandemic is having some impact, Iofina’s growth outlook remains strong.
Companies: Iofina plc
Q3 production and operational update
Companies: Enwell Energy plc