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Beaufort Securities Breakfast Alert: Ariana Resources,Kibo Mining, Premier African Minerals, Jangada Mines and others

Beaufort Securities Breakfast Alert: Ariana Resources,Kibo Mining, Premier African Minerals, Jangada Mines and others

Markets


Europe
The FTSE-100 finished Friday's session little changed at 7,523.23 whilst the FTSE AIM All-Share index was down 0.15% at 1,020.33. In continental Europe, the CAC-40 finished 0.08% higher at 5,372.38 whilst the DAX was 1.18% higher at 12,991.28.
Wall Street
In New York on Friday night, the Dow Jones closed 0.71% higher at 23,328.63, the S&P-500 added 0.51% at 2,575.21, while the tech-based Nasdaq climbed 0.36% to end at 6,629.05.
Asia
In Asian markets this morning, the Nikkei was up 1.14% at 21,702.92 but the Hang Seng was 0.67% lower at 28,295.84.
Oil
In early trade today, WTI was up 0.5% at $52.1 per barrel and Brent was 0.26% higher at $57.9 per barrel.
 

Headlines


Brexit: Business leaders call for swift transition deal
Britain's five biggest business lobby groups are calling for an urgent Brexit transition deal, or they warn the UK risks losing jobs and investment. In a joint letter being sent to Brexit Secretary David Davis, the groups, including the Institute of Directors and CBI, will say time is running out. Sources told the BBC the letter is still in draft form, but will be sent in the next day or two. A government spokesman said the talks were "making real, tangible progress". The other lobby groups backing the letter are the British Chambers of Commerce, the Federation of Small Businesses, and the EEF manufacturing body. Together they represent companies employing millions of workers.

Company news


Jangada Mines (LON:JAN, 4.38p) – Speculative Buy
Jangada Mines, a natural resources company developing South America's largest and most advanced platinum group metals (PGM) project, announced significant vanadium sampling and metallurgical results from its Pedra Branca project in north-eastern Brazil, as past to the Company's strategy to increase by-product credits. Assay results from five hand samples returned 0.33% V2O5, 5.0% titanium and 53% iron with grade and mineralogy being remarkably consistent. As previously announced, Pedra Branca has a JORC (2012) compliant resource estimate of 23.1Mt grading 1.28g/t (Pd, Pt and Au) and contains an attractive suite of potential by-product credits including Ni, Cu, Co and Cr. Consultants, GE21 Consultoria Mineral, are currently working on a Scoping Study which is expected to be completed in the near term followed by a Pre-Feasibility Study (PFS). The Pedra Branca project comprises 44 exploration licences covering 55,000ha with at least 11 other PGM targets have been confirmed by drilling which could significantly enhance the current resource estimate.

Our view: The above vanadium showing is positive news as it shows the multi commodity potential of the Pedra Banca project. The project covers over 55,000ha and already has a resource of PGM, cobalt, copper and chrome. The potential addition of vanadium to the mix demonstrates the exploration upside at Pedra Branca. We look forward to results from the Scoping Study in the near term as the Company continues to fast track Pedra Branca towards trial mining in early 2018. In the meantime, we maintain a Speculative Buy rating on the stock.

Beaufort Securities acts as corporate broker to Jangada Mines Plc

Ariana Resources (LON:AAU, 1.38p) – Speculative Buy
Ariana Resources, the gold-silver exploration and development company, announced its quarterly operational update from its Kiziltepe gold mine in Western Turkey for the period ended 30 September. Ramp-up to full production at Kiziltepe has now been completed through the JV agreement (50:50) with Proccea Construction. Total production for the period was 3,762oz of gold and 15,985oz of silver, this is 6% higher then the feasibility forecast recovered gold on as annualised basis. Estimated cash costs for the period are US$570/oz. Since start-up, 5,691oz of Au and 30,504 of silver have been sold. The processing plant is operating to design specifications, operational mill availability increased t 97% and utilisation increased to c 98% during September. Weighted average grade for the period is 3.12g/t Au and 43.7g/t Ag which is in line with reserve expectations and higher-grade ore is expected during Q4 2017 as mining progresses deeper in the Arzu South pit. Process recoveries remain higher than expected at 95% for gold and 71% for silver. Ore production achieved an average rate of 18,600t per month with a peak rate of over 22,600t per month. Operational enhancements are also being considered to increase mill throughput to c 200,000t of ore per annum. Loan repayments continue to be made on a scheduled basis with over US$5.9m in payments made as at 30 September 2017, of which US$1.8m was repaid during Q3 2017. After repayment of all loans, profits from operations will be shared on a 51:49 basis between Ariana and Proccea respectively.

Our view: The above results are an important milestone for Arianna, reporting its first quarterly operational update from Kiziltepe having now achieved commercial production. We are encouraged with the average ore grades (3.12g/t Au and 43.7g/t Ag) and recoveries which match reserve estimations and are higher than expected, respectively. We also note the average run rate of 18,600t per month and peak rates of over 22,400t per month which is more than 200,000t per annum and significantly higher than that stated in the feasibility plan. With JV cash costs coming in at c US$570/oz the Group should be able to repay its loan relatively quickly. We maintain a Speculative Buy and place our target price under review as we update our forecasts.

Beaufort Securities acts as corporate broker to Ariana Resources plc

Jubilee Platinum (LON:JLP, 4.40p) - Speculative Buy
Jubilee has announced it has signed an earn in agreement with Berkeley Mining Resources (BMR) to earn 40% of BMR's lead zinc surface dumps in Zambia. The dumps total 6.4 million tonnes containing approximately 700,000 tonnes combined lead and zinc, with a higher grade resource of c.3 million tonnes containing nearly 400,000 tonnes of Pb + Zn. Jubilee will provide £2.3m in staged debt funding (0.3,1.0,1.0) to earn 40%, initially as preferred equity until all the debt and interest has been repaid. Jubilee will be the operator.

Our view: This is a slight surprise given the metals are lead and zinc (not platinum, chrome or copper). But clearly Jubilee knows its metal recovery expertise/IP will work. The investment provides diversity in terms of both metal and country and given the size of the resource and zinc price, looks to be a low cost transaction for Jubilee. We reiterate our Speculative Buy recommendation for Jubilee.

Beaufort Securities acts as corporate broker to Jubilee Platinum PLC

Katoro Gold (KAT.L, 3.12p) - Speculative Buy
Last week Acacia Mining's major shareholder Barrick Gold (63.9%) negotiated an agreement with the Government of Tanzania "whereby economic benefits generated by Acacia's operations would be shared with Tanzania on a 50/50 basis going forward". It seems that the Government's 50% share of economic benefits will be delivered in the form of royalties, taxes and a 16% free carry interest in Acacia's operations. Barrick also stated that Acacia would make a $300m payment to the Government of Tanzania as a gesture of good faith.

Our view: Whilst Barrick's agreement is subject to approval by Acacia's Board and shareholders we see the proposal as positive news for resource companies with assets in Tanzania. Recent mining legislation changes have had a negative impact on all Tanzania focused resource companies and made the country a high-risk destination for foreign investors. We view Barrick's agreement as a precedent setting framework. Although the proposed changes have a limited impact on exploration companies, Katoro's management can now focus on developing the Imweru project. At the same time foreign investors can consider returning to Tanzania, a country well-endowed with natural resources.

Beaufort Securities acts as corporate broker to Katoro Gold plc

Kibo Mining (LON:KIBO, 5.00p) - Speculative Buy
The progress made at Acacia is a positive for Kibo. Although Kibo is predominantly a power project company, it does have a coal mining element, and Tanzania's standing as an investment destination is important. It is now critical that the goal posts don't move again, i.e. that the current government sticks with the proposed 16% equity interest plus royalty and tax = a 50% profit share.

Beaufort Securities acts as corporate broker to Kibo Mining PLC

Premier African Minerals (LON:PREM, 0.32p) – Speculative Buy
Premier African Minerals, the South and Western Africa focused mineral explorer and developer, announced today an update on its Zulu lithium project in Zimbabwe. The Company has intersected several high-grade intervals which confirm continuity of the Main Zone as well as high-grade potential of the New Zone after completing 21 drill holes (diamond core) totalling 3,316m. Initial assay results from three drill holes returned on average several meters thick intervals with grades greater than 1% Li2O. The best intercept returned 0.57m grading 2.93% Li2O from drill hole ZDD-23. Premier has a current resource estimate of 20.1Mt grading 1.06% Li2O including 7Mt grading 1.5% Li2O and an exploration target of 60-80Mt. The purpose of the current drill programme is to expand on resources from Main Zone to include the newly discovered South-East Zone.

Our view: The initial assay results are encouraging and we note the multiple intersections of lithium mineralisation from the Main Zone and the New Zone. We look forward to further assay results in the coming weeks which could expand the current resource estimate from the Main Zone. In the meantime, we maintain a Speculative Buy rating on the stock.

Beaufort Securities acts as corporate broker to Premier African Minerals plc

 



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