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Jubilee Platinum, Pantheon and audioboom pique Shard's interest

Last updated: 12:59 03 Oct 2014 BST, First published: 11:59 03 Oct 2014 BST

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After the summertime lull it has been busy at Shard this week. It seems the masses are now fully back at their desks and interest in the market seems to have picked up alongside volumes. We have put three companies under the Share microscope.

Jubilee Platinum (LON:JLP)

Jubilee is a mines-to-metals company, with platinum resources and processing assets.

Its smelting operations are progressing well. Its third arc furnace commenced operations in May of this year, signifying the end of a two year process to upgrade operations. Second quarter revenues were up 44% on the previous three months and they are now trading profitably. The first quarter net loss of £151,000 improved to a second quarter net profit of £70,000. All three furnaces are fully contracted and they are looking to start processing higher value platinum materials now the refurbishment is complete.

Jubilee also produce its own power for the processing plant via their subsidiary, Power Alt. Surplus power is sold back to the South African Grid. The small fundraise this week will enable it to upgrade the grid connection. The project should take eight weeks to complete and will enable Jubilee to increase exports to the grid by up to 3.6 kilowatts, equating to a revenue increase of circa £195,000 per month at current contracted rates.

Then we come on to the Tjate mining project with a targeted 70mln ounce resource. The company have agreed to sell a section of this asset (around 20%) to Anglo American Platinum for £4mln. This sale will be complete once Jubilee obtains the mining licence for the project. The final requirements for the mining licence and the environmental assessment reports were submitted to the Department of Mineral Resources in August. The process is expected to be completed shortly.

Part of the reason the share price is down is that around 30% of Jubilee’s stock has been sold into the market over the last few months by previous holders and they now seem to be totally out.  This clearly hasn't helped the share price. 

There are of course risks - as there are with any company of this nature. Commodity price fluctuations, political risk, operational risk and the potential of never receiving the mining licence headline the list of concerns. But with monthly profitability now achieved and the proceeds of the Tjate sale expected to be received this year and the overhang apparently gone, sentiment could change very quickly.

Pantheon Resources (LON:PANR)

On Tuesday, Pantheon announced that they had raised US$30.2m to increase its working interest in its Kara Farms joint venture from 25% to 50%, through a revised joint venture with Vision and to fund two wells.

The acreage targets two formations: the Austin Chalk and the Woodbine/Eagleford Sandstone.

The Austin Chalk is well understood and has been producing for about 100 years and could be considered to be a development play rather than exploration play. The geological risks is low geological and neighbouring drillers have enjoyed a 93% success rate. 

The primary target is the Woodbine/Eagleford Sandstone. The LP2 well (which is not part of the JV) was drilled by Vision and has already produced over US$30m in revenue to date. The JV will drill a new well approximately a mile away from LP2.

Vision Resources brings enormous technical knowledge of the regions geology. A three year study completed with the Bureau Economic Geology at the University of Texas has led them to believe they have unlocked the key to successful exploitation.

The acreage provides exposure to five mini basins in total. Each mini basin has a similar geological signature to the adjacent field which has already produced in excess of US$4bn of oil and gas at today’s prices since 1985.

Over 150 wells targeting the Woodbine are believed possible on the acreage with a combined PV10 over US$4bn. Potential revenues to the JV are up to US$11bn.

There are certainly risks, of course they could miss and not find any oil, operational risks will also apply and as this is a JV any negative actions by their partners could have an adverse effect on their shares but with all I have mentioned and the fact the directors are backing them at these levels we  feel there is upside potential from here.

audioBoom (LON:BOOM)

There were a few sore heads after audioBoom’s launch party on Tuesday night promoting their new iOS app. Billed as the audio equivalent of YouTube, audioBoom is the UK’s only quoted social media play. In amongst an enjoyable evening there was a bullish presentation from CEO Robert Proctor highlighting audioBoom’s rapid growth and new app which could change the way that audio is consumed. Talk of imminent news flow was swiftly followed with an RNS on October 1. The company announced that it was raising £8mln to support its growth strategy. The number of registered users has been rapidly growing and stood at 3 million by September 2014. With house broker, Arden Partners, forecasting growth in registered users of 7mln by 2016, the future looks exciting for audioBoom.


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