Fox-Davies Capital Monday News Wrap
September 22 2008, 9:17am
Victoria Oil & Gas (VOG) announces that it has entered into an agreement to provide a US$5 million loan facility to Bramlin Limited. In an effort to gain exposure to a broader spectrum of value-enhancing Opportunities VOG has been reviewing several new projects outside of the Company's core region of the Former Soviet Union. VOG consider that the provision of this loan to an established operator in Africa will provide the Company with access to further potential opportunities within this region.
Comment: Providing debt facilities by an oil junior to another oil company is an original move that builds upon our view of expected increasing corporate activities looking forward.
According to Reuters, The main militant group in Nigeria's oil-producing Niger Delta said on Sunday it had begun a unilateral ceasefire after a week of attacks on oil installations which have cut output in Africa's top producer.
Gippsland (GIP) have stated they do not foresee that the recent international financial instability will adversely affect project financing for the Abu Dabbab tantalum-tin project. Negotiations are presently in progress with KfW Bankengruppe. The KfW legal due diligence associated with the Abu Dabbab project is nearing completion. An Engineering, Procurement, Construction Management (EPCM) contract is expected to be executed between the Company and the successful engineering group prior to the end of October 2008. The Abu Dabbab product will not be classified as an International Maritime Organisation (IMO) Class 7** radioactive material as the combined U3O8 and ThO2 will be well below the maximum limit of 0.1%. Most sources of tantalum feedstock have difficulty in achieving this 0.1% limit. Separately, the Company's 100% owned subsidiary Nubian Resources PLC has made application for three highly prospective Prospecting Licences in the northern part of Eritrea.
Comment: The Abu Dabbab project remains on track.
Minera IRL (MIRL) announces that an Option Agreement has been signed on the 5,400 ha "Ananea Project" in the Puno District of southern Peru. The Agreement follows extensive negotiations in recent months with the Central Cooperatives of the Rinconada Mine. The agreement is for a period of 5 years and covers the acquisition of 93% of shares and mining rights for 6 concessions located. The transaction entails paying the Cooperatives US$4.5 million in staged payments over 5 years, which can be terminated at any point if exploration results are not of sufficient interest. The initial payment is US$200,000. Minera intends to commence exploration activities immediately and have submitted an exploration programme with a minimum expenditure of $2.3 million over 5 years, assuming progressive exploration success.
Comment: Now that Corihuarmi is in production, Minera are looking at available growth opportunities. This looks like an interesting prospect in an established gold mining district.
African Diamonds (AFD) announces that the Director of Mines of Botswana has informed the parties that the Retention Licence applied for by De Beers was not considered and in his view was not formally lodged, as a Mining Licence application was still pending. AFD has been notified by De Beers that agreement has been reached between De Beers and the Botswana Government on the marketing of AK06 diamonds. The diamonds will be marketed through the Diamond Trading Company Botswana in a similar fashion to current Debswana production. AFD directors are optimistic that the deadline of 30th September for completion Mining Licence negotiations can be reached. In the light of the progress being made toward a Mining Licence, AFD have agreed to seek deferment of a court case scheduled for the Botswana High Court on 22 September 2008.
Comment: It appears that progress is being made. The concession by the Botswana government to allow AK06 diamonds to be marketed througn the DTC Botswana is significant – we suspect that this removes the main reason for De Beers to resist development of the project.
Gamesa (GAM), through its subsidiary, Made, won a turbine order for 120MW worth EUR 200m from the Tunisian company STEG (Société Tunisienne de L'Electricité et du Gaz) for two wind farms in the Bizerte region. The agreement covers the turnkey supply of wind turbines as well as an agreement to operate and maintain the wind farms.
Comment: This order follows a smaller order for 34MW from EUFER(Enel Unión Fenosa de Energías Renovables) in Spain last week. EUFER has a total of 1,200MW of installed renewable energy capacity in Spain.
At the end of June 2008, Gamesa reported an order portfolio of 11,500MW, largely within its targeted markets, Europe, the US and China, amounting to more than three years of its current production capacity. Almost half its order book consists of a 4,500MW order in terms of an agreement signed earlier this year with Iberdrola Renovables with which it has agreed to develop wind farms jointly. Iberdrola Reovables is 80% held by Iberdrola SA which holds a 23.95% stake in Gamesa.
Indian company Nandan Biomatrix is in the process of raising US$30m from a private equity fund to finance its Jatropha expansion target. Overall the company expects to invest around $200m as it cultivates 800,000 hectares of land over the next 5 years. Nandan expects turnover of INR1.4bn (US$30m) for FY 2008-09.
Comment: Jatropha is still at the early stage of cultivation, but a number of countries in Africa and Asia are pursuing plantation initiatives as it can be grown on marginal land, and its toxicity means it avoids the food for fuel debate of palm oil, soya and rapeseed as biodiesel feedstocks. UK AIM listed D1 Oils and BP have been active in various regions in India, whilst Burma’s Junta issued a mass cultivation initiative to reach up to 3.25m hectares of plantations. Plant yields however are still wildly inconsistent, and the oil remains some years away from commoditisation.
