Altus Strategies* (ALS LN) – BUY, 132p – Updated Diba PEA using stronger metallurgical recoveries lifts project NPV to $140m | Anglo American (AAL LN) – De Beers reports steady rough diamond sales demand while cautioning on continuing Covid19 risks | Bacanora Lithium (BCN LN) – Mexico presses ahead with plans to nationalise lithium industry | Botswana Diamonds (BOD LN) – Drilling underway at Thorny River and Marsfontein | IronRidge Resources* (IRR LN) – IronRidge renews gold licenses in Chad | KAZ Minerals (KAZ LN) – Baimskaya capex revised upwards and commissioning delayed
Companies: ALS AAL BCN BOD IRR KAZ
Companies: Bacanora Lithium Plc
Bacanora Lithium (BCN LN) – Ganfeng exercises option to increase investment in Sonora Lithium project | Chaarat Gold* (CGH LN) - BUY – Production guidance reiterated after Armenia/Azerbaijan agree to a ceasefire | Endeavour Mining (EDV CN) – Q3 report declares first dividend as board mull London listing | Gemfields (GEM LN) – Sale process for SPM | Panthera Resources (PAT LN) – Bido field exploration plans | Serabi Gold* (SRB LN) – Q3 results hint that worst impact of Covid19 may be over with production expected to start t recover in Q4 | Vast Resources* (VAST LN) – Baita Plai exploration target expanded to 3.2-5.8mt
Companies: BCN CGH 0YYC GEM PAT SRB VAST
Although China is the world leader in terms of battery materials and battery manufacturing, Europe is second and due to grow from 10GWh to around 500GWh by 2030, underpinned by the green energy focused post COVID-19 support. BCN has now spun-out of Zinnwald into AIM listed Erris Resources which has been renamed Zinnwald Lithium (ZNWD LN) and has a dedicated and experienced management team, firm commitment to funding and transparent structure. We believe ZNWD to be well placed to capitalise on the regional tailwinds of massive transitional energy related stimulus unlocking the value potential, post-tax NPV8 US$257m, that we have previously highlighted exists. Under the terms of the transaction ZNWD now owns the 50% shareholding in the Zinnwald project and following a fundraise of £3.75m BCN has a 44.3% stake in ZNWD and an additional net profit royalty of 2%.
Arkle Resources* (ARK LN) – Mine River soil sampling Bacanora Lithium (BCN LN) – Operational update at Sonora Project in Mexico | BlueRock Diamonds (BRD LN) –– BlueRock recovers 9.7ct diamond | Cornish Metals* (CUSN CN) –– First results from drilling at South Crofty in Cornwall | Greatland Gold (GGP LN) – Recent drilling expands northern breccia zone at Havieron as WA grants Mining Lease | Predictive Discovery (PDI AU) – Results of further drilling at Bankan | Strategic Minerals* (SML LN) – Confirmation of Leigh Creek environmental submission | Sunstone Metals (STM AU) – Drilling starts at Espiritu gold-silver prospect in Ecuador
Companies: ARK BCN BRD GGP PDI SML STM VAST
Bacanora Lithium (BCN LN) has provided an update demonstrating ongoing progress towards design completion, a key milestone head of project financing and construction.
Bacanora Lithium (BCN LN) has provided a periodic update demonstrating that despite the impact of COVID-19 measures the company continues to make robust progress in developing the Sonora project in Mexico. We also note a strong cash position of US$45m to enable continued progress. National and state level measures have meant the closure of the pilot plant since March 2020 although BCN hopes to restart producing trial lithium deliveries to offtake partners as early as June, should changes in the regulations permit it.
Bacanora Lithium (BCN LN) – Non-executive director appointment | Central Asia Metals (CAML LN) – Milestone 100,000t of copper from Kounrad | Medusa Mining (MML AU) - Co-O gold mine restarted in the Philippines | Orosur Mining (OMI LN) – CEO, Ignacio Salazar resigns | Power Metal Resources* (POW LN) – Update on nickel exploration projects in Botswana | Shanta Gold (SHG LN) – Robust production with FY20 guidance reiterated
Companies: BCN CAML MML OMI POW SHG
Bacanora Lithium (BCN LN) | Central Asia Metals (CAML LN)
Companies: Bacanora Lithium Plc (BCN:LON)Central Asia Metals Plc (CAML:LON)
Bacanora Lithium (BCN LN) has announced an update in relation to the Sonora project following the impact of the coronavirus. Given that BCN’s strategic partner, Ganfeng Lithium is primarily based in China the review process of project engineering has been delayed. As we had anticipated this delay now means that the review work is likely to be completed in Q3 2020, roughly a three month impact, however, with Ganfeng in line with many other industrial groups in China now resuming work and restarting factories this gives greater clarity to our estimate.
Bacanora Lithium (BCN LN) 15.5p, Mkt Cap £34.6m – Sonora State reports first case of Covid19 infection | Cora Gold* (CORA LN) 4.3p, Mkt Cap £5.6m – Sanankoro drilling results | Europa Metals Limited (EUZ LN) 0.015 pence, Mkt Cap £1.7m – Impact of Covid19 containment measures at Toral zinc, lead, silver project in Spain | Versarien PLC – 23.36p, Mkt Cap £36m – £6m subscription with US institutional investor | World Health Organisation (WHO) launches multinational COVID-19 trial (SP Angel Healthcare team) | Novacyt* (NCYT.L): FDA Emergency Use Authorization for COVID-19 test | Creo Medical Group (CREO.L): FDA clearance for Haemostasis Device
Companies: BCN CORA VRS NCYT CREO
Bacanora Lithium (BCN LN) # released interim results for 2019 which highlight a prudent year in terms of spending given the focus on securing the landmark deal announced with Ganfeng Lithium. The agreement was executed in October 2019 following approval from the relevant Chinese authorities. Given this focus corporate spending was significantly reduced in 2019 with an operating loss of US$3.2m versus US$7.99m in 2018. With the drawdown on the Red Kite facility having commenced interest cost was the primary driver of additional costs resulting in a net loss of US$4.95m versus US$11.1m 2018. However, with the completion of the Ganfeng deal along with a subsequent fundraise of £7.7m in November 2019 the company ended the year with a strong cash position of US$48.9m. With a major strategic partner and strong institutional support the company is well positioned to execute on the full project financing package and commence construction.
Bacanora Lithium (BCN LN) has announced changes to its agreement with Solarworld and specifically the cancellation of options in relation to the Zinnwald JV along with a commitment to funding of €1.35m over the next two years.
Bacanora Lithium (BCN LN) has announced that it has raised £7.7m (US$10m) at a price of 25p/sh. through the issuance of 30.92m shares. The placing made at the request of one of the company’s key institutional shareholders underpins the support for the project beyond that of Ganfeng. M&G will, as a result of the placing, increase their position to 19.9% which we view as a significant endorsement of the company’s strategy in particularly in relation to successfully bringing on board Ganfeng Lithium. Our valuation is calculated on a fully diluted basis and therefore our target price is only marginally impacted by the placing and we reduce it by 1.8% to 112p/sh.
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Less than a fortnight after a major new contract announcement in West Africa, Capital has announced the expansion of its operations at Barrick Gold’s Bulyanhulu Gold Mine in Tanzania. The contracts include a five-year laboratory services contract for MSALABS, together with a two-year underground grade control drilling contract. Capital commenced operations at Bulyanhulu in February 2020, undertaking a deep hole delineation drilling program. The successful execution of this resulted in an expansion of services, with two underground rigs added to operations from May. The new contract will expand the underground fleet to four, utilising two rigs from the existing fleet and including the acquisition of a further two rigs.
Companies: Capital Limited
Trading to date in FY 2021 has been positive, with no sign of an adverse impact from the second national UK lockdown. Net new business across both divisions is described by management as encouraging and the new business pipeline remains very healthy. With volumes better than expected and margins improving DX is on track to perform materially better than market expectations and we have, consequently, upgraded FY 2021 EPS by 29% and FY 2022 by 15%, driven by stronger assumptions in DX Freight. We have also raised our FCF-based target price from 29p to 33p and reiterate our view that the group is in a strong position to rebuild profitability by winning new business and improving efficiency, productivity and margins.
Companies: DX (Group) Plc
Management is delivering right on cue to its resumed guidance as per the 1 October trading update. H2 revenue recovery is back close to pre-pandemic levels and operating margins have returned to target 3% in quick time – and are sustainable at that level too. Having upheld dividends through this challenging period and actually extended the order book (up 17% YoY and also c3% higher than last reported), TClarke is firmly re-establishing a growth trend on arguably more solid foundations. The share price is 10% higher since the last trading update but in our view remains significantly undervalued against a prospective FY21E EV/EBITDA ratio of 3x, a PE of c6x, yield 4.6% and double-digit FCF yield.
Companies: TClarke plc
Volex has reported interim results that are in-line with expectations following a strong trading update in mid-October. Of far greater significance is today’s announcement of the proposed acquisition of DEKA for a consideration of up to €61.8m on a debt free basis. DEKA is a leading and highly profitable power cord manufacturer, strategically located in Turkey, that serves leading European white goods manufacturers. The acquisition should close in early CY2021, subject to expected Turkish Competition Authority approval. We foresee 15% earnings enhancement in FY2022E with further opportunities for revenue synergies with Volex in the Far East as its operations also vertically integrate, production efficiencies increase and the cost of production falls. The statement highlights that pro forma net debt/EBITDA remains under 0.4x and this provides scope for further bolt-on acquisitions alongside a new $70m RCF and $30m accordion, also announced with the interims.
Companies: Volex plc
We release prudent FY20E and FY21E forecasts as Xpediator continues to gain momentum and operations revert to pre-COVID levels. The Group has made strategic progress year to date. It has implemented a strict cost reduction programme which should drive annualised cost saving of over £0.5m, restructured and strengthened its management team and further integrated acquisitions. Additionally, it is in the process of consolidating its site portfolio, driving further costs out of the business. We believe the market continues to undervalue Xpediator's geographically diverse revenue base, flexible low fixed cost operating model and positive financial outlook. Accordingly, we move our recommendation from Under Review to Buy.
Companies: Xpediator Plc
Directa Plus has announced that in the October collaboration agreement with NexTech Batteries, it has achieved above 400 Wh/kg (watt-hours per kilogram, the usual measure of energy density) in a practical system. NexTech produced several full-scale pouch format cell prototypes using its proprietary cathode and electrolyte materials (with Directa plus graphene) producing 410Wh/kg of specific energy at a weight only slightly below 30g. For comparison, standard Lithium-Ion batteries have an energy density of 100-265 Wh/kg.
Companies: Directa Plus Plc
President Trump likes to project himself as a highly successful businessman, but surprisingly little is known about his true financial position. Various articles, including a 2016 in-depth analysis by The Wall Street Journal, have speculated about his income and asset base. All sorts of claims and counter-claims have been made about his wealth – by Trump himself, pitching his fortune at some $9bn, and by journalist Timothy O'Brien, suggesting that it is as “low” as $150m-$250m. It is doubtful whether we shall ever know the truth, but we can use Trump’s UK corporate filings to gain an insight into his businesses in Scotland.
Companies: AVO ARBB ARIX CLIG DNL FLTA ICGT PCA PIN PHP RECI STX SCE TRX SHED VTA YEW
The group has released a positive trading update, signalling a strong H2 and performance ahead of expectations. The new guidance points to a 6.7% upgrade to revenues and a 10.5% upgrade to EBITDA. Cash generation has been notably strong, at about $26m, which will drive an increase in supplemental dividends with a dividend yield of 7.1%. We raise our TP from 255p to 285p, based on a target P/E of 14x, giving decent upside to the current 11.6x.
Companies: Somero Enterprises, Inc.
Xpediator has delivered a healthy trading update, breaking several revenue records during H2 2020. Furthermore, the outlook for FY21 remains promising, reflecting recovery to more normal levels in Transport Services, a full-year impact of the Nidd acquisition, the turnaround of underperforming businesses, and new ventures. The £6m PBT forecast for FY20 highlights an improving margin, albeit this represents a shortfall from FY18. In our opinion management actions, plus recovering markets, can take the Group to peak margins over the next 18-24 months: delivering a marked increase in profitability.
Brick and concrete products group Forterra has raised its guidance for FY 2020E to above the current consensus range and reinstated dividends following trading in Autumn which exceeded its previous expectations and which has continued strongly despite the second lockdown. We have increased our FY 2020E revenue, EBITDA and EPS estimates by 3%, 14% and 46% respectively, and cut our net debt projection. We have introduced FY 2021E estimates showing further strong expected growth.
Companies: Forterra Plc
SThree has released a brief update ahead of the scheduled Q4 trading update expected on 12th December. The key headline is that an improving trading backdrop over the last few months has driven a better than expected profit performance. Market consensus was clearly too light with the company now guiding for an FY’20 outcome above the top end of the range of expectations. We have updated our forecasts accordingly and now look for FY’20 PBT and EPS of £28.1m / 13.3p respectively – a PBT upgrade of +53% on our previous estimate. Although the company has not formally reinstated full guidance, we are taking this opportunity to publish our estimates for FY’21. SThree has shown good resilience through this pandemic. The combination of STEM industry specialism and the inherently higher short term visibility of the contract focus has afforded SThree management a greater degree of flexibility when it came to aligning the necessary cost actions with the strategic ambitions of building market share in the key, global STEM markets. Costs and headcount have been cut, but they have been targeted and selective. The net result has been an increasingly positive tone in trading commentary, culminating in yesterday’s explicit upgrade. Has this been fully priced in by the market? To an extent yes, with the shares now standing +57% above the May 2020 lows and outperforming the peer group year to date. However, despite this outperformance (share price and operational) SThree still stands at a material valuation discount to its peers. We continue to find the extent of this valuation gap hard to justify.
Companies: SThree plc
The new ammendments to the UK CfD renewable energy support scheme opens up an opportunity for tidal energy to compete against floating offshore wind. We think the two technologies can deliver similar costs but that tidal, and specifically the already permitted capacity at Atlantis’s MeyGen site, has a marginal advantage in terms of readiness.
Companies: SIMEC Atlantis Energy Ltd.
H1F21 revenue was £107m, down 14.8% y/y (H1F20: £125.6m) and down 11.9% sequentially (H2F20: £121.5m). Q2F21 revenue was up 5.3% y/y, indicating a trend to recovery in the post-lockdown period across both, Ireland and the UK. The strength of LTHM's business model is supported by the diversity of its customer base and the expanse of its product offering, allowing it to withstand fluctuations in demand across market sectors. We believe LTHM stock is a relatively low risk investment given the strong cash position (131.6p/share), no debt and a stable yield. The stock trades at 8x EBITDA, compared to its peer average of ~11.1x, on what are more compelling metrics.
Companies: James Latham Plc
AFC has announced it has secured a long term lease over new premises at its Surrey HQ, which will serve as the Group’s large scale H-Power assembly and commissioning facility. We view this as a positive step forward in AFC scaling up its production to meet strong levels of demand in the current environment. We remain very comfortable with our investment thesis and target valuation of 68p per share outlined in our initiation note in September.
Companies: AFC Energy plc
H1F21, impacted by the COVID pandemic, created mixed trading conditions across CML's end-markets, particularly when combined with continuing industry headwinds. However, with solid sales and new orders in Storage markets and a growing product portfolio in Communications markets, supported by a clear strategy focused on enhanced capabilities and internal expertise to increase the size of the addressable market; strong proprietary IP and respected quality/reliability of technology; and continued investment in R&D to grow the product portfolio and in sales & marketing to expand the customer base; it is evident that CML is positioning itself for medium to long-term growth. We believe it is evident that these investments today will allow CML to deliver strong shareholder returns in the future.
Companies: CML Microsystems Plc