Proactive Investors - Run By Investors For Investors

Beaufort Securities Breakfast Alert: Bushveld Minerals Limited, Fox Marble Holdings PLC, Hastings Insurance Group, Jubilee Platinum PLC, KEFI Minerals plc

Beaufort Securities Breakfast Alert: Bushveld Minerals Limited, Fox Marble Holdings PLC, Hastings Insurance Group, Jubilee Platinum PLC, KEFI Minerals plc

Today's edition features:

• Bushveld Minerals (LON:BMN)

• Fox Marble Holdings (LON:FOX)

• Jubilee Platinum (LON:JLP)

• KEFI Minerals (LON:KEFI)

• Hastings Group Holdings (LON:HSTG)




The FTSE-100 finished yesterday's session 0.59% lower at 7,498.06 whilst the FTSE AIM All-Share index was down 0.49% at 1,003.45. In continental Europe, the CAC-40 finished 1.40% lower at 5,145.70 whilst the DAX finished down 1.12% at 12,154.00.

Wall Street

In New York last night, the Dow Jones ended 0.17% lower at 22,048.7, the S&P-500 closed 0.04% lower at 2,474.02 and the Nasdaq was down by 0.28% at 6,352.33.


In Asian markets this morning, the Nikkei 225 was 0.19% lower at 19,700.74 and the Hang Seng was down 1.59% at 27,315.13..


In early trade today, WTI crude was down 0.08% at $49.52 per barrel and Brent crude was 0.04% lower at $52.68 per barrel..



North Korea Guam missile strike plan 'ready by mid-August'

North Korea says its plan to fire four missiles near the US territory of Guam will soon be ready, as a war of words with Washington intensifies. State media said Hwasong-12 rockets would pass over Japan and land in the sea about 30km (17 miles) from Guam, if the plan was approved by Kim Jong-un. It denounced Donald Trump's warnings of "fire and fury" and said the US leader was "bereft of reason". The US has warned the North its actions could mean the "end of its regime". US Defence Secretary Jim Mattis said Pyongyang would be "grossly overmatched" in any war against the US and its allies. The BBC's Rupert Wingfield-Hayes, who is in Guam, says there is a sense that the North Korean threat is rhetorical, as most people feel that if they really did strike with missiles it would be suicidal for the North Korean regime.

Source: BBC News


Company news

Bushveld Minerals (LON:BMN, 9.88p) – Speculative Buy

Bushveld Minerals, the diversified mineral development company with a portfolio of vanadium, titanium, iron ore, tin and coal in southern Africa, announced yesterday an update from its Vametco vanadium operations. Bushveld Vametco, which is 45% and 55% owned by Bushveld and Yellow Dragon respectively, holds a 78.8% interest in Strategic Minerals Corporation (SMC) which is the holding company of Vametco. Operational and financial highlights for the first half of 2017 include: production of 1,441 metric tons of vanadium (MTV) with revenues of ZAR439.1m (US$33.2m) and production costs of US$15.58/kg V resulting in EBITDA of ZAR85.5m (US$6.5m). Currently the Vametco plant has a capacity of 3,000MTV per annum and Bushveld expects to increase this to 5,000MTV over the next three years. Bushveld's share of the above financials is c 35%.

Our View: The above announcement is an important milestone for Bushveld reporting its first operational update from Vametco having recently completed the acquisition with Yellow Dragon. We are encouraged with H1 2017 production rates and relatively low production costs. We note that the vanadium market has improved significantly since Bushveld acquired its share of Vametco with prices currently over US$45/kg V. Assuming prices and production costs remain at current levels Bushveld and its partners should be able to generate high margins. We look forward to further updates from the Vametco mine and plant as Bushveld focuses on its expansion initiatives. In the meantime, we maintain a Speculative Buy rating on the stock.

Beaufort Securities acts as corporate broker to Bushveld Minerals plc


Fox Marble Holdings (LON:FOX, 8.00p) – Speculative Buy

The AIM listed company focused on marble quarrying and finishing in Kosovo and the Balkans region this morning announced it has signed a Memorandum of Understanding with Pristine Stone ('Pristine Stone'), a natural stone importer and distributor in the USA, in order to establish a new distribution outlet for Fox Marble products in the country. Under the three-year agreement, Fox Marble will take a 5% share in Pristine Stone for nil consideration. Pristine Stone will act as a marketing, sales and distribution agent for the marble material produced by the Company from its quarries in Kosovo and Macedonia. The marble supplied to Pristine Stone will be cut and polished into slabs and tiles at Fox Marble's own facility in Lipjan, Kosovo, before being shipped to the United States. In consideration, and subject to achieving minimum sales volumes of US$1.5 million over the three years as determined by the Company, (i) Pristine Stone will be granted priority rights to sell Fox Marble material in the United States and, (ii) Pristine Stone will be granted 750,000 warrants issued in equal instalments over three years at a 2p over market price on the day of issue. Pristine Stone's management has over twenty years' experience in the stone industry including sales, fabrication, and installation. Pristine Stone will serve as a primary distributor for Fox Marble as the company looks to grow its presence in the United States with a team that has the ability to sell into the world's largest end market for slabs. Pristine's founding principals, Frank Kaloshi and Tim Seymour, have built a company that leverages the combined expertise of Mr. Kaloshi in the high-end marble market, and Mr. Seymour as a well-known financial market participant, and long-time successful investor in Eastern European companies focused in the materials sector. Chris Gilbert, Chief Executive of Fox Marble, said: "This agreement builds on our strategy of increasing our global footprint as we continue to develop further as a fully integrated production, processing and distribution company of pre-eminent quality marble. As such we look forward to working with Pristine Stone which, through our incentivized distribution agreement is structured to help deliver maximum sales penetration of our marble product into the American market."

Our View: Fox shares took a further beating following the revenue warning that resulted from Pisani's appointment of Administrators and Beaufort's downgrade to Hold (from Speculative Buy) early in July. Indeed, the shares have all but halved from the peak achieved about six months ago. So the question now has to be: Have the shares now fallen too far? It does look that way! Beaufort has long held the opinion that Fox's exceptional high grade, multiple type/colour dimensional stone (found on surface while remaining open at depth) effectively provides it with infinite resource to supply to a growing US$10bn+ global market. Positioning itself as a low-cost, high-quality wholesale supplier of choice with elementary open pit workings, low cost labour and excellent infrastructure against a backdrop of Kosovo's prospective EU accession, Fox Marble dispels most of the fears normally associated with such early stage producers. If there has been a problem, however, it is that access this giant, but overwhelmingly fragmented market, depends on reputation, foremost with international distributors, who remain the key 'door openers'. Achieve that, become a default supplier of choice for, say, half an acre of flawless Sivic White for a new corporate headquarters in Dubai, then Fox Marble's quarries could become very profitable indeed. It certainly is not there yet, but it is making progress. Today's announcement is an important step in this right direction. Right now, various new orders plus agreements signed with buyers from India, Turkey, etc. suggest revenues of between €3m and €4m are already 'in the bag' for the current year. Repeat orders along with the new arrangement with Pristine Stone should ensure the starting point for 2018E is something over €6m. Given that the new factory is now complete, gross margins are set to make a step improvement, while operational expenses will also start to reduce. While the 2017E should be expected to remain in net losses, with a high level of costs fixed there is finally reasonable confidence that next year will actually produce some (albeit modest) positive earnings. Hurrah!! The recent issue of an 8% CLN will remind investors that Fox has a relatively weak balance sheet and could, potentially resort to further equity issuance to plug the gap but, nevertheless, there are signs that the Group's extended run of bad luck and disappointing news might finally have run its course. Beaufort is willing to give Fox Marble the benefit of the doubt once more, moving its recommendation from 'Hold' back to 'Speculative Buy', with a price target of 12p/share.

Beaufort Securities acts as corporate broker to Fox Marble Holdings PLC


Jubilee Platinum (LON:JLP, 4.05p) – Speculative Buy

Jubilee announced yesterday that it has secured a US$50m project funding agreement in support of its metals recovery business. Project funding will be provided by Riverfort Capital and structured at the project level to minimise dilution to existing shareholders. Riverfort had previously provided funding to Jubilee for its chrome and platinum recovery at Hernic. The funding commitment is for an initial 33 month period (with flexibility for mutual extension) and will allow Jubilee to target multiple surface based metal recovery projects. In recognition of the funding commitment, Riverfort has been granted the right to exercise a 2.5% maximum preference equity stake in the subsidiary Jubilee Processing.

Our View: The above announcement is positive news as it will enable Jubilee to pursue its growth strategy for its metals recovery business. The funding combined with Jubilee's expertise in the metals extraction technology should enable the Company to unlock potential value from surface material projects without the risks normally associated with mining companies. We look forward to further announcements regarding the potential recovery projects in the near term. In the meantime, we retain our speculative Buy recommendation.

Beaufort Securities acts as corporate broker to Jubilee Platinum PLC


KEFI Minerals (LON:KEFI, 5.15p) – Speculative Buy

KEFI Minerals, the gold exploration and development company with projects in the Kingdom of Saudi Arabia and the Federal Democratic Republic of Ethiopia announced today that its residual funding requirement for the Tulu Kapi gold project has been further reduced. This follows from the recently signed financing agreement (17 July 2017) with infrastructure specialist Oryx. The residual amount has now been reduced from US$32m to US$24m based on refinements to planned capital expenditure and contingency provisions. KEFI is now focusing on sourcing part of this residual requirement from a separate finance facility against ore stockpiles. These are estimated to include US$15m of contained gold during start-up of production. KEFI's preference to retain majority ownership and control of the project.

Our View: KEFI continues to drastically reduce the capital requirement for the development of Tulu Kapi while maintaining ownership and minimising dilution to existing shareholders. The above announcement continues this theme. We look forward further updates as the targeted date for financial close approaches in Q4 2017. In the meantime, we maintain our Speculative BUY recommendation.

Beaufort Securities acts as corporate broker to KEFI Minerals plc


Hastings Group Holdings (LON:HSTG, 320.00p) – Buy

Hastings, a general insurance provider, yesterday announced its interim results for the 6 months ended 30 June 2017 ('H1 FY2017'). During the period, gross written premiums advanced by +28% to £462m, net revenue climbed +22% to £345.2m and adjusted operating profit rose +22% to £86.5m, against comparative period (H1 FY2016). Profit after tax increased by +36% to £57.9m, leading basic and diluted earnings per share of 8.8p (H1 FY2016: 6.5p). Free cash flow generated improved by +34% to £65.8m, while net debt leverage multiple reduced to 1.7x (end-FY2016: 1.9x). Calendar year loss ratio was 73.4%, while solvency II coverage ratio stood at 173% (end-FY2016: 140%). On the operational front, the Group's live customer policies increased by +15% to 2.54 million and its market share of UK private car insurance rose to +7.0% (H1 FY2016: 6.2%). The Group has made continued investment in the business during the period, includes Guidewire, the next generation claims and broking platform, which the management said will enable future growth opportunities and operational efficiencies. Hastings' CEO, Gary Hoffman, commented "I am delighted that Hastings continues on its profitable growth trajectory. Supported by our 2,900 colleagues, we are well on course to deliver on our ambitious 2019 targets and continue our strong momentum into the second half". The Group declared an interim dividend of 4.1p per share, up +24%, to be paid on 10 November 2017 (ex-Dividend: 5 October 2017). The Group is scheduled to announce its third quarter trading update on 27 October 2017.

Our View: Hastings continues to deliver an impressive performance. The result for the half year were strong with +15% growth in live customer policies, driven by high retention as well as new customers. Hasting differentiates itself through its agile, digital and data-driven business model, whose approach focusses on price comparison websites ('PCW') to providing customer with the best suited and most attractive offerings. The net result is found in continued market share gains. Looking ahead, the Board confirmed that it is "on track" to continue its profitable growth and deliver against its FY2019 targets. Such targets includes; 1) calendar year loss ratio of 75-79%, 2) dividend payout ratio of 50-60% of adjusted profit after tax, 3) reach customer numbers of 3.0 million during FY2019 but not at the expense of profitability, and 4) net debt leverage multiple of 1.0x during FY2019. For the FY2017, the Group already achieved its customer count target of 2.5 million. With our slightly upgraded FY2017 forecast of revenue £715m, pre-tax profit £167m (from £156m) and EPS of 20.5p (from 19.4p), the Shares are presently valued at FY2017E and FY2018E P/E multiples of 15.6x and 13.2x along with dividend yields of 3.7% and 4.3%, respectively. Hastings remains a high visibility investment that fits well for investors seeking both capital appreciation and income. The Shares have performed extremely well rising +61% over the last 12 months, yet the growth momentum remains set to continue. Beaufort repeats its Buy recommendation on the shares.

Important Risk Warnings and Disclaimers 

This report is published by Beaufort Securities Ltd ("Beaufort Securities"). Beaufort Securities Ltd is Authorised and Regulated by the Financial Conduct Authority and is a Member of the London Stock Exchange. 


This document is not an offer to buy or sell any security or currency. This document does not provide you with individually tailored investment advice. It has been prepared without regard to the your financial circumstances and objectives The appropriateness of a particular investment or currency will depend on your individual circumstances and objectives. The investments and shares referred to in this document may not be suitable for you. 

This research is non-independent and is classified as a Marketing Communication under FCA rules. As such it has not been prepared in accordance with legal requirements designed to promote independence of investment research and it is not subject to the prohibition on dealing ahead of the dissemination of investment research in COBS 12.2.5. However Beaufort Securities has adopted internal procedures which prohibit analysts from dealing ahead of non-independent research, except for legitimate market making and fulfilling clients' unsolicited orders. 

By receiving this document, you will not be deemed a client or provided with the protections afforded to clients of Beaufort Securities. When distributing this document, Beaufort Securities is not acting for you and will not be responsible for providing advice to you in relation to this document. Accordingly, Beaufort Securities will not be responsible to you for providing the protections afforded to its clients. 

Beaufort Securities may effect transactions in shares mentioned herein and may take proprietary trading positions in those shares, and may receive remuneration for the publication of its research and for other services. Beaufort Securities may be a shareholder in any of the companies mentioned in this report. Accordingly, this document may not be considered as objective or impartial. Additionally, information may be available to Beaufort Securities or the Group, which is not reflected in this material. The remuneration of the author of this report is not tied to the recommendations on any shares mentioned nor to the any transactions undertaken by Beaufort Securities or any affiliate company. Further information on Beaufort Securities' policy regarding potential conflicts of interest in the context of investment research and Beaufort Securities' policy on disclosure and conflicts in general are available on request. Please refer to 

Past performance is not a guarantee of future performance. Investments may go down in value as well as up and you may not get back the full amount invested. The listing requirements for securities listed on AIM or the ICAP Securities & Derivatives Exchange are less demanding and trading in them may be less liquid than main markets. This may make it more difficult to buy and sell these securities. 


This document includes certain statements, estimates, and projections with respect to the anticipated future performance of securities listed on stock exchanges and as to the market for these shares. Such statements, estimates, and projections are based on information that we consider reliable and may reflect various assumptions made concerning anticipated economic developments, which have not been independently verified and may or may not prove correct. No representation or warranty is made as to the accuracy of such statements, estimates, and projections or as to its fitness for the purpose intended and it should not be relied upon as such. Opinions expressed are our current opinions as of the date appearing on this material only and may change without notice. Other third parties may have issued other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. Those reports reflect the different assumptions, views, and analytical methods of the analysts who prepared them. This report has not been disclosed to any of the companies mentioned herein prior to its publication. 

This document is based on information Beaufort Securities has received from publicly available reports and industry sources. Beaufort Securities may not have verified all of this information with third parties. Neither Beaufort Securities nor its advisors, directors or employees can guarantee the accuracy, reasonableness or completeness of the information received from any sources consulted for this publication, and neither Beaufort Securities nor its advisors, directors or employees accepts any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document (except in respect of wilful default and to the extent that any such liability cannot be excluded by the applicable law). You should not rely on this document and should not use it substitution for the exercise of the independent judgment of yourself or your adviser. 

The information contained in this document is confidential and is solely for use of those persons to whom it is addressed and may not be reproduced, further distributed to any other person or published, in whole or in part, for any purpose. Other persons who receive this document should not rely on it. Beaufort Securities, its directors, officers and employees may have positions in the securities mentioned herein.


© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use