Ariana Resources* (AAU LN) – 2020 guidance maintained as plant expansion considered at Kiziltepe | Bluebird Merchant Ventures (BMV LN) – Independent expert appointed for valuation to consolidate South Korean gold mines | Botswana Diamonds (BOD LN) – Geophysics to refine November drilling targets at Marsfontein and Thorny River | Jubilee Metals Group (JLP LN) – Q3 production sees operating earnings rise to £15m | Orosur Mining* (OMI LN) – Funds received for exploration at Anzá project | Panthera Resources (PAT LN) – Exploration plans for the Bassala project | Pensana Rare Earths (PRE LN) – Study into UK REE processing facility | Scotgold Resources* (SGZ LN) – £3m raise to accelerate Phase II expansion and fund exploration | Strategic Minerals* (SML LN) – Cobre Q3 magnetite sales | Vast Resources* (VAST LN) – Indicative timeline for asset backed debt funding
Companies: AAU BMV BOD JLP PAT PRE SGZ SML VAST
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
Adriatic Metals* (ADT1) – Adriatic Metals increase loan to Tethyan Resources | Arc Minerals* (ARCM LN) – Don Bailey resigns from board as Anglo American steps in with exclusivity
agreement | Jubilee Metals (JBL LN) – Jubilee appointed to recommission and operate chrome plant at Inyoni in South Africa | Petropavlovsk (POG LN) – Board update | Rio Tinto (RIO LN) – Rio Tinto executives lose bonuses over destruction of ancient caves in Australia| Shanta Gold (SHG LN) – Interims highlight strong FCF and positive net cash status | Strategic Minerals* (SML LN) – Redmoor project review | Sunrise Resources (SRES LN) – £1m fundraising | Tertiary Minerals* TYM – Buy-back and cancellation of deferred shares
Companies: ADT1 ARCM JLP POG RIO SHG SML SRES TYM
Jubilee announces today it has both acquired a new chrome processing facility in South Africa (Windsor 8) from a private group in South Africa and arranged an offtake agreement that fully fills its existing Windsor Chrome circuits for the next three years. Jubilee will operate Windsor 8 and make circuit changes to maximise recoveries – Jubilee commits to spending £0.44m to upgrade the plant but is entitled to this (plus interest) back before sharing earnings form the JV on a 70:30 basis with its JV partner. “Windsor 8” is located ~50km from Windsor towards Rustenburg along the Western Limb of the Bushveld complex in the heart of the Bushveld chrome resources – extending Jubilee's reach for further potential parcels of additional material further west.
Companies: Jubilee Metals Group Plc
Altus Strategies* (ALS LN) – High grade gold mineralisation intersected at Tabakorole | Anglo Asian Mining* (AAZ LN) BUY Target 209p – H1 exploration update | Chaarat Gold* (CGH LN) BUY Target raised to 58p (from 51p) – Earnings update | Glencore (GLEN LN) – Record marketing performance shores up H1 results despite Covid19 pressures | Jubilee Metals Group (JLP LN) – Additional copper tailings in Zambia | Kavango Resources (KSZ LN) – Petrology report confirms further similarities between the Kahalari Sutre Zone and the Norilsk nickel system in Russia | Vast Resources* (VAST LN) – Drilling at Baita Plai returns high grade results
Companies: ALS AAZ CGH GLEN JLP KAV VAST
Jubilee Metals successfully processes chrome tailings in South Africa to produce chrome concentrate and PGMS. It also owns the commissioned Sable copper refinery at Kabwe in Zambia and is looking to build a zinc-lead treatment plant at Kabwe next to the Sable refinery to process old tailings from the Kabwe mine. Today Jubilee announces that it has secured access rights to process 2Mt of Run-Of-Mine material grading in excess of 2% copper in Zambia with the potential to add a further 2.5Mt of tailings – Project “Roan”; an as yet an undisclosed project location in Zambia. This material will be upgraded at the “Roan” site with the concentrate shipped off to Jubilee's Sable Refinery to produce copper cathode. Initial target is set at 10kt contained copper/yr from Roan, and Jubilee hopes to begin production in 4 months' time with full production reached in 8 months – advanced preparations have been made, plans drawn up and discussion with equipment manufacturers already accomplished – Jubilee is ready to hit the ground running.
Centamin (CEY LN) – Q2 results confirm 2020 production and cost guidance remains broadly intact | Jubilee Metals Group (JBL LN) – Interims highlight strong PGM earnings growth and maintenance of cash position | Novagold (NG CN) – Novagold suing short-selling firm J Capital Research for defamation (Mining.com) | Panther Metals (PALM LN) – Raising £250,000 | Pensana Metals (PM8 AU) – Drilling from Longonjo – updated mineral resource estimate expected by end of September | Vast Resources* (VAST LN) – Baita Plai development update
Companies: CEY JLP NG PALM VAST
Jubilee today takes us through its H1 2020 numbers, which, importantly, cover the critical COVID-19 initial lockdown period in South Africa. The numbers continue to show growth and progress, with headline H1 2020 operational earnings up 54% to GBP 12.8 million – the sixth consecutive, six-monthly period of double-digit growth. The cash position increased to £10.8m despite settling the final payment of £1.4m for the acquisition of additional PGM and chrome rights as well as settling historical debt of £2.5m, all while commissioning the Zambian Sable Refinery.
Following the appointment two months ago of new CEO Rob Richards, VDTK's newsflow has been encouraging in recent weeks, and we view this morning's announcement as a further affirmation of the company's renewable energy solution. Today's RNS highlighting a contract to supply ultra lightweight, flexible solar panels to Black Tulip Minerals SA, of Peru, is, at over €200,000, the latest in a string of recent positive announcements, while also taking the company into a completely new sector which it had announced as a target area.
Image Scan is a specialist in the field of X-ray imaging for the security and industrial inspection markets. The company has announced, as part of its organic growth strategy, a new partnership agreement with a major security technology company that will lead to the launch of a new range of security X-ray screening systems for the international market. Competitively priced, and leveraging Image Scan's IP and direct and indirect international channel partners, the new system will be a high performance, competitive conveyor X-ray machine, suitable for security checkpoints in government and commercial buildings around the world. Importantly, these systems will also allow the company to increase its recurring service and support revenue.
Companies: IGE JLP VDTK
Robust, cash-generative production from mining waste
Jubilee operates several chrome-Platinum Group Metal (PGM) operations in South Africa and is constructing a zinc-lead (vanadium) plant at Kabwe in Zambia after already commissioning the copper and cobalt circuits (the ‘Sable' refinery). The company has a growth pipeline identified and significant opportunities to find new projects in Africa (or globally); more specifically, Jubilee announced that it is looking to increase its copper (cobalt) production in Zambia aggressively to make full use of the Sable Refinery. Jubilee also owns the Tjate PGM project in South Africa, which is currently on hold. The company model is to treat its own waste materials and to supplement these with third party ores and wastes where possible. This year has been nothing if not eventful for Jubilee, but further progress and material catalysts are expected over the course of 2020. Jubilee has a high-margin business with cash on hand, and we see plenty of opportunities for Jubilee to capitalise on its robust business model through the global Covid-19 crisis and beyond. We initiate with a fair value of 11.2p/sh
Jubilee Metals (JLP) – Corporate – Large copper tailings project in Zambia – staged expansion for Sable
Market Cap £82m Share Price 3.8p
Jubilee announced yesterday that it had secured a JV with a private company - Star Tanganika – for the rights over a copper project at Ndola in Zambia. The purchase price was $5m ($0.6m in cash the rest in shares in Jubilee) which will be used to advance a further potential copper tailings project held by the owners of Tanganika. Jubilee will provide all of the operating and capital funding for the first phase project and will receive 75% of the project earnings until all capital is recovered dropping to 60% after that – Jubilee will also have first right of refusal over the copper-bearing concentrates produced on 3rd party offtake terms.
Gold – Robust pricing, improved returns and increased interest
The robust gold price, currently sitting comfortably above $1,700/oz, has been one of the bright spots of the current COVID crisis, although the roots of the price increase were seen well before from mid-2019 on geopolitical and trade concerns. Gold mining companies have been reaping the rewards of the higher price with forecast profits and cash expected to grow significantly. The increase in gold price has been reflected by share price appreciation for most of the gold-mining sector; gold miners, those companies developing gold projects and even gold explorers have all seen an uptick in share prices. Those companies in production should see considerably higher profits and we expect the level of dividends back to shareholders to rise.
The rate of M&A in the sector might also increase, as in previous high price periods, with some companies assuming that these prices can be sustained – however, they will have to be careful as a rash of M&A in previous cycles has shown that there may be a price to pay later on and the industry can ill afford a return to eye-wateringly large write-downs on the other side of this cycle. Gold miners will also have to behave prudently as there will, of course, be a temptation for higher throughput and production, regardless of grade, to generate more cash – a decreasing profit margin perhaps, but a lengthening mine life; as in everything there is a balance to be made to ensure sensible returns.
We are most heartened by a renewed interest in the previously (seemingly) ignored junior explorers which we think is a theme that will develop and continue.
Companies: AURA CMCL CNG GDP JLP
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Hargreaves’ AGM statement confirms a positive start to FY21, building on the resilient FY20 performance. Trading is in line with expectations, the Industrial Services business has won a number of new contracts, and Hargreaves Land is said to be close to announcing the completion of its first plot sale at Blindwells. In our view, the shares are yet to reflect the earnings growth forecast for the next three years or the prospect of a 20p total dividend, which is expected to be paid first in FY22 as previously restricted HRMS profits are distributed. A further update on trading will be provided in early December, ahead of interims at the end of January.
Companies: Hargreaves Services plc
DGO has reported another strong set of quarterly results despite the extremely challenging operating environment. When many in the industry have been forced to decrease, suspend or eliminate their distributions, DGO has increased its dividend for the second consecutive quarter to 4¢ per share (an 11.5% dividend yield). The Q3/20 dividend represents a 7% increase on Q2/20 and a 14.3% increase in 2020. Production during Q3/20 increased 17% YoY to 107kboepd, following a full quarter of production from the Carbon Energy and EQT acquisitions. DGO's Smarter Asset Management programme continues to generate value, maintaining legacy production flat for the ninth consecutive quarter. The Company's robust hedging strategy continues to deliver results, with Q3/20 Adjusted EBITDA increasing 10% QoQ to US$75m and a Q3/20 EBITDA margin of 52%. We maintain our BUY recommendation and our price target at 138p, a 29% premium to the current share price.
Companies: Diversified Gas & Oil PLC
Trifast has released an interim trading update which highlights trends that have continued from the AGM statement in September with trading slightly ahead of the Group's base case assumptions for FY21 of revenue down c.16% YoY. September was the strongest month in the Group's first half and the press release indicates that October has also started well for sales and orders. The trading update indicates resilience in the business considering the tough trading environment.
Companies: Trifast plc (TRI:LON)Trifast plc (25D:BER)
Savannah Resources today releases its results for the period ending June 2020. Although for a mining company in development phase Interims are not so critical they do provide a useful line in the sand to assess progress. Savannah's key focus is the Mina do Barroso project in Portugal and here, despite the global pandemic, progress has been made. Firstly, The Environmental Impact Assessment (EIA) and Mine Plan have been submitted to the authorities as part of the project approval process and these updates will be incorporated into the Definitive Feasibility Study (DFS); Secondly, metallurgical test work was carried out which aids the offtake negotiations which remain ongoing; Finally, the production of the DFS remains on track for 2021. In addition to all of the project specific work Savannah has been proactive with the communities in Portugal in demonstrating the benefits a mining project will bring to the country at a local and national level as well as an agreement at a regional level with EIT InnoEnergy; this EU-linked group will help to secure commercial partners and finance for Mina do Barroso as part of the European Commission's battery initiative.
Companies: Savannah Resources Plc
Phoenix today updates its resource for the Empire deposit in Idaho after the summer's drilling (32 additional holes). The new Measured and Indicated (M&I) Resources stands at 22.9Mt grading 0.4% copper, 0.2% zinc, 10.3g/t silver and 0.32g/t gold (up from 19.3Mt grading 0.4%, 0.2%, 11g/t and 0.35g/t respectively from the last calculated resource in May 2020) plus a further 10Mt in the Inferred category at similar grades. M&I resources now stand at 173kt copper equivalent (current metal prices) against the previous M&I resource estimation at 155kt copper equivalent.
Companies: Phoenix Copper Ltd. (United Kingdom)
Since the group is in the middle of a major reorganization, the strong cash generation will help generate interest in the strategy update scheduled for 2021. The CFO stood at $10.4bn, vs $2.5bn in Q2, thanks to the oil price rebound, positive working capital movements and Shell cashing in on trading derivatives. Net debt was down by $4bn, enabling the group to announce a 4% increase in the quarterly dividend to $16.65cts.
Companies: Royal Dutch Shell Plc Class A
H1 2020 saw extreme commodity price weakness, but was still a productive period for President, especially for its balance sheet, with debt more than halving to US$15m following a placing, strategic subscription and debt-to-equity conversion. This leaves President on a sound financial footing, well positioned to ride out sustained lower prices if necessary while delivering the growth potential within its core Argentine business, further evidence of which was provided with today’s positive drilling update. We are cutting our price target by 10% to 3.5p due to lower near-term production forecasts, but this is still more than double the current share price with further operational catalysts on the near-term horizon.
Companies: President Energy PLC
Q3 trading statement
Companies: HNTIF 0YT HTG
After laying out the new strategy, the focus has shifted back to current operations. The group managed to reduce its net debt by $500m (to $40.4bn) with Brent averaging $43/bbl and particularly weak refining margins. This demonstrates the group’s ability to reach the cash balance point target of $40/bbl and hints at a buyback programme in 2022.
Companies: BP p.l.c.
Savannah has published interim results to June. The main takeaways include a 30 September cash position of £3.2m, divestment of its Oman copper assets (announced September), and the news that Savannah is working on responses to the regulator, following the latter’s initial review of the Barroso EIA (submitted in May).
The chairman’s statement is also of interest, making the point that there’s been a major change in ‘sentiment towards electric vehicles, the lithium ion industry and most recently the battery raw material supply sector’.
We would add to this statement that the debate over whether spodumene projects (hard rock lithium like Barroso) are more or less strategic than brine projects is somewhat redundant. The upcoming shortage of lithium plus the battery industry’s capital commitment to both hydroxide and carbonate means both will be required and both are at risk of shortage. We continue to recognise Barroso’s strategic importance to the European lithium battery supply chain and reiterate our 10.2p target price.
Trans-Siberian Gold's (TSG) Q320 results show improved year-on-year and quarter-on-quarter top line results, despite a reduced operational performance, largely due to higher gold and silver prices and increased tonnages. Gold grade and silver grades from the Asacha Gold Mine for the first nine months of the year are slightly lower than we had expected [due to Q1 performance]. Production levels above are expectations, which has negated the impact of the lower average grade for the first 9 months. We raise forecasts and our target price to 184p.
Companies: Trans-Siberian Gold PLC (TSG:LON)Trans-Siberian Gold PLC (UJ1:FRA)
Valeura Energy (VLE CN/VLU LN): Selling Turkey shallow – Valeura is selling its producing shallow conventional gas business to TBNG for a cash consideration of US$15.5 mm, plus royalty payments of up to an additional US$2.5 mm.
Increased estimates of of gas discovery offshore Turkey – The Tuna-1 discovery in the Black Sea is now estimated to hold 14.2 tcf (up 3 tcf compared to previous estimates).
FAR Limited (FAR AU): Financial update – FAR continues to be in default with regards to its obligations in Senegal. The company is in a default position of US$29.6 mm (excluding interest). FAR had US$59.0 mm unrestricted cash at hand at 30 September 2020.
Tullow Oil (TLW LN): Approval to sell Uganda – Tullow has received government approvals with regards to the sale of Uganda to Total. The transaction is expected to close in the coming days.
EVENTS TO WATCH NEXT WEEK
27/10/2020: Bp (BP LN) – 3Q20 results
29/10/2020: Royal Dutch Shell (RDS LN) – 3Q20 results
29/10/2020: Aker Bp (AKERBP NO) – 3Q20 results
29/10/2020: Repsol (REP SM) – 3Q20 results
30/10/2020: Lundin Energy (LUNE SS) – 3Q20 results
30/10/2020: Seplat Petroleum (SEPL LN) - 3Q20 results
Companies: FAR VLE TLW
Oil retreated as a further increase in Libyan output threatens to return more supply to a market that is already grappling with a pandemic-induced slump in demand.
Crude futures fell 1.9% in New York on Friday and posted their first weekly decline in three. Libya lifted force majeure on its Ras Lanuf and Es Sider ports and oil output will surpass 1 million barrels a day in four weeks, according to the state-run National Oil Corp. The announcement came as prospects for more Libyan output increased following the signing of a permanent cease-fire agreement.
Prices were already on the decline as talks appeared to stall on a US stimulus deal before the election, with House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin trading blame for the impasse. A deal would have injected a sorely needed boost to demand, with positive catalysts for prices harder to come by heading into the end of the year.
US benchmark crude futures declined 2.5% over the week as a resurgence of coronavirus infections spurred governments around the world to renew tighter lockdown restrictions. While comments from Russian President Vladimir Putin signalling openness to delaying a planned OPEC+ output hike helped bolster prices, the continued return of Libyan production complicates the group's tapering strategy.
West Texas Intermediate for December delivery declined 79 cents to settle at $39.85 a barrel.
Brent for the same month declined 69 cents to end the session at $41.77 a barrel. The contract fell 2.7% over the week.
Despite the prospect of more Libyan supply returning to the market, Brent's structure remained firm. The spread between the global benchmark's nearest contracts strengthened on Friday to its narrowest contango since late July
Meanwhile, traders' attention is shifting toward the outcome of the US election in November, which could have varying implications for US supply. Presidential candidate Joe Biden said fossil fuels need to be phased out over time, a comment seized on by Donald Trump as a threat to the industry. But there is debate over how much such a policy would impact oil prices in the near future.
Other oil-market news:
Venezuelan crude inventories have surged 84% over the past three weeks as the threat of US sanctions ward away buyers of the nation's most important commodity. That raises the risk that state-run PDVSA will have to start shutting in production again, and is the latest sign that Venezuela's oil industry is on the verge of collapse.
Oil and gas output in Norway, western Europe's biggest producer, could rise to a record by the middle of the decade as new fields come on stream, according to consultants Rystad Energy AS.
Companies: FOG PVR 88E DGOC EME TRIN UOG
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
Forecast and valuation update
Companies: HUR HUT HRCXF