PROACTIVE NEWS SUMMARY: Medgenics, Xstrata, Glencore, Mkango Resources, Agriterra

One of today’s main stories by Proactive Investors previewed an upcoming announcement from biopharmaceutical firm Medgenics (LON:MEDG, AMEX:MDGN), which is preparing to report major progress for its novel protein delivery system, the Biopump.

"We think we are in front of some very important developments in the next months," said president and chief executive Dr Pearlman in a recent interview with Wall Street newsletter website, corporateprofile.com.

The firm has just completed a "Phase 1/2" trial treating patients with kidney failure for anaemia and had seen patients go for six to 12 months without injections, and without being anaemic, Dr Pearlman said.

And on the cards in the next few months is the approval for three clinical trials in Israel for hepatitis and anaemia.

Medgenics is also applying for paperwork in the US that it hopes will lead to approval in the middle of the year for a 2b trial, said the company chief.

"And we are also talking to a number of companies about partnering," he also revealed in the interview.

The Biopump removes the need for hundreds of injections, which are "expensive, painful and dangerous", added Dr Pearlman.

Three other feature stories of the day were dedicated to mining companies with one of them taking a close look at the merger deal between FTSE 100 constituents Xstrata (LON:XTA) and Glencore (LON:GLEN), which drew mixed reaction from the City.

Shares in both groups fell back as two of the UK’s leading institutional shareholders vowed to block the $90 billion “merger of equals”.

David Cummings, Standard Life’s head of equities, said the proposed exchange ratio "clearly undervalues" Xstrata's assets and future earnings contribution even though he added there were merits in the combination.

"Consequently it is our intention to vote against the deal unless the merger terms for Xstrata shareholders are materially improved,” he said.

Xstrata shareholders will get 2.8 shares in Glencore for each they own currently and end up in total with 45% of the enlarged company, which will be called Glencore Xstrata International.

The price values each Xstrata Share at 1,290.10p and the company overall at approximately £39.1 billion or a 15% premium to its value before the merger talks were revealed last week.

Richard Buxton, at investment firm Schroders, added that if it is a merger of equals, Xstrata shareholders should get a 50% proportion from the deal.

Schroders wants the premium over its pre-announcement value to be increased to 20%, according to reports today.

Schroders owns 1.45% of Xstrata, while Standard Life is Xstrata’s fourth largest shareholder at 2.15%.

The deal has been structured as a scheme of arrangement, which requires 75% Xstrata shareholder approval but with Glencore unable to vote its existing 34% stake, only 16.4% of shareholders need to object for the merger to falter.

It could also face a number of other hurdles before it is approved. Some observers have suggested it could take a year for the merger to get past the regulators.

Mick Davis, Xstrata’s chief executive, will assume that role at the enlarged group with Glencore’s chief executive Ivan Glasenberg to be deputy CEO.

Another article covered today’s note from VSA Capital on Mkango Resources (CVE:MKA). According to the broker, the company is set for a significant uplift in value in the year ahead as it hits its targets, according to VSA Capital.

The broker reckons a preliminary economic assessment of the Songwe rare earth project in the third quarter of this year could see the firm being valued on a par with some of its larger peers.

At present Mkango is worth around C$18 million but, according to VSA analyst Jessica Pendal, the pivotal report could potentially put it in a similar bracket to Greenland Minerals (ASX:GGG), Quest Rare Earths (CVE:QRM) or Frontier Rare Earths (TSE:FRO) – which are valued at C$252 million (A$235 mln), C$198 million and C$100 million respectively.

Pendal highlights that Mkango has concentrated on the flagship Songwe project, which is hosted within the Phalombe licence.

To date it has commissioned a technical report and is implementing a two stage drill programme.

The first stage was completed in the first half of 2011. It completed 2,000 metres of diamond drilling in thirteen holes in this part of the programme. Then last month Mkango kicked off a 3,000 metre programme. Around 500 metres have been drilled so far.

The economic assessment will incorporate the findings from both drill programmes and the technical report.

The analyst adds that, like most rare earth projects, mineralogy and metallurgy are the key to unlocking value.

“Mineralogy work is on-going but the latest preliminary results suggest that the principal REE bearing minerals are synchysite, apatite and some minor florencite,” Pendal said.

“The HREE and yttrium are possibly being found in the highest concentrations within the apatite; a potential benefit is that technology for processing of apatite is well established. All mineralogical results are being used to assess processing options.”

In the meantime, Weatherly International (LON:WTI) said the total resource of the Tschudi copper project in northern Namibia has increased by 5 per cent to 50.1 million tonnes at 0.86 per cent copper.

The upgrade was contained in a report charting the progress of a formal feasibility study of Tschudi, which revealed it contains a maiden open pit reserve of 22.2 million at 0.87 per cent copper.

This supports an 11 year mine life at 15,000 tonnes of copper a year.

The feasibility study itself is expected to be to be published in the middle of this year.

Chief executive Rod Webster said: "The progress being made on the Tschudi feasibility study demonstrates that the project is progressing as we had envisaged, albeit with some important enhancements. 

“The fundamentals of the project are very good and we look forward to the prospect of adding an additional mine to our portfolio."

Away from the mining sector, the agriculture and logistics specialist Agriterra (LON:AGTA) said this morning that its aggressive expansion strategy means its Mozambique beef herd now numbers 3,750. It is on course to be 10,000 head by 2015.

It said its prized beefmaster herd at Movonde totals 1,000 and is achieving US$1,100 per carcass.

A dam project near Movonde will increase the supply of water, therefore supporting the expansion programme. Meanwhile, land clearance at the Dombe Ranch will allow it to increase its capacity.

Separately, the company’s abattoir at the Mozbife operation near Chimoio is on course to open in August 2012.

The company is acquiring a turnkey slaughterhouse and meat processing plant from the Netherlands. The decision to vertically integrate will make the whole meat business a far more profitable one.

Agriterra director Euan Kay said: “The continued development of our Vanduzi feedlot and abattoir at Chimoio, in addition to establishing butchers' shops, are the key final elements in our vertically integrated beef business, enabling Mozbife to benefit from the full uplift in value for slaughtered and butchered products.