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Fox-Davies Capital

Fox-Davies Capital specialises in assisting international resource companies to gain access to the UK, European and North American capital markets and has a substantial background in emerging markets particularly in Africa, Asia, Russia and the CIS.


Fox Marble, Chaarat Gold, Landore Resources, Nyota Minerals and others feature in Fox-Davies Newsflash

January 17 2013, 8:40am


Daily Mining Monitor   

Afferro Mining (LON:AFF) has commented on recent media speculation regarding the status of negotiations regarding a potential takeover offer.

In this news:

The Company remains in active discussions with all potential offerors from whom it has received approaches

Jindal Steel and Power Limited named as one of the parties

FD Comment: Whilst there was never any certainty a formal offer would be made, doubts emerged when the exclusivity period lapsed on the 14th. However, by naming one of the potential suitors, assuming they had Jindal’s approval, will give the market more confidence a deal could be done.

African Barrick Gold PLC (LON:ABG) announced its December quarter production. Gold produced in the quarter was 1480,684oz with sales of 159,585oz. As expected, gold production for the year was weighted heavily towards the second half and total production of 2012 was 626,212oz with sales of 609,252oz. Full year cash costs per ounce sold are expected to be in line with guidance of US$900 - US$950 per ounce, at the top end of the range. More gold was produced towards the end of the quarter which is why sales are well below production. This gold will be sold in January 2013. Production was slightly below our forecast despite an excellent performance at Buzwagi due to a below expectation performance at Bulanhulu due to paste delays resulting in lower than planned availability of high grade stopes, a problem which continued throughout the quarter and will impact the current quarter.

Capital Drilling (LON:CAPD) has released a trading update ahead of the FY’12 results on 18th March.

In this news:

Unaudited figures Fleet Size 88 (+13%), Fleet utilisation 76% (-7%), ARPOR US$192k (+22%), Revenue US$158.9m (+22%), EBITDA US$37.1m (+9%), EBIT US$20.9m (+9%), NPAT US$14m (-20%), EPS 10.4c/sh (-21%), NAV 69.2c/sh (+18%)

FY’12 was marked by rapid expansion of the fleet with US$30m Capex. Fleet size is now 93 rigs with average age 3.5yrs. Capex expected to be materially reduced in FY’13

4Q’12 was weak as utilisation rates slipped due to the increased fleet size, a slowdown driven by clients year end budgets and the lowest levels of capital market activity in the mining sector for the last seven years.

Company received confirmation from clients for ~ 90% of forecast revenue for 2013, with remainder expected to be confirmed in 1H’13 as the current tenders conclude and are re-tendered for the year ahead.

Gearing was 22% and company has commenced a range of cost savings initiatives and will provide further updates during year.

FD Comment: FY’12 was a good year as the Company expanded rapidly driving a 22% increase in revenue to the detriment of profitability (ROCE 19.9% was -20%). We expect this growth to be tempered due to a slowdown in capital spend across the mining sector this year.  With reduced capex and the Company looking to cut costs we should see an improvement in profitability this year with 90% of revenues already confirmed.

Chaarat Gold (LON:CGH) has provided an update on the fiscal regime in the Kyrgyz Republic.

In this news:

Updated Tax Code effective from 1 January 2013

Revenue based regime now in force

Move to clarity and transparency confirmed

FD Comment: Whilst increasing the transparency of the fiscal regime is a very good thing, doubts still remain over the ability of Western companies to bring assets into production in the Kyrgyz Republic with the issues facing Centerra Gold at Kumtor often highlighted.  Chaarat has been keeping a low profile in the country, but as it nears production which according to the announcement is later this year, this may change.

Fox Marble (LON:FOX) has signed an agreement to acquire rights to extract marble from a quarry in the west of Kosovo, close to the Company’s red marble quarry at Cervenilla.

In this news:

Quarry currently used for aggregate extraction

Rights to extract marble from the 2.5 hectare site for a 20 year period

Obtained on a royalty only basis of €20 per cubic metre extracted

Expects to start extraction of grey marble in 2Q’13 when snow clears

Illustrative market price of a processed cubic metre of grey marble is €2,100

FD Comment: This is positive for the Company as it can increase production of blocks for no further capital outlay. It should be noted that the market price is for processed slabs rather than extracted blocks which will be produced until the Company’s own processing plant is up and running. Meanwhile the Company is pursuing its legal remedies to remedy the 4 licenses it had unilaterally “annulled” last month.

Landore Resources Ltd (LON:LND) announced an updated resource estimate for the B4-7 Nickel-Copper project in its Junior Lake property, Ontario, Canada. The new resource is a NI 43-101 compliant 2.69Mt grading 0.7% nickel, 0.46% copper,, 0.03g/t gold, 0.14g/t platinum and 0.55g/t palladium. This estimate was based on the following average long-term metal prices (US$) of $9.00/lb nickel, $3.50/lb copper, $16.00/lb cobalt, $1,700/oz platinum, $800/oz palladium, and $1,300/oz gold. Open Pit Mineral Resources are reported at an NSR cut-off grade of C$23. Underground Mineral Resources are reported at an NSR cut-off grade of C$58.

Nyota Minerals Limited (LON:NYO) has announced that the Ethiopian Ministry of Mines has confirmed in writing that The Tula Kapi Definitive Feasibility Study and Environmental and Social Impact Assessment complies with all regulations and satisfies the requirements for the issuance of a large scale Mining Licence.

In this news:

Nyota and the Ministry believe they are close to finalising the terms for the issuance of a Mining Licence. 

Ministry has extended the Company's exploration licence. 

Enables preliminary preparations for the resettlement of people living within the proposed mining licence area and the further exploration work.

Results from the Feeder Zone drill programme are anticipated very shortly.

FD Comment: A positive step for Nyota which will now be looking at financing options for the US$221m capex required. This is also positive for other companies looking to develop projects in Ethiopia including Alecto Minerals and Stratex International as it demonstrates the government is looking to actively develop mines.

Petropavlovsk PLC (LON:POG) announced its 2012 and fourth quarter trading update. Gold production in the December quarter totalled 211.9k oz taking full year production to 710.4k oz, exceeding the 2012 guidance of 700k oz. The 2013 production target is between 740,000oz and 780,000oz, a year-on-year increase of between 4% and 10%.  There was strong operating cash flow during H2 2012 - preliminary unaudited estimates indicating that net operating cash flow increased approximately five times in H2 2012 in comparison with H1 2012to US$230M. The Pressure Oxidation ("P-OX") Hub remains on schedule for commissioning in Q1 2014. There were also promising results from brownfield exploration conducted around existing mine sites, in particular from Malomir and areas close to the Albyn plant. Further, there was an announcement of a potential US$238M investment in IRC by new shareholders to support production growth, which would reduce the Company's holding in IRC to c.40% with the new shareholders holding c.36%, in each case assuming no additional shares in IRC are issued and that all IRC shares are issued in accordance with the subscription agreements. A pro-rata indemnity on the existing guarantee with the Industrial and Commercial Bank of China, reducing the Company's exposure under the guarantee, will be implemented on full completion of all stages of the investment, which is expected to be in Q3 2013.

Serabi Gold (LON:SRB) has announced that the conditional subscription by Fratelli Investments Limited and parties acting in concert with it has been completed, conditional upon admission of the new Ordinary Shares.

In this news:

A total of £16.2m was raised at 6p per share

Deal was underwritten by Fratelli Investments

81,350,353 of the 270,000,000 new shares issued went to the 3rd parties

Following admission and excise of all warrants Fratelli Investments will hold 52.46% of the Company

FD Comment: With the capital raise complete Serabi can now concentrate on the development and start-up of underground mining operations at its Palito gold mine. The PEA published in June was designed around a 9 year mine life at a life of mine average rate of ~90ktpa at an average 8.98g/t Au. With recoveries of 90.7% for gold and 90% for copper, cash operating costs after refining and treatment were projected to be US$739/oz AuEq. With the Company separately announcing that mining equipment has been ordered and senior mining personnel will be arriving on site this month we are expecting first production from Palito towards the end of this year with the plant being commissioned in 4Q’13.

Sierra Rutile Ltd (LON:SRX) announced the appointment of Derek Folmer to the role of Chief Marketing Officer. Mr Folmer, whose appointment will take effect from 15 April 2013, will be responsible for managing all aspects of Sierra Rutile's sales and marketing activities. Mr Folmer joins Sierra Rutile from Rio Tinto, where he held the position of General Manager - Rutile & Zircon, responsible for global sales of rutile and zircon produced by Richards Bay Mining and QIT Madagascar Minerals. Prior to this he held various sales and marketing management positions within Rio Tinto focussing on titanium dioxide feedstocks.

Mr Folmer has a strong track record of developing and implementing global marketing strategies and has substantial experience and knowledge of key markets in North America, Europe and Asia, particularly in China.

Sylvania Platinum Ltd (LON:SLP) announced the appointment of Stuart Murray as Chairman of Sylvania, effective 1 April 2013. Mr Murray replaces Richard Rossiter who has stepped down from the Board of Sylvania. 

Roger Williams, a current Non-Executive Director of the Company, will take on the responsibilities of Chairman with immediate effect and until such time Mr Murray assumes the chairmanship.



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