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Beaufort Securities Breakfast Alert : Ariana Resources, Fox Marble and Xtract Resources

Beaufort Securities Breakfast Alert : Ariana Resources, Fox Marble and Xtract Resources

• Ariana Resources (LON:AAU)
• Fox Marble (LON:FOX)
• Xtract Resources (LON:XTR)

Markets

Europe
The FTSE-100 finished yesterday's session 0.28% higher at 7,348.03, whilst the FTSE AIM All-Share index was down 0.90% at 1,011.53. In continental Europe, the CAC-40 finished 0.02% lower at 5,374.35 whilst the DAX was down 0.38% at 12,998.85.
Wall Street
Last night in New York, the Dow Jones closed 0.16% lower at 24,140.91, the S&P-500 fell 0.01% to end at 2,629.27, while the Nasdaq finished 0.21% higher at 6,776.38.
Asia
In Asian markets this morning, the Nikkei 225 was up 1.39% at 22,485.7 and the Hang Seng was 0.6% higher at 28,393.18.
Oil
In early trade today, WTI crude was 0.13% higher at $56.03 per barrel and Brent was up 0.21% at $61.35 per barrel.

Headlines
Bitcoin surges above $14,000 to new high
Bitcoin crossed $14,000 (£10,460; €11,870) on Thursday, surging $2,000 in less than 24 hours. The cryptocurrency began the year below $1,000 but continues its sharp rise despite warnings of a dangerous bubble. Bitcoin hit the latest milestone during early trading in Asia, according to the website Coindesk.com. The new record high comes just days before the launch of bitcoin futures on two exchanges, including the world's largest futures exchange, CME. Spread betting firm CMC Markets said the rise had all the symptoms of a bubble market, warning "there is no way to know when the bubble will burst".
Source: BBC News

Company news
Ariana Resources (LON:AAU, 1.20p) – Speculative Buy
Ariana Resources, the gold-silver exploration and production company operating in Turkey, announced results from its recent exploration programme across the Hot Gold Corridor and within its wholly owned Salinbas/Ardala gold project in north-east Turkey. The Hot Gold Corridor is named after the 3.87Moz Au eq. Hot Maden deposit and Ariana’s Salinbas (and the adjacent Ardala deposits) are located approximately 16km from Hot Maden. Arianna has identified a 550m x 150m area of precious and base-metal soil anomalies at Salinbas North. Soil samples returned 3.83g/t Au plus 108g/t Ag, 2.97g/t Au plus 94g/t Ag and 1.67g/t Au plus 91g/t Ag. Previous drilling at Ardala zone returned 135m grading 2.28g/t Au, 0.29% Cu and 113g/t Mo.

Our view: The above results are very positive and demonstrate the potential for the Hot Gold Corridor to contain a significant multi-phase porphyry system at Ardala as well as an associated gold-silver deposit at Salinbas. Results to date suggest that the Hot Gold Corridor has the potential to be an extensive alteration zone with several styles of mineralisation. We look forward to further exploration updates on Salinbas and Ardala and the potential for the area to host multi-million-ounce gold deposits and significant base metal mineralisation. In the meantime, we maintain a Speculative Buy rating on the stock.

Beaufort Securities acts as corporate broker to Ariana Resources plc

Fox Marble (LON:FOX, 10.62p) – Speculative Buy
The AIM listed company focused on marble quarrying and finishing in Kosovo and the Balkans region, this morning confirmed that it has received a cash loan from one of its Non-Executive Directors. Roy Harrison OBE has subscribed £500,000 in an unsecured loan note issued by the Group, which carried an interest rate of 5% for the outstanding period and may be repaid at any time within a 2-year term. The new monies have been raised specifically for the purchase of equipment, with a view to facilitating increased production in the Group’s marble quarries sufficient to satisfy existing demand. It is expected to be delivered and become operational on site immediately following the soon to commence annual winter shutdown which is expected to end during March 2018. Chris Gilbert, CEO, commented: "This facility, which falls outside our normal operating budget, will allow us to provide the quarries with additional essential equipment and it will give us the ability to increase production substantially, in order to meet the current and growing, global demand for our material."

Our view: Excellent news! In a major report on Fox Marble that Beaufort recently published (titled ‘At Last! Finally Set to Deliver in its Original Business Plan’), the only genuine analytical concern raised was with respect the Group’s relatively weak balance sheet. It concluded that although available cash plus remaining credit facility should be sufficient to fund quarry expansion now required to satisfy current demand, there is clearly limited room for manoeuvre and management would be more comfortable with a greater cash ‘cushion’. Given the Board’s understandable reluctance to place new discounted equity in the market, a low-priced loan facility such as this taken up by one of the Group’s NEDs provides an ideal near-term solution. It is also an obvious reflection of Board-level confidence in the Group’s continuing progress. This was also exactly what Beaufort concluded and, late though it is, Fox Marble’s vision now genuinely looks set to be delivered. It appears set to create significant value in terms of significant cash flow generation while anticipating shareholders being rewarded with early dividend distribution. Indeed, Beaufort forecasts suggest current contract visibility will be sufficient for it to deliver modest positive cash flow for the first time in 2018E, and go onto generate surplus enough to offer a maiden dividend in 2019E. Beaufort rates Fox Marble as ‘Speculative Buy’ with a price target of 24p/share.

Beaufort Securities acts as corporate broker to Fox Marble Holdings PLC

Xtract Resources (LON:XTR, 2.90p) – Speculative Buy
Xtract Resources announced yesterday an update on its Manica alluvial operation in Mozambique. Sino Minerals, the contractors operating on the eastern portion of the licence, have produced 6.287kg (202oz) of tax-paid gold since initial start-up to the end of November. This equates to a gross value of US$230,000 to Xtract and its partner Nexus or US$92,000 attributable to Xtract. Management expects monthly alluvial gold production to increase now that the start-up phase has been completed. Xtract also announced that it has negotiated enhanced the terms regarding alluvial mining on the western portion of the Manica concession with contractors Omnia Mining and Moz Gold Group. The latter has been assigned the M blocks while the former has rights over the O blocks. Given the size of the western half of the alluvial project it was agreement that such division would be beneficial to all interested parties. Omnia has an underutilised plant 3km west of the Manica concession. The amended agreement should have an effect of increasing revenue whilst reducing operating risk.

Our view: Achieving production on the eastern half of the Manica Alluvial production is a significant milestone for the company. Whist Xtract’s portion of the start-up phase is a modest amount, we are encouraged with initial results and expect monthly production to increase in the coming months. We look forward to steady state operation from both the eastern and western portions of the alluvial concession with the amended agreement which should result in increased payments to Xtract. In the meantime, we maintain our Speculative Buy rating on the stock.

Beaufort Securities acts as a corporate broker to Xtract Resources PLC



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