Altus Strategies* (ALS LN) 31.5p, Mkt Cap £22.1m – Sale and royalty agreement on Cote d’Ivoire gold properties | Arc Minerals* (ARCM) - Drilling starts at new Fwiji target in Western Zambia | Caledonia Mining* (CMCL LN) 1280, Mkt Cap £138.3m – Increased quarterly dividend | Oriole Resources (ORR LN) 0.35p, Mkt cap £2.6m – Drilling underway at Senala gold project | Phoenix Copper* (PXC LN) 29p, Mkt Cap £16.2m – Empire mine metallurgical results
Companies: ALS ARCM CMCL ORR PXC
Caledonia, which operates the Blanket gold mine in Zimbabwe, announces today a second dividend increase for 2020 with an increase of their dividend from 7.5c a quarter to 8.5c a quarter – an annualised 34c/yr which currently yields 2.3%. This comes on the back of a first increase in January of this year when Caledonia raised its dividend from 6.9c/quarter.
Avation is a lessor of 48 commercial aircraft to a diversified airline client base. This morning, the group has released results for the nine months to 31 March 2020, which illustrate that the business remained profitable in Q3 FY 2020.
Phoenix copper today provides the results from the initial metallurgical test work to recover precious metals from the Empire deposit. Results from leaching with non-toxic ammonium thiosulfate (ATS) resulted in high gold recoveries of nearly 98% gold, and silver recoveries of between 70% and 80%. A full metallurgical report on this new work is available on Phoenix Copper's website.
Companies: CMCL AVAP PXC
Raised forecasts and new fair value on gold price outlook
Caledonia Mining continues to make great strides in the redevelopment of its Blanket mine in Zimbabwe. An extraordinary 5-year period of self-funded investment to sink a new Central Shaft in the mine, to future proof production for the next 15+ years (at least), is almost at an end. The period of final construction and commissioning is coinciding with a period of high gold price which removes pressure on final funding requirements, and also shows the potential of this mine to generate significant cash flows when fully developed. We raise our fair value to £15.80/sh (£13.00/sh) mostly on the back of a reassessment of our gold price forecast over the next 5 years. We also point to the inclusion of Caledonia in the Russell 3000 index which will create an impetus for passive ETFs to buy shares. This should provide further equity market support to Caledonia, which is premised fundamentally on the yield and growth opportunity provided– where else can yield and growth funds both invest? Gold miners are the cream of the cash flow crop at the moment.
Companies: Caledonia Mining Corporation Plc Com Shs Npv
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 ORR
Caledonia Mining* (CMCL LN) – Quarterly results show little impact of Covid19 and improving operating environment in Zimbabwe | Condor Gold* (CNR LN) – Quarterly results and progress report | Horizonte Minerals (HZM LN) – Quarterly results and project update.| Vast Resources* (VAST LN) 0.18p, Mkt Cap £19m – Preliminary test work demonstrates good copper recoveries at Baita Plai
Companies: CMCL CNR HZM VAST
Q1 Results for Caledonia (Q1 Mar 2020); raised expectations and forecasts
Caledonia Mining today provides its Q1 2020 results which show the transformation a year
and a robust gold price can make. Sorting out production / development planning and
maintaining a steady gold production, together with a focus on safety has paid dividends
at the Blanket mine in Zimbabwe. Higher production has led to higher revenues, profits
and cash. The gold price helps, but only adds gloss to the underlying performance of the
mine. As Q2 begins with COVID-19, the mine continues to operate and is back to full
capacity in the lock down – a situation we feel confident can continue. The Central Shaft
fit out provides the catalyst for future valuation appreciation as the mine expands to
>80koz gold per year. We see fair value in Caledonia at 1,300p after raising our gold price
expectations due to the strong gold market and, with an impending wall of paper money
to further inflate assets, we see our new forecast as conservative.
Altus Strategies* (ALS LN) – Positioned for growth in FY20 | BHP (BHP LN) - Pledges another A$3m to fight coronavirus | Kavango Resources (KAV LN ) - Review highlights Kalahari Suture Zone similarities with other major nickel regions | Mkango Resources* (MKA LN) – Results highlight progress towards feasibility study | Caledonia Mining* (CMCL LN) – Quarterly dividend | Condor Gold* (CNR LN) – Permit awarded for Mestiza pit | Scotgold Resources* (SGZ LN) BUY Target 119p – Loan facility terms changes | SolGold* (SOLG LN) – Phase 2 metallurgical testing shows enhanced gold recoveries and improved concentrate quality | Tertiary Minerals* TYM –– Issue of shares to Precious Metal Capital Group
Companies: ALS BHP KAV MKA CMCL CNR SGZ SOLG TYM
Caledonia today declares its usual quarterly dividend of 7.5c (US$0.075, $0.86m) after deferring the decision at the start of the month – a prudent decision given that Zimbabwe was going into a 21 day lock down (currently extended by a further 14 days). In the event, the Blanket gold mine was allowed to stay open as Caledonia demonstrated that it could protect its workers and prevent the spread of Covid-19. Blanket operated at 93% of capacity during the period, and with the supply chain from South Africa operating efficiently the mine has a ‘normal' balance of supplies and consumables and can continue to restock. The mine is currently ramping back up to 100% capacity.
Aura Energy* - (AURA LN) – Issue of shares | Altus Strategies* (ALS LN) – Tabakorole geophysical survey identifies new targets | Caledonia Mining* (CMCL LN) – AGM Procedures | Chaarat Gold* (CGH LN) - BUY – Completion of a $13.8m placing | Empire Metals* (EEE LN) (formerly Georgian Mining GEO LN) – Acquisition of control in Australian Palladium Deposit | Mkango Resources* (MKA LN) - COVID-19 safety measures for Malawi | Scotgold Resources* (SGZ LN) BUY – 119p – Earnings update: delivering gold at Cononish | Serabi Gold* (SRB LN) –– Appointment of non-executive director | Vast Resources* (VAST LN) – Baita Plai parts and equipment shipment update
Companies: AURA ALS CMCL CGH GEO MKA SGZ SRB VAST
Arc Minerals* (ARC LN) – Royalty agreement signed with royalty agreement with Golden Square Equity Partners Limited | Bluejay Mining* (JAY LN) – Greenland waives mineral exploration license obligations for 2020 | Caledonia Mining* (CMCL LN) – Q1 production rises 19% | Central Asia Metals (CAML LN) – Maintaining 2020 production guidance for now | Cora Gold* (CORA LN) – Drilling suspended at Madina Foulbe on official COVID-19 related instructions | Eurasia Mining (EUA LN) SUSPENDED – Operations and corporate update | Kenmare Resources (KMR LN) – Draws on facilities to weather Coronavirus storm | Rambler Metals* (RMM LN) – Appointment of non-executive director | Renascor (RNU AU) - Work Continues on Siviour Graphite Project despite COVID-19 | Serabi Gold* (SRB LN) –– Amended payment schedule for Coringa acquisition
Companies: ARCM JAY CMCL CAML CORA EUA KMR RMM SRB
Caledonia today provides an update on production from the Blanket mine in Zimbabwe with 14.2koz gold produced in Q1 2020 – an increase of 19% over the same period in the prior financial year. A focus on development rather than production in the final quarter of 2019 means that Caledonia should be able to balance production over the remaining quarters of the year and hit its production target of between 53-56koz for FY 2020.
Following on from the updates to the market provided on 10 February 2020 and 25 March 2020, Watchstone has this morning confirmed a proposed return of cash to shareholders totalling £50.5m/110p per share. A formal General Meeting will be held on 27 April 2020, and subject to shareholder and Court approval, trading in the shares ex-entitlement to the return of cash is expected to commence on 11 June 2020, with a return of 110p per share on or around 30 June 2020.
Companies: Caledonia Mining Corporation Plc Com Shs Npv Watchstone Group
Ariana Resources* (AAU LN) – Due diligence completed | Botswana Diamonds (BOD LN)* – New exploration licences in Botswana | Caledonia Mining* (CMCL LN) – Deferral of dividend | Central Asia Metals (CAML LN) – 2019 results and decision to forego a dividend distribution | Gem Diamonds (GEMD LN) – Diamond sale | Glencore (GLEN LN) defers $2.6bn dividend decision.| Greatland Gold (GGP LN) –Newcrest exploration achieves 40% interest in the Havieron project | Strategic Minerals* (SML LN) – Experiencing little impact from Covid19 | Scotgold Resources* (SGZ LN) – Interims | Vast Resources* (VAST LN) – Chiadzwa Community Diamond Project update
Companies: AAU BOD CMCL CAML GEMD GLEN GGP SML SGZ VAST
Caledonia today announces that it has taken the prudent decision to defer its approval for the payment of the second quarterly dividend (7.5c/sh - $0.9m - 7% of declared Caledonia cash). The Blanket mine in Zimbabwe remains in operation (at a slightly reduced capacity to secure Covid-19 social distancing) and the mine site remains well-stocked with supplies, so despite the current difficulties getting supplies from South Africa production at the mine can continue for some time to come; 2-3 months in our opinion, if the supply chain from South Africa ceased altogether.
Touchstar is a supplier of mobile data computing solutions and managed services to a variety of industrial sectors. This morning, the group has released an update in light of COVID-19. The Board reports that it has taken swift action to re-engineer processes to adhere to government guidelines, whilst maintaining client service levels. Q1 2020 trading is reported to have been ‘broadly' in line, with revenue growth of 40% from continuing operations and outstanding orders to ship to customers in the coming months. Q1 was cash neutral, which follows on from the RNS on 5 February, of a net cash position of £849k as at 31 December 2019.
Companies: Caledonia Mining Corporation Plc Com Shs Npv Touchstar
Caledonia today provides an update on its Blanket mine in Zimbabwe in the light of the full lockdown other than “for essential services” from today as ordered by President Mnangagwa. The mine is still operating as the authorities will grant exemptions for businesses which demonstrate they can operate in a manner that contributes to the management of the spread of Covid-19 infections. Caledonia has applied for this exemption.
Anglo American (AAL LN) – De Beers diamond sales | Atalaya Mining (ATYM LN) –Operations suspended at Proyecto Riotinto | Caledonia Mining* (CMCL LN) – Seeking exemption from virus mitigation measures | Cora Gold* (CORA LN) 4.5p, Mkt Cap £5.9m – Commencement of drilling at Madina Foulbe, Senegal | Gemfields (GEM LN) – Suspension of operations | Pan African Resources (PAF LN) – Operations under lock-down | Rainbow Rare Earths (RBW LN) 1.5p, Mkt cap £5.7m – Doubling production to 20,000tpa for >20 years reiterated in interim statement
Companies: AAL ATYM CMCL CORA GEM PAF RBW
Research Tree provides access to ongoing research coverage, media content and regulatory news on Caledonia Mining Corporation Plc Com Shs Npv.
We currently have 118 research reports from 9
A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.
Companies: AGY ARBB ARIX BUR CMH CLIG DNL HAYD NSF PCA PIN PXC PHP RE/ RECI SCE SHED VTA
Considering the environment, this sale is positive and marks the completion of the $15bn divestment programme started after the acquisition of the shale assets from BHP in 2018. Overall, BP’s strategy in downstream is to bring stable earnings, to offset volatility in upstream. In this regard, expanding renewables activities would seem appropriate to BP. While, BP has no competitive advantage in this field, exposure to renewables will allow the oil majors to keep their oil & gas activities.
Companies: BP Plc
Acquisitions and creditors update
Companies: Premier Oil
InfraStrata's acquisition of the iconic Harland & Wolff (H&W) shipyards in Northern Ireland has been transformational for the group, and with a carefully planned growth strategy, there is a clear route to cash breakeven in the short term. Over the medium to long term, these facilities could support a c£400m revenue business. With the company trading at a c30% discount to its H1/20A book value and c65% to its Adj NAV, we initiate with a Buy recommendation.
Oil posted its second weekly loss for the month, as a surge in US coronavirus cases clouds the demand outlook and casts doubts on the market's recovery.
Futures in New York slipped 3.2% this week. The price slump comes just days after oil closed above $40 for the first time since early March, and following a run of weekly gains that lifted oil from its historic plunge below zero in April. Texas -- the centre of the American oil industry -- halted its reopening as virus infections jumped, and Houston's intensive-care wards reached capacity. Bars in Texas and Florida were ordered to shut, and Arizona reported a surge in infections.
While massive OPEC+ output cuts and a pickup in demand have helped crude climb from its April low, price gains have slowed this month. Infections continue to soar in many parts of the world, consumption is still a long way off pre-virus levels and many refiners are struggling with low margins.
Crude stockpiles in the US are at record highs, and there's a risk that US shale producers could start bringing back output. The number of rigs drilling for oil fell by 1 to 188, the lowest since June of 2009.
West Texas Intermediate for August slid 23 cents to settle at $38.49 a barrel in New York.
Brent for August fell 3 cents to close at $41.02 a barrel.
Still, the pessimism's being tempered by huge cuts to Russia's seaborne crude exports, a development that lifted oil earlier in the session. Shipments of the flagship Urals grade from its three main western ports are set to plunge by 40% next month, according to loading programmes seen by Bloomberg. The steep reductions underscore the OPEC+ alliance's commitment to eliminate the oil glut that built up earlier this year.
Other oil news:
Exxon Mobil Corp is preparing to cut jobs in the US as the oil giant focuses on a slimmed-down and more efficient organisational structure, according to people familiar with the matter.
Four automakers backing a California effort to curb tailpipe emissions will break with some big rivals in the legal battle over the Trump administration's relaxation of fuel efficiency standards.
Companies: FOG PVR 88E DGOC EME TRIN UOG
Implications of the gold-silver metallurgy at Empire, Idaho
Yesterday, Phoenix Copper published a metallurgical report on the leaching of its gold-bearing mineralisation from the Empire resource area in Idaho. This showed high recoveries for gold and silver using standard cyanide and non-standard Ammonium Thiosulphate leaching (comparable leach times, reagent consumption and recovery). The implications of these tests may be far ranging for Phoenix as it enables it to consider bringing forward precious metals production from the area, with the following benefits: 1) quicker permitting for a non-cyanide process; 2) cheaper reagents; 3) earlier establishment of mine site infrastructure to assist ongoing economic studies and; 4) cash flow in a robust gold price environment. More test work on the gold recovery process remains to be completed to establish the optimum leaching and recovery parameters. We still see fair value at 34p/sh (see research from 12/05/2020 for full details) but note that Phoenix management is actively seeking to bring forward value in its projects. In the meantime, we have drilling results and a (potential) resource upgrade to look forward to shortly from the Red Star lead-silver project as well as a funded resource drilling program to establish a whole resource for Empire – and not just the base metal-rich zones.
Companies: Sirius Real Estate
Enteq Upstream PLC (LON:NTQ) has released full-year (FY) results for the year-end March 2020 with commentary on the ongoing trading environment. The company reported revenues of around US$10.9mln, underlying adjusted EBITDA (earnings before tax interest depreciation and amortisation) of US$3.1mln,
Companies: Enteq Upstream
Rockfire Resources, the gold and copper exploration junior with projects in northern Queensland has recently commenced a major £0.8m drilling programme on Plateau, its most advanced project. Drilling is likely to be followed by a resource update in late 2020 and a scoping study in Q1 2021. We believe that the updated resource estimate could be commercially significant. This reflects the promising drilling results post July 2019’s resource assessment and the potential for the drilling programme to expand the resource base given the analogous Mt Wright mine geology 47 km to the NE. The new drilling programme will include diamond drilling for the first time which will enable deeper higher-grade targets to be targeted. The drilling programme has been underpinned by the recently announced £1m raise. We believe the scope for positive news flow in the coming months is excellent while the gold market backdrop should be supportive for gold exploration as well as production plays over the balance of 2020.
Companies: Rockfire Resources
Shearwater sells resilience and today's trading update shows us how resilient demand has been for its products and services. The Group has swung to EBITDA profitability and cash flow is well ahead of expectations. The macro themes of cyber security and remote working are supportive of robust demand levels going forward. We are maintaining our forecasts. Buy.
Companies: Shearwater Group
Petropavlovsk PLC (LSE: POG) have released their FY2019 results and Q1 trading update this morning. The company had already released production numbers for last year. Overall the numbers reflected a strong operational performance although various financial/other parameters thwarted positive changes below the EBITDA line. Conversely net cash from operations reduced by 43% due to lower cash from prepayment as part of the group’s forward sale facility with the banks, yet net debt came down to $561m. . We show the key figures in Table 1.
Solid State is a manufacturer of computing, power and communications products, and value added distributor of electronic components. This morning, the group has provided a further update on trading in light of the present COVID-19 backdrop, ahead of full year results to 31 March 2020 due to be released on 30 June.
Cadence today provides and update on the Amapá iron ore project in Brazil. The Amapá JV (EV Mineração S.A.), in which Cadence can earn an initial 20% of the project, is understood to be on track to begin shipping stockpiled iron ore from late Q2 / early Q3 2020. Finalisation of the negotiation with the secured creditors still needs to be reached, but the Amapá JV partners are engaging constructively. In preparation for shipping, a trucking contractor has been hired to move key equipment to site and a shipping manager and shipping broker have been engaged.
This morning's update from CSSG confirms the positive direction of travel highlighted when the company published H1 results in March. With comparators still challenging (because of one-off work in the prior year), and “light” Covid-19 impacts in recent months, the expected £1.6m EBITDA flagged by the company seems a creditable number, still within touching distance of historical performance in both EBITDA and PBTA terms. Net cash, moreover, even after three months of the Covid-19 crisis, is reported to still be higher than the £2.4m which the company reports it had at the start (which in turn represents an increase on the £2.3m as at 31 December 2019). Not surprisingly, having suspended payment of the dividend a couple of months ago, the Board is now proposing to have another look at this question, at least in relation to the half year dividend.
PTY's announcement this morning flags a change in the CFO role with the new appointee benefiting from extensive experience in developing digital businesses to their full potential, both in overall and in financial leadership positions. His arrival follows on from highly proactive action led by the previous finance director, delivering a platform for growth once the current uncertain circumstances have abated.
Companies: KDNC CSSG PTY SOLI
PetroTal (PTAL LN/TAL CN)C; Target: £0.45: Initiating coverage – PetroTal is a production and reserve growth story in Peru with a market cap of ~£90 mm. Management’s experience of operating in the jungle and their deep in country relationships are key. Project execution has been excellent. The Bretaña field (48 mmbbl 2P reserves) was acquired from Gran Tierra in late 2017 with production of 1 mbbl/d achieved in 3Q18. By YE19 that figure had grown to >13 mbbl/d. While COVID-19 forced a shut down of the export infrastructure and Brent prices collapsed to ~US$20/bbl, PetroTal has managed to negotiate with Petroperu a reduction in transport fees and a rephasing of a contingent payment. With the recent US$18 mm equity raise strengthening the balance sheet and production expected to restart in July, PetroTal is returning to growth. Bretaña could produce 20 mbbl/d. PetroTal’s shares trade at ~ one quarter of our Core NAV of £0.46 per share and at one third of the company’s value based on its 2P reserves only (2P NAV of £0.28 per share). On flat production, the share price implies EV/DACF multiples of 1.0x in 2021 turning negative in 2022. Importantly PetroTal’s only material liabilities consist of (1) an oil linked contingent payment over three years to Petroperu on very flexible terms and (2) trade payables of US$49 mm with attractive payment terms. We forecast ~US$45 mm of capex (incl. servicing the payables) in 2H20. This is covered by (1) US$28 mm in cash from a recent equity raise plus collecting pending invoices from oil sales, (2) >US$10 mm of VAT receivables and (3) ~US$25 mm operating cash flow (US$11-12/bbl net backs) in 2H20 at US$38/bbl. At ~US$45/bbl and 12 mbbl/d in 2021, we forecast PetroTal generates ~US$90 mm cash flow with ~US$35 mm cash capex (incl. servicing the payables). Our target price of £0.45 per share (~our Core NAV) represents 4.5x the current share price.
i3 Energy (I3E LN): Corporate update | Parex Resources (PXT CN): Trading update in Colombia | Phoenix Global Resources (PGR LN): FY19 results | Royal Dutch Shell (RDSA/B LN): Dry hole in Brazil | IGas Energy (IGAS LN): Trading update | Serinus Energy (SEN LN): Deferred EBRD debt repayment | Union Jack (UJO LN): Additional interest in UK asset | SDX Energy (SDX LN): Update in Egypt and Morocco| ShaMaran Petroleum (SNM CN): Payment from KRG and debt restructuring | United Oil & Gas (UOG LN): Reserves and production update in Egypt | FAR (FAR AU): Not paying cash call in Senegal | Lekoil (LEK LN): Update in Nigeria | San Leon Energy (SLE LN): FY19 results | Savannah Energy (SAVE LN): Trading update | Victoria Oil & Gas (VOG LN): Trading update in Cameroon
Companies: SEN SDX PTAL PGR VOG PXT SAVE RDSA FAR
Warren Buffett once said that as an investor, it is wise to be ‘fearful when others are greedy and greedy when others are fearful’. Fear is not in short supply right now.
Companies: OPM ALU ANCR BLV CONN CRC STU GATC HAT LEK MMH MCB MWE NXR NTBR NOG PAF PEG RFX SRC TEF TEG TPT VTU WYN XLM
Jubilee Metals (JLP) – Corporate – H2 Update - Continued transformational improvements
Market Cap £90m Share Price 4.5p
Today Jubilee, the chrome and Platinum Group Metals (PGM) producer in South Africa with its Kabwe base metal refinery currently under construction in Zambia, provides an update on its H2 numbers for the six month period ending December 31st 2019. Revenues increased 74% (£25.0m from £14.4m in H1 2019) with operational earnings also increasing to £8.3m in H2 (from £5.6m). In H2 the company also brought the Kabwe copper (cobalt) plant into production from third party material with a view to also producing zinc in Q2 2020.
Verditek (VDTK) – Corporate – Continued trials, new sales appointment
Market Cap £4.9m Share Price 2.25p
We note this morning's RNS from VDTK, which outlines a wide range of trials, development agreements and potential outlets for their strong but light solar product. The RNS amply illustrates the potential broad reach of VDTK's product, taking in industrial, retail, telecoms and transportation products among others. With the company anticipating crystallising these opportunities in FY2020E, with commercialisation to follow, potential drivers remain safety, practicality and cost.
Companies: Jubilee Platinum Verditek
Velocys has announced the appointment of Worley as its global engineering partner to manage the delivery of its fully integrated technology package. Velocys has also given details of the full suite of licenced technology partners to deliver the package in the UK and the USA. These are a strong group of partners with each one having successfully demonstrated their technology at commercial scale with similar feedstocks to those planned at Bayou and AltAlto. With the company now offering an improved negative carbon intensity on its Bayou project, it is clear that progress is being made.