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Bezant Resources plc: THE INVESTMENT CASE

Bezant Resources PLC consolidates enlarged portfolio

Bezant Resources has pared back costs while adding new projects and metals to its portfolio
Bezant Resources PLC consolidates enlarged portfolio
INVESTMENT OVERVIEW: BZT The Big Picture
A significant platinum project outside of South Africa would find real support from investors

Results from Bezant Resources PLC (LON:BZT) released this morning made for an interesting case study of the current state of play at the junior end of the mining sector.

Bezant has been able to bend and weave its way through some of the toughest markets we’ve seen in years, showing entrepreneurial flair in picking up new projects, but also highlighting the pressures on all companies with significant reductions in directors’ salaries and fees.

During the six months to December 2015 the company spent just £189,000 on administrative expenses, and booked an overall loss of £265,000 after taking into account its share of losses on a project held jointly with an associate.

Further cost cutting initiatives are on the way.

On the plus side of the ledger, meanwhile, the company was able to raise just over £400,000 in new equity via a subscription priced at a premium back in December.

That raise took the total cash balance at the period-end to more than £1.5mln, although as analyst Yeun Low at Shore Capital notes, it will be lower now, following a recent deal.

“A quick canter through the 2016 interims,” writes Low in his usual jaunty style, “revealed that Bezant ended December 2015 with £1.55mln of cash versus payables of just £72,000.”

But that £1.55mln “will have halved since”, according to Low, following the company’s deal to acquire new platinum and gold licences in the Choco district in Colombia from a company called Leeward Island Resources.

This deal involved the payment of a US$1mln option fee and a further US$1mln in Bezant shares.

The key to this acquisition lies in the potential for platinum on the licences. Any company that can secure a meaningful source of platinum outside of South Africa (which dominates supply) would find itself and its shares highly sought after, as investors become increasingly chary of investing in a country that is seen as increasingly corrupt.

What’s more, Bezant’s chairman Ed Nealon, who was also a major contributor in the recent fundraising, has significant experience in the platinum space, having been one of the driving forces behind the rise of Aquarius Platinum (LON:AQP) in the last decade.

“We have now successfully secured options over the Colombian platinum assets and if exercised in due course we shall seek to fast-track such assets into production,” said Nealon. “As a board, we increasingly believe that value in the prevailing difficult market conditions must be generated from revenues and, with our historic track record in platinum development and production, we look forward to potentially ultimately creating a low-cost mining operation located outside of South Africa.”

Early cash flow would have the additional advantage of supporting further work on the company’s other projects, the Eureka copper-gold project in Argentina and the Mankayan gold project in the Philippines, which has been up for sale for some time.

The shares were flat in early trade, at 2.25p.

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