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PROACTIVE NEWS SUMMARY: Baobab Resources, Forte Energy, Medgenics, Amphion Innovations, Providence Resources

Last updated: 16:53 06 Jul 2012 BST, First published: 20:53 06 Jul 2012 BST

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Two of today’s main stories by proactive Investors covered today’s news from mining groups Baobab Resources (LON:BAO) and Forte Energy (LON:FTE).

Baobab rallied seven percent to 8.13 pence today after saying it could raise up to £7 million via a private placing of shares with a Luxembourg investment fund.

Redbird Investments, part of African Minerals Exploration & Development SICAR SCA, has agreed to acquire 50 million shares in the Mozambique-focused iron ore exploration group for 8 pence each. 

The price represents a modest premium to last night’s close 7.38 pence.

Redbird has also been granted 25 million warrants exercisable at 12 pence, which could bring in a further £4 million.

The cash injection will be used to complete the pre-feasibility study of the Tete Project.

Chairman Jeremy Dowler said: "The company is very pleased to welcome the Fund on board and we look forward to working with them to build Baobab into a successful pig iron producer. 

“The African Minerals Exploration & Development investment brings with it not just the assurance of full-funding beyond the conclusion of the PFS, but also an exceptional depth of experience in the mining finance space, specifically in Africa."

Baobab has a global resource of 482 million tonnes, with over 300 million tonnes in the Tenge-Ruoni area, establishing it as a standalone asset.

Likewise, the news from Forte Energy was positive.

The company unveiled a 68 percent increase in the resource estimate for its Firawa Project in Guinea.

The inferred resource rises to 19.5 million pounds of the uranium compound U3O8 at a 100 parts per million cut-off from 11.6 million pounds previously.

The resource tonnage jumps 71 per cent to 30.3 million tonnes.

“Mineralisation occurs along an undulating east-west orientated ridge, of up to 60 metres in height from the surrounding plain and extends over three kilometres,” the company said in a statement this morning. 

“The majority of the mineralised zones dip moderately to steeply towards the north and remain open at depth.”

Today’s results follow a 63 hole drilling campaign for a total of 4,712 metres.

Earlier this week Forte revealed encouraging assays from the Bohoduo uranium prospect, which is also in Guinea.

Bohoduo spans a total of 338 square kilometres and it is located 70 kilometres north east of the flagship Firawa project. 

Previous drilling in 2008 confirmed uranium mineralisation at the property. And earlier this year Forte drilled 17 holes, for a total of 1,277 metres. 

The first batch of results, announced today, returned assays with up to 578 parts per million (ppm) uranium.

Combined, the two sets of drill results have confirmed the continuity of uranium mineralisation along a 2.3 kilometre strike length. And the mineralisation has been encountered from surface down to 100 metres.

We also published an in-depth story on Medgenics (LON:MEDG, LON:MEDU NYSE:MDGN), whose chief executive Dr. Andrew Pearlman says its Biopump technology has the potential to “start a whole new pharmaceutical industry”.

“Our technology has promise to provide a major change in medicine. It is not just a product that we have, it’s an industry,” says Pearlman.

Its technology manipulates patients’ own tissue to produce proteins to fight diseases, eliminating the need for hundreds of vaccines.

The company is at an inflection point. Having completed its first clinical trials in anaemia in Israel, Medgenics now has US FDA approval to start its first clinical trials in US patients to treat anaemia in patients undergoing kidney dialysis.

It also has FDA designation of its INFRADURE treatment for Hepatitis D virus as an Orphan Disease and further approval for trials in Israel to treat Hepatitis C being just around the corner.

Additionally, the appointment earlier this week of Dr. Sol Barer as chairman was viewed by investors and industry commentators as a real accolade for the company. 

Pearlman adds: “Coming on the heels of recent announcements, we see the appointment of Dr. Barer as a major transformative event at the company.”

As chief executive at Celgene, Dr Barer was a major force in the transformation of the business, which grew from an outfit employing 30 researchers, to a business that’s now worth almost US$30 billion.

The addition to the board of an industry heavyweight of this calibre is a huge endorsement of Medgenics and its technology.

Pearlman adds: “Sol is a highly successful life science innovator and businessman, he knows key people and has extensive deal-making experience. 

“This is a potent combination that will be invaluable to ensuring Medgenics’ technology will receive early recognition and appreciation throughout the life science sector.”

Meanwhile, we interviewed chief executive of Amphion Innovations (LON:AMP) Richard Morgan, who said that intellectual property is becoming a recognized “asset class” in its own right.

“Amphion’s approach has been consistent in finding and cultivating good IP in our partner companies.  We now have a dual track approach,” said Morgan.

“The first track is to build and monetise good companies that make and sell products and make a profit.  

“The second track is to work with our partner companies to extract value from the reservoir of IP where it either has applications in other areas and/or where the original product concept has not worked out, which can happen for a variety of reasons.  The two tracks are wholly complementary.

“We have reinvested a considerable amount of capital in the IP licensing programmes, in both DataTern and Axcess, one of our partner companies.  

“We have done that with the expectation that we can generate good results from the incremental investments, in terms of both potential cash flow and value realization.  

“There are no easy or quick paths to success.  We believe we are making progress and will see good results from these programmes but the timing of outcomes is difficult to predict.”

We also covered a broker note on Providence Resources (LON:PVR) from Liberum Capital, which said its Barryroe oilfield could contain three times more oil than investors are expecting.

A new Barryroe resource audit is expected to be published later this month. 

And the City broker believes the oilfield may contain 1 billion barrels of oil-in-place, with 160 million barrels of recoverable oil, following the recent testing success.

In March an appraisal well successfully showed that Barryroe could yield commercial oil flows. It was a breakthrough for Ireland’s nascent oil industry. And the analysis that has followed has provided further encouragement.

“The March well results and subsequent data evaluation demonstrated that the 2010 RPS assumptions are likely to be far too cautious. We expect significant upgrades to market expectations,” analyst Andrew Whittock said in a note.

“Based on net pay, porosity and hydrocarbon saturation data points released following the latest Barryroe well, and educated guesstimates of the areal extent of the basal interval that was tested, we estimate STOIIP in that basal interval could be c.750mmb. 

“With more than 300mmb upside to that from the Lower and Middle Wealden sections and as yet undefined upside from the upper, secondary objectives confirmed by the well, we believe Providence could announce a STOIIP of at least 1.0bn barrels.”

Whittock says that while certain aspects of his estimate may be found inaccurate, the range of potential outcomes ‘give confidence’ that the new assessment will be ‘a multiple of current market expectations’.

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