Goldplat, Highland Gold, Kodal Minerals, Gemfields, Kefi Minerals, Savannah Resources, SolGold
Date
9/27/2016 5:45:29 AM
(MENAFN- ProactiveInvestors - UK) SP Angel, Mon
Goldplat* (LON:GDP) – Results improve as Goldplat recovers from disastrous year
Highland Gold (LON:HGM) – Interim results
Kodal Minerals* (LON:KOD) – Field reconnaissance in Mali
Gemfields (LON:GEM) – Results for FY to 30th June
Kefi Minerals* (LON:KEFI) – Interim results and project update
Savannah Resources (LON:SAV) – Raising £1.42m
SolGold* (LON:SOLG) – Newcrest ups its financing and offer price for stock in SolGold
European equities are off this morning with the Euro Stoxx 600 index down 1.4% and all sector components of the measure trading in the red with financial and energy stocks leading losses.
• Crude prices are flat today following a 4% decline on Friday as Saudi Arabia suggested the oil producers' meeting in Algiers on Sep 26-28 will fail to lead to a concerted action.
• Money managers hiked their short positions in crude by the most in more than a year in a week through Sep 20, according to the CFTC data.
• Gold prices are little changed holding on to its last week's gains (+2.2%) on the back of a the Fed announcement to keep low rates for longer than markets expected it to.
• Nickel prices are trading 1.8% lower today (-$195/t) following its biggest weekly gain in almost three months (+9.6%) and as Philippines authorities delay results of the audit.
• Iron ore futures climbed albeit only marginally on Monday on reports of a decline in iron ore stockpiles (-0.3%wow according to Steelhome weekly data).
Colombia – landmark peace deal with Farc rebels
• Colombia stands to benefit hugely from the peace deal due to be signed with Farc rebels today.
• There is little doubt the nation will benefit from the appearance of peace and the end to bombing and more importantly kidnapping which affected so many Colombian families.
• Many of the families affected by kidnapping and murder called for the peace deal but many others will also struggle to come to terms the reality of reconciliation. The nation is divided on the merits of the deal but today's signing will at least give peace in Colombia a chance.
• The Farc have in recent years lost ground to government forces and are not the only rebel group on the ground. Rebel groups who refuse to be a part of the peace deal are to be allowed to move into specified areas as part of the deal.
• The deal and the lasting peace which is expected to follow should raise Colombia's international status and enable this, sophisticated and developing, nation to gain better international standing.
US – stops short of accusing Putin of war crimes
• The US ambassador to the US has accused Russia of Barbarism.
• Russia claims that peace in Syria is almost impossible.
• The US special envoy has said the use of weapons fired by the Russians may amount to a war crime.
• The implications and potential for Russia being accused of war crimes is not good for Russia and risks the co-operation seen recently between the US and Russia on airstrikes against Islamic State and related terrorist groups.
US and UK politicians in race to bottom in terms of political confidence
• The UK is in the lead with Labour electing comrade Corbyn this weekend but the US looks likely to regain the lead as the US holds a 'Trump' card.
Dow Jones Industrials -0.71% at 18,261
Nikkei 225 -1.25% at 16,545
HK Hang Seng -1.56% at 23,318
Shanghai Composite -1.76% at 2,980
FTSE 350 Mining -1.72% at 12,238 FTSE 350 +67% since 1st January
AIM Basic Resources +0.54% At 2,462 AIM Basic Resources +51% since 1st January
US
Date Index Period Actual Est Previous
Friday Manufacturing PMI Sep 51.4 52.00 52.00
Monday New Home Sales Aug %mom -8.3 12.4
Tuesday SPCS 20 City Index (SA) Jul %mom 0 -0.1
SPCS 20 City Index (NSA) Jul %yoy 5.1 5.1
Markit Services PMI Sep 51.2 51.00
Markit Composite PMI Sep 51.5
Consumer Confidence Sep 98.8 101.1
Wednesday Durable Goods Orders (ex Transport) Aug (Prelim) %mom -0.5 1.3
Capital Goods Orders Aug (Prelim) %mom -0.1 1.5
Thursday Weekly Jobless Claims 260k 252k
GDP Q2 (Final) %qoq 1.3 1.1*
Consumer Spending Q2 (Final) %qoq 4.4 4.4
Core PCE Q2 (Final) %qoq 1.8 1.8
Friday Personal Income Aug %mom 0.2 0.4
Personal Spending Aug %mom 0.1 0.3
PCE Aug %mom 0.2 0.00
PCE Aug %yoy 0.9 0.8
Core PCE Aug %mom 0.2 0.1
Core PCE Aug %yoy 1.7 1.6
* Previous Q2 GDP estimate; Q1 GDP change was +0.8%qoq
Turkey – Moody's cut long term issuer and senior unsecured bond ratings of Turkey one notch to junk Ba1 on Friday.
• The agency cited risks to the 'country's sizeable funding requirements' and 'the weakening in previously supportive credit fundamentals, particularly growth and institutional strength' as primary reasons behind the decision.
• S & P placed the nation's credit rating in junk following the failed coup attempt in mid Jul, while Fitch has Turkey on BBB- investment grade rating on review for a downgrade.
• The lira lost more than 1.0% against the US$ over two days on the back of the announcement.
US – Obama vetoes bill to allow families to sue a sovereign state eg Saudi Arabia over 9-11
• Reports suggest that Saudi Arabia may have threatened to pull funds out of the US, eg US treasuries if the bill had gone through.
• It makes financial sense for the US president to veto the bill, but 9-11 is a highly emotive subject and strange things do happen though Obama had previously made firm statements saying that he will veto the bill.
• Republican leaders in congress appear confident that they may have sufficient votes to override the veto
• Speculation may suggest that Saudi Arabia which may not be allowed to receive interest payments on paper due to Sharia law may receive services in return for the payment of interest on US government bonds. These services may be in the form of the provision of municipal and other services provided to the Saudi Arabian government.
Currencies
US$1.1239/eur vs 1.1206/eur yesterday. Yen 100.60/$ vs 100.88/$. SAr 13.703/$ vs 13.574/$. $1.293/gbp vs $1.301/gbp.
0.761/aud vs 0.762/aud. CNY 6.669/$ vs 6.670/$.
Commodity News
Precious metals:
Gold US$1,334/oz vs US$1,335/oz yesterday –
Gold ETFs 65.3moz unch vs 65.3moz yesterday
Platinum US$1,038/oz vs US$1,057/oz yesterday
Palladium US$691/oz vs US$692/oz yesterday
Silver US$19.42/oz vs US$19.80/oz yesterday
Base metals:
Copper US$ 4,821/t vs US$4,848/t yesterday –
Aluminium US$ 1,626/t vs US$1,644/t yesterday –
Nickel US$ 10,460/t vs US$10,670/t yesterday –
Zinc US$ 2,252/t vs US$2,288/t yesterday –
Lead US$ 1,910/t vs US$1,938/t yesterday –
Tin US$ 19,625/t vs US$19,575/t yesterday –
Energy:
Oil US$45.8/bbl vs US$47.1/bbl yesterday
Natural Gas US$2.982/mmbtu vs US$3.003/mmbtu yesterday
Uranium US$24.40/lb vs US$24.40/lb yesterday
Bulk:
Iron ore 62% Fe spot (cfr Tianjin) US$55.9/t vs US$55.6/t –
Steel rebar, China 25mm US$388.2/t vs US$384.5/t –
Thermal coal (1st year forward cif ARA) US$60.3/t vs US$60.0/t yesterday -
Coking coal prices $206.4/t unch vs $206.4/t FOB Australia for Premium Hard Coking Coal (The Steel Index) – Prices holding new high level
Other:
Tungsten - APT European prices vs $180-200/mtu unch 'again' vs $185-200/mtu two weeks ago
Company News
Goldplat* (LON:GDP) 6.25 pence, Mkt Cap £10.5m – Results improve as Goldplat recovers from disastrous year
• Goldplat report year end results for the year to 30 June 2016 adding to information released at end August.
• The team managed to turn the business around from what was a disastrous 2015 to show a modest £1.4m post-tax profit for the year vs a loss of £0.9m a year earlier.
• Admin expenses rose to £1.836m vs £1.679m indicating less focus in this area than some others.
• Gold sales rose to 37,666oz of gold from 30,524oz a year ago with the gold recovery operations producing 35,661oz vs 28,246 yoy.
• Operating profits rose to £1.172m from £0.711m yoy and Pre-tax profits rose to £1.942m vs £0.796m.
• The Gold Recovery plant in Ghana reports an operational profit of £0.437m for the year vs a loss of £641,000 yoy
• The very small, loss making Kilimapesa gold mine in Kenya lost £0.711m for the year vs a loss of £753,000.
• Goldplat has improved its cash position to £2.056m from £0.630m a year earlier
• New chairman Matthew Robinson has taken over from displaced Brian Moritz.
Conclusion: Goldplat is recovering from a disasterous 2015. The group is still trying to generate a profit at its only gold mine at Kilimapesa in Kenya but has returned to profit at its gold recovery plant in Ghana.
The slow demise of the South African gold mining industry may make the sourcing of gold bearing waste materials, such as wooden packs, increasingly difficult.
*SP Angel analysts have visited the Goldplat's recycling plant at Benoni in Johannesburg
Highland Gold (LON:HGM) 141p, Mkt Cap £459m – Interim results
• Revenues increased 12.5%yoy to $147.1m (H1/15: $130.7m) on stronger sales volumes (127.7koz v 119.3koz in H1/15) and slightly better realised prices for gold dore and Novo concentrates.
• EBITDA climbed 45%yoy to $79.7m (H1/15: $54.9m) helped by a decline in cash costs on a weaker USDRUB exchange rate.
• Net profit more than doubled to $37.1m (H1/15: $14.5m) with EPS coming in at $0.11 (H1/15: $0.04).
• An interim 5p per share dividend was approved by the Board
• Net debt reduced to $197.9m (H1/15: $232.4m) with ND/EBITDA ratio coming down to 1.3 (H1/15: 1.7).
• TCC remained at impressive sub-$500/oz levels averaging $444/oz (H1/15 and FY/15: $538/oz and $480/oz).
• AISC averaged $609/oz (H1/15 and FY15: $710/oz and $640/oz).
• Net cash flow from operations (post interest and tax) totalled $71.8m (H1/15: $48.9m) and FCF at $47.4m (H1/15: $24.8m).
• The Company reiterated its FY16 production target for 255-265koz (2015: 262.5koz).
Conclusion: Good H1/15 interim results reflect solid performance at the flagship Novo mine and improvements in cash costs at MNV ($602/oz in TCC) with both operations beating internal production targets.
Kodal Minerals* (LON:KOD) 0.16p, mkt cap $5.9m – Field reconnaissance in Mali
• Kodal Minerals today reports a summary of field reconnaissance at its Bougouni lithium project in Southern Mali.
• The visit to the three key prospects identified a zone of outcropping pegmatite veining over a strike length of 400m with a width of >20m.
• 'Previous investigation at the Kola prospect had returned anomalous lithium results up to 1.1% Li2O from very limited sampling.'
• 'At the Ngouanala prospect the previously identified pegmatite vein was found to have a thickness in excess of 20m and strike length in excess of 300m.'
• The visit also identified further parallel and new zones of pegmatite veining at Ngouanala.
• Previous sampling on the Sogola property has returned lithium assay results in excess of 2.2% Li2O.
Conclusion: Bernard Aylward, the Kodal ceo is working to define the potential of these lithium bearing pegmatites. This is relatively early stage exploration and much work has yet to be done to define the potential value of these prospects.
*SP Angel acts as Financial Advisor and Broker to the company. *Robert Woodridge, a partner at SP Angel is also Chairman of Kodal Minerals.
Gemfields (LON:GEM) 46.5p, mkt cap £257.8m – Results for FY to 30th June
• Gemfields reports a 90% increase in after tax profit for the year to 30th June 2016 of US$23.5m (2015 – US$12.3m).
• At the operating level, profit rose by over 30% to US$39.89m (2015- US$30.40m) and the company also benefitted from a substantial increase in finance income to US$6.81m (2015 – US$0.22m) as the company's cash balances increased to US$41.48m (2015 – US$27.97m).
• Net debt declined to US$10.00m from US$16.73m.
• At the Kagem emerald operation, production of 30.0m carats during the year is in line with the 30.1m carats achieved in 2015. The company is planning an investment of US$10m in an expanded mining fleet to increase mining capacity and is now targeting 30-35m carats of production from Kagem for the current year.
• Kagem production generated revenues of US$101.2m (2015 – US$64.9m as it benefitted from record unit prices of US$70.68/carat. Costs declined to US$1.48/carat (2015- US$1.58/ carat).
• At the Montepuez ruby operation, production rose to 10.3m carats (2015 – 8.4m) and the company is looking for 2016/17 production in the range of 10-12m carats.
• Grades at Montepuez rose from 26 carats per tonne to 35 carats per tonne and the company reports a modest reduction in operating costs to US$2.54/carat (2015 – US$2.57/carat).
• The company plans to invest approximately US$25m to expand production at Montepuez. The main additional items of equipment include additional dense media separation, optical sorting and stone sorting capacity within the wash plant.
• 'Gemfields expects demand for its rubies and emeralds to continue to rise in the coming year driven and supported by the Company's global marketing initiatives.' The company is expecting to hold four emerald and beryl auctions and two ruby and corundum auctions in the coming year.
• Elsewhere, 'Work continues in Colombia to progress the acquisition of the Coscuez emerald mine while the next stage of exploration has commenced at the Company's greenfield properties in Ethiopia.' The company is also 'close to establishing a supply chain which will see the introduction of sapphires [from Sri Lanka] to its existing product supply chain.'
Conclusion: The company is continuing to build its coloured gemstone business with expansions of the African emerald and ruby businesses likely to be augmented by the introduction of sapphires from Sri Lanka and a further source of emeralds from S America.
Kefi Minerals* (LON:KEFI) 0.49 pence, Mkt Cap £19.0m – Interim results and project update
• Kefi Minerals has reported a loss of £1.88m (0.07p/share) for the first six months of 2016 compared to £1.63m (0.12pence) in 2015.
• Following investment of £1.20m and receipt of £1.63m (net) from the issue of shares during the period, the company's cash balance at 30th June amounted to £0.15m.
• The company is maintaining momentum on the development of its flagship Tulu Kapi gold project in Ethiopia where it expects to achieve 'Steady-state gold production of 115,000 oz pa from 2018 from the open pit at an impressive All-in Sustaining Costs ('AISC') level of c US$746/oz.'
• During the first half of the year, Kefi Minerals has strengthened its management team and improved the project economics of the Tulu Kapi gold project to the point where they 'are better today than at any time and with all-in costs estimated at US$746/oz, we believe it puts the Tulu Kapi project in the lowest cost quartile of gold producers globally.'
• The company expects that 'In the second half of the year, our focus is on working with the Government of Ethiopia on the community resettlement, livelihood restoration and community resettlement programmes.'
• In addition, the company is in continuing discussions with potential financiers for the project, which, according to the company's estimates released in August, will require capital investment of US$130m. Kefi Minerals has already secured some US$85m of debt facilities and received a further commitments for US$20m from the Ethiopian Government, and 'As a result, the Board looks to the future with confidence.'
• At the company's Jibal Qutman project in Sadi Arabia, preliminary analysis indicates a viable, low capital cost project with the potential to provide a source of cash flow to underpin a further, ambitious, exploration programme in conjunction with Kefi's partner, G & M. The prime target of future exploration in Saudi Arabia are the precious and base metals targets at Hawiah in western Saudi Arabia.
• The partners (Kefi 40%) plan to apply for a mining licence for Jibal Qutman when the outcome of a Government review of policy is known late this year.
Conclusion: Kefi Minerals continues to press ahead with its flagship Tulu Kapi gold project and has made a number of improvements to enhance the project economics, strengthened the management team ahead of the development phase and is starting on the community resettlement programmes in conjunction with the Ethiopian Government. Progress in Saudi Arabia is likely to pick up pending the outcome of a Government policy sector review later this year.
*SP Angel act as Nomad and broker to Kefi Minerals
Savannah Resources (LON:SAV) 3.9 pence, Mkt Cap £15.0m – Raising £1.42m
• Savannah Resources reports that it has raised £1.42mthrough the placing of approximately 28.2m shares and subscription for 12.5m shares at a price of 3.5p/share.
• In addition, the Company has received letters of intent for a further £0.83m from directors and related parties which will become effective when the Company has exited its current 'close period'.
• The funds are to be used to progress the development of the Company's copper projects in Oman and to further explore the newly acquired lithium projects in Finland.
SolGold* (LON:SOLG) 13.875p, Mkt Cap £169.7m – Newcrest ups its financing and offer price for stock in SolGold
Fully diluted market cap is around £195m
• Newcrest has raised its proposed investment in SolGold to US$22.863m from US$10.8m in return for a 10% stake in SolGold.
• The new proposed price for the investment is US$0.16c/s up from US$8c/s.
• Maxit Capital and its clients are to also invest US$10.137m for a further 4.43% of the company.
• The combined capital raising of US$33m reduces the proposed Maxit Capital funding by US$9.863m leaving appetite for more investor interest.
• On completion Newcrest will have the right to appoint a director and anti-dilution rights to maintain a 10% position in the company.
• Newcrest has agreed, for a period of three years, to follow the recommendations of any independent expert appointed by the SolGold board in respect of any proposed change of control transaction in respect of SolGold capital or its assets.
• SolGold now appear to have around US$48m of cash at hand with which to drill out the Cascabel copper / gold porphyry discovery in Ecuador. This is a good amount of funding for the delineation of a resource at the Alpala prospect and for the determination of further resources within a series of other prospects within the Cascabel license area.
SP Angel