Author stories Proactiveinvestors Author stories RSS feed en Thu, 22 Feb 2018 19:06:48 +0000 Genera CMS (Proactiveinvestors) (Proactiveinvestors) Alastair Ford on rare earths, gold & Apple getting serious on cobalt Mining Capital's Alastair Ford chats through latest developments at Rainbow Rare Earths (LON:RRE), Orosur Mining (LON:OMI) and Wishbone Gold (LON:WSBN).

Ford also discusses recent reports that US tech giant Apple Inc (NASDAQ:AAPL) is in talks to buy long-term supplies of cobalt directly from miners for the first time.

The US$870mln company is one of the biggest end-users of the metal, which is a key battery ingredient for a lot of its products, including its popular iPhones.

Thu, 22 Feb 2018 11:14:00 +0000
Parity Group Plc: The 'best-kept secret' in recruitment and consultancy Alan Rommel, chief executive of Parity Group Plc (LON:PTY), tells Proactive their aim is to become a leading provider of digital services to their clients through two complimentary businesses.

''The first of those is a consultancy business which focuses on larger deliverables ... higher margins, higher value, longer-term contracts ... increasingly focused on the data markets and data analytics''.

''That is supported by our professionals division which is fundamentally a recruitment business ... they're well established, have a strong brand in the IT sector and we support IT and business change programs for our clients''.

Thu, 22 Feb 2018 10:37:00 +0000
Orosur Mining 'delighted' by results and progress so far at Anza in Colombia Ignacio Salazar, chief executive of Orosur Mining Inc (LON:OMI, CVE:OMI), tells Proactive Investors they're continuing to intersect good gold mineralisation in drilling at the APTA deposit - one of five identified target areas in the Anzá project in Colombia.

Notable results to date from 17 intercepts in seven drill holes include 17.76 grams per tonne gold over 5.32 metres, 4.89 grams over 13.9 metres, 5 grams over 23 metres and 4.86 grams over 25 metres.

Thu, 22 Feb 2018 09:19:00 +0000
Exciting time for Eco (Atlantic) as it passes on first seismic data to Total Eco (Atlantic) Oil & Gas Ltd (LON:ECO CVE:EOG) CEO Gil Holzman tells Proactive they've forwarded on the first batch of seismic data shot by Tullow Oil (LON:TLW) over the Orinduik field.

French giant Total has an option to take a 25% working interest in Orinduik from Eco for a payment of US$12.5mln.

Thu, 22 Feb 2018 09:04:00 +0000
Motif Bio to present at prestigious infectious diseases conference Graham Lumsden, chief executive of Motif Bio Plc (LON:MTFB), caught up with Proactive's Andrew Scott following the news that three iclaprim abstracts have been accepted for presentation at the upcoming 28th European Congress of Clinical Microbiology and Infectious Diseases in Madrid this April.

ECCMID brings together leading experts in the infectious diseases, infection control and clinical microbiology sectors.

Lumsden says it's an important arena to showcase Motif Bio's iclaprim data.

Wed, 21 Feb 2018 19:44:00 +0000
PowerHouse Energy signs new deal with Wrightbus Ltd Keith Allaun, chairman at the waste-to-Energy specialist PowerHouse Energy Group Plc (LON:PHE), talks Proactive's Andrew Scott through their deal with Wrightbus Ltd, a company that builds innovative hydrogen powered buses.

The memorandum of understanding is expected to lead to a definitive deal for a venture with Powerhouse supplying its Distributed Modular Gasification (DMG) system and Wrightbus supplying hydrogen fuel powered buses.

Wed, 21 Feb 2018 12:25:00 +0000
A 'thrilling' year ahead for Faron Pharmaceuticals with Phase III Traumakine results in Q2 Markku Jalkanen, chief executive at Faron Pharmaceuticals Oy (LON:FARN), caught up with Proactive following their £15mln funding aimed at accelerating the development of its two lead products.

Jalkanen says the funds will allow them to prepare the way to market for Traumakine, a treatment for Acute Respiratory Distress Syndrome (ARDS).

Results from a phase III trial (INTEREST) are expected early in the spring, but Faron's keen to lay the groundwork for a product launch.

The money will also enable Faron to expand the scope of the upcoming phase I/IIb trial of immunotherapy cancer treatment Clevegen.

Wed, 21 Feb 2018 12:14:00 +0000
Tlou Energy 'in a great position' after significant increase in Botswana gas reserves Tony Gilby, managing director of Tlou Energy Limited (LON:TLOU), discusses with Proactive's Andrew Scott their huge increase in reserves at the Lesedi and Mamba coal bed methane projects in Botswana.

Proved and probable reserves (2P) jumped 944% to 40.8 billion cubic feet (BCF) 3.9 from BCF, while the less certain 3P category rose by 63% to 426.6BCF from 261.1BCF.

Wed, 21 Feb 2018 10:19:00 +0000
Rainbow Rare Earths focused on upping production at Gakara mine in Burundi Martin Eales, chief executive of Rainbow Rare Earths Limited (LON:RBW), tells Proactive they're expecting to commission the new processing plant at the Gakara mine later this month, after which the scale of mining should pick up sharply.

He says the the plant is now running as designed and final adjustments have been completed.

Wed, 21 Feb 2018 08:33:00 +0000
Collagen Solutions applies for European approval after successful ChondroMimetic study Jamal Rushdy, chief executive of Collagen Solutions PLC (LON:COS), discusses with Proactive the successful results from an eight-year extension clinical study of patients who received ChondroMimetic® implants for the repair of cartilage defects in the knee.

Rushdy says the positive results have now allowed them to submit an initial submission for a CE Mark.

Wed, 21 Feb 2018 08:06:00 +0000
Surge of interest in Seeing Machines' driverless car tech Fri, 16 Feb 2018 11:00:00 +0000 Q&A with Strategic Minerals on 27 October - send us your questions Wed, 11 Oct 2017 13:31:00 +0100 Q&A with Amur Minerals' Robin Young next week - send us your questions Tue, 10 Oct 2017 14:12:00 +0100 W Resources PLC's Michael Masterman LIVE in the Proactive studio Tue, 19 Sep 2017 16:05:00 +0100 Powerhouse Energy boss quizzed - Keith Allaun talked at length to Proactive investors today Thu, 06 Jul 2017 15:30:00 +0100 UK Oil & Gas’s Broadford Bridge well can be the litmus test for Weald Basin believes analyst Gray Tue, 20 Jun 2017 15:36:00 +0100 Sound Energy's Sidi Moktar drilling has two shots at a big target reckons Graham -Wood Mon, 19 Jun 2017 13:36:00 +0100 Election result a shock but no reason to start selling, says ETX’s Wilson Fri, 09 Jun 2017 10:31:00 +0100 'Brexit now looks like being far less disruptive after election result' Fri, 09 Jun 2017 09:36:00 +0100 Echo Energy cashed up and raring to go says Malcolm Graham-Wood Fri, 02 Jun 2017 13:36:00 +0100 In the news: Burey Gold Burey Gold (to be renamed Amani Gold)
ASX:BYR | A$0.074 | US$71m | Speculative Buy
2016 Annual and September Quarterly Reports

Burey Gold has published its 2016 Annual Report and its September Quarterly Report, in which cash at the end of the period was reported to be A$9.6m. This has allowed the company to accelerate the pace of drilling, and programmes totalling 22,200m are now underway in its main two areas in the DRC.

RC and diamond drilling is ongoing at Douze Match towards the north of 30km exploration corridor across the company’s two licence areas. This is to follow up the spectacular results of earlier scout drilling at the Tango shear and to test mineralisation on 4km of a granite/volcanic contact.

RC drilling is underway (and diamond drilling is planned) at the Giro area on the southern licence area, where the company’s main focus during 1H16. This is aimed at infill drilling to allow the calculation of a maiden resource estimate during early 2017.

COMMENT: We expect a significant increase in newsflow from the company due to the drill programmes currently underway at its 55%-owned Giro Gold Project. We look forward to some of the first results, including assays from two diamond drill holes that have been completed at Douze Match (on the Tango structure), and note the potential for these to repeat the impressive results from the earlier scout RC programme in the area.

We also look forward to the completion of the infill drilling programme at Giro and the estimation of a maiden resource, which is now expected to be completed in early 2017, and for which we have suggested that around 2.0Moz of gold at a grade of 1.5-2.0 g/t may have been outlined.

We continue to recommend the company as a Speculative Buy. 

Douze Match
A soil anomaly over an area of 6km by 2.5km has been mapped and sampled — The strongest anomaly is centred around the Tango area, with the remainder along a sheared granite/volcanic contact to the south-west. A scout RC drilling programme across 1km of the anomaly commenced in July. All sampling from the scout drilling was undertaken on 3m composites. A total of 4,413m was drilled in 97 shallow holes (mainly less than 45m length), with final results reported in August 2016. The results were very encouraging, and included some spectacular numbers, including 15m @ 256 g/t. Mineralisation was reported from two NNW trending zones of sulphide-rich quartz breccia in the Tango area (on Drill Line 4) and also from the NE trending granite/volcanic contact zone (reported in Lines 2 and 3).
Current Drill Programme
·         1,000m of diamond drilling in five holes — The first two holes, totalling 553m, targeted the flat-lying Tango structure and were completed in mid-September, with assays pending. The programme is expected to be completed by the end of October, when the rig will move to the Kebigada Shear Zone.
o   Hole DD001 — Drilled to 337m. Intersected the shear over 9.6m from 22.4m to 32.0m, comprising hematised quartz veins. Core recovery was reported to be low at less than 40%, including one 0.7m mined out section. The hole was also reported to have intersected several other mineralised shears.
o   Hole DD002 — Intersected the shear over 20m from 33m to 53m. Confirmed shallow dip of 35° to the SE. No quartz veining was intersected in the zone, which comprised intense pyrite and pyrrhotite mineralisation over 1.5m within a broader 20m thick zone of shearing and alteration.
·         3,200m conventional RC drilling — To define true width and depth extent of mineralisation across the Tango shear and contact zone.
·         11,500m shallow scout RC drilling along 6km granite contact — Testing extensions of the Tango Shear and contact zone to include the old Belgian Siona workings 5km SW of Tango and the remaining soil anomaly.
A soil anomaly at Giro covering 1.0km by 1.5km was drilled with an RC programme totalling 9,823m, with final drilling results announced in December 2015 — Drilling confirmed that the main zone of mineralisation is associated with a NNW chargeability anomaly related to the interpreted Kebigada Shear Zone. Gold mineralisation was confirmed from surface over a strike length of 1,400m over widths of 350-450m. This was followed up by five diamond drill holes totalling 1,221m, which showed a strong correlation between gold mineralisation and silica flooding and pyrite, as well as occasional narrow quartz veins and stringers. Many of the holes were reported to have ended in mineralisation and demonstrated that mineralisation is open at depths of more than 250m. Structural interpretation suggested that mineralisation has two distinct orientations: one NNW, parallel to the interpreted Kebigada Shear Zone, and the other E to ESE.
Current Drill Programme
·         5,000m RC resource drilling — Has commenced and is planned to be completed by late December to enable an Inferred mineral resource estimate in early 2017. Drilling will infill on 100m drill lines.
·         1,500m diamond drilling — to test structural controls and depth extensions.

Fri, 28 Oct 2016 10:41:00 +0100
Tullow Oil, Tower Resources, Xcite Energy Headlines

Tullow Oil (LON:TLW – 288p) – RBL Relief
Tower Resources (LON:TRP – 2.38p) – Best of Both
Xcite Energy (LON:XEL – 1.58p) – Self Inflicted, But a Salutatory Lesson

In Brief

Tullow Oil (LON:TLW – 288p) – RBL Relief: While there is an argument for saying that Tullow's success at securing the continuation of its RBL facility is to be expected, there has been concern that either the terms would be restrictive, or the headline amount would decline. We believe that the shares will rally on the back of today's news, not only because of the removal of uncertainty, but also the fact that in some way, it is a vindication of the Company's finances, offering and team.
Tower Resources (LON:TRP – 2.38p) – Best of Both: Today's news that the Company's board has been significantly restructured is a reflection of the times currently facing exploration companies and typical of the management team. We believe in putting shareholder value first, Management has demonstrated their commitment to the longer term success of the Company, ensuring that in as far as possible, the prospectivity offered by the Company's acreage is retained. Furthermore, there is possibility that in moving to part time roles the Directors' inevitable involvement with other companies could generate further opportunity for Tower and its shareholders. We believe that shareholders should thank management for the steps that they have taken for the benefit of the Company.
Xcite Energy (LON:XEL – 1.58p) – Self Inflicted, But a Salutatory Lesson: We wish it could have been different, but the seeds of this destruction were sown the day Management executed the agreements for the debt without having cash flows to cover the cost. Management must take full responsibility for this failure, and for not adopting an alternative strategy when it was clear that their strategy clearly wasn’t working. We can see no winners in this as the shareholders have lost their investment and creditors will not get value for the perfection of the security package, as the issues with the asset's development don’t magically disappear. There is at least some comfort for the sector, as the failures at Xcite are nothing to do with systemic risk, arising from things like drilling operations, subsurface uncertainty, or oil market volatility, but self-inflicted by a management team who exposed the Company's owners to excessive financial risk.

Fri, 28 Oct 2016 10:01:00 +0100
Today's Market View - Coal of Africa Birimian Limited FinnAust Mining Golden Star Resources Coal of Africa (LON:CZA) – September quarter highlights search for a cash generating asset
Birimian Limited (ASX:BGS) – high-grade lithium resource reported at Goulamina within the Bougouni license in Mali
FinnAust Mining* (LON:FAM) BUY Target Price 15p – Huntsman raise price for titanium dioxide pigment effective Jan 2017
Golden Star Resources (CVE:GSR) – Mining Lease for Mampon deposit

FTSE 100 is off today with nearly all sectors in the red amid an increase in sovereign bond yields.
Sovereign bonds are being sold off on the back of reports of accelerating inflation in Eurozone countries, positive UK GDP numbers with the US expected to release its numbers later today (expectations for a stronger economic growth in Q3).
US 10y bond yields hit 1.87% this morning, the highest since May/16; UK 10y yields were up at 1.30% today, the highest since Brexit; German 10y yields came at 0.22%, the highest since May/16 as well.
The US$ held near a seven month high with gold little changed at $1,267/oz ahead of US Q3 GDP data.
Brent is flat this morning with OPEC members meeting in Vienna today to discuss the breakdown of the proposed production cuts. Non-OPEC producers will join discussions on Saturday.
Iron ore futures prices extended gains to five days now climbing 2.1% today amid gains in coking coal and steel prices.

Economic News
US – Core capital goods orders fell more than forecast in Sep pointing to slowdown in business investment towards the end of Q3 following a strong start to the quarter.
Weekly jobless claims are continuing to linger around the lowest level in several decades with a four-week average at 253k.
Claims average 250k in four weeks ending Oct 7 marking the lowest reading since late 1973.
First reading of the Q3 GDP is out later today with estimates for growth to have rebounded from a weak H1/16 driven by a recovery in business investment and continuing strength in consumer spending.

Germany – Region level data point to an increase in inflation rate through Oct with nationwide numbers out later today.
Estimates are for inflation to come in at 0.1%mom/0.7%yoy, up from 0.0%mom/0.5%yoy in Sep.
A revision in inflation expectations may finally allow the ECB to consider winding down its monetary easing programme.
Bund yields have been edging higher recently hovering around levels last seen in May.

UK – Economy expanded at a faster than expected rate in Q3 driven by a stronger growth in services (+3.0%yoy v 2.7%yoy).
Manufacturing growth slowed to 1.2%yoy, down from 1.6%yoy in Q2, while construction came out as a drag on growth coming in at -0.2%yoy v +0.4%yoy in Q2.
Q3 GDP (%qoq): 0.5 v 0.7 in Q2 and 0.3 forecast.
Q3 GDP (%yoy): 2.3 v 2.1 in Q2 and 2.1 forecast.
Positive GDP numbers pushed yields on 10 year gilts to the highest since referendum results on the back of expectations for the BoE to avoid further easing in the near term.
Brexit effect is expected to take time and forecast to slow  economic growth rate to 0.9% next year, half the rate estimated for this year, led by a decline in business investments and a slower private consumption.

France – Quarterly growth slightly underperformed expectations in Q3 with a slower pace of expansion led by weaker growth in private spending and business investments.
Q3 GDP (%qoq): 0.2 v -0.1 in Q1 and 0.3 forecast.
Q3 GDP (%yoy): 1.1 v 1.3 in Q1 and 1.2 forecast.
Positive consumer confidence readings in Oct signal a potential acceleration in household spending in the final quarter with the index hitting the mark reached in May this year which was the highest reading since Oct/07.
A separate report on inflation showed consumer prices returned to growth in Oct after a one month of negative change as the effect of lower oil prices fall away.
CPI (Harmonised, %mom): 0.1 v -0.2 in Sep and 0.2 forecast.
CPI (Harmonised, %yoy): 0.5 v 0.5 in Sep and 0.6 forecast.

Spain – GDP slowed 0.2pp to 3.2% in Q3 with growth continued to be driven by consumer and export sectors strength.
Q3 GDP (%qoq): 0.7 v 0.8 in Q1 and 0.7 forecast.
Q3 GDP (%yoy): 3.2 v 3.2 in Q1 and 3.1 forecast.
One of the fastest growing economies in the Eurozone posted an acceleration in inflation to 0.8%mom/0.5%yoy in Oct with the rise “mainly explained by the increase in the prices of electricity and fuels”.

US$1.0905/eur vs 1.0911/eur yesterday.   Yen 105.31/$ vs 104.69/$.   SAr 13.846/$ vs 13.938/$.   $1.214/gbp vs $1.222/gbp.
0.758/aud vs 0.761/aud.   CNY 6.780/$ vs 6.780/$.

Commodity News
Precious metals:
Gold US$1,266/oz vs US$1,268/oz last week –
     Gold ETFs 65.5moz vs 65.4moz last week – significant fall in ETF holdings
Platinum US$967/oz vs US$962/oz last week
Palladium US$615/oz vs US$622/oz last week
Silver US$17.59/oz vs US$17.64/oz last week

Base metals:  
Copper US$ 4,807/t vs US$4,759/t last week –
Aluminium US$ 1,706/t vs US$1,678/t last week –
Nickel US$ 10,420/t vs US$10,195/t last week
Zinc US$ 2,373/t vs US$2,354/t last week – iron water pipes increasingly coated in zinc to extend life to >100 years.
The use of zinc to coat iron water pipes is growing due to its ability to extend life spans.  The zinc serves to corrode faster than the iron causing its to dissolve sooner and defer corrosion of the iron.  A polythene ecasement keeps bacterial away from the piping to minimize organic factors which cause corrosion.
Longer lifespans is good news for road users with less roadworks needed bad news for contractors in the longer term who enjoy digging holes in roads.
Lead US$ 2,064/t vs US$2,063/t last week
Tin US$ 20,530/t vs US$20,460/t last week

Oil US$50.5/bbl vs US$50.3/bbl last week
Natural Gas US$3.047/mmbtu vs US$2.723/mmbtu last week – big change
Uranium US$19.70/lb vs US$19.70/lb last week

Iron ore 62% Fe spot (cfr Tianjin) US$60.8/t vs US$60.1/t
Chinese steel rebar 25mm US$410.0/t vs US$410.9/t – steel exports out of China rise by 2.4% in the first nine months of the year to 85mt
Chinese steel producers continue to raise exports according to the China Iron & Steel Association.
Export growth was mainly into emerging Asian markets where construction demand is high.
Belt and Road Initiatives are expected to continue to increase demand for Chinese steel.
The association reports that the 373 CISA-member steel smelters (~80% of capacity) reported Rmb25m ($3.7m) in profit marking a recovery from heavy losses last year by cutting costs though this profit generation is said to be still very vulnerable.
Q4 demand will be led by real estate, construction and machinery manufacturing
Machinery manufacturing, such as automobile production, which has been growing by roughly 10 percent year-on-year in recent years, is also a key engine of steel demand. Yet the demand won't be robust in the rest of the year.

Thermal coal (1st year forward cif ARA) US$69.8/t vs US$71.0/t last week
Premium hard coking coal Aus fob US$252.4/t vs US$249.1/t

Tungsten - APT European prices $190-198/mtu vs $191-197/mtu unch last week

Company News

Coal of Africa (LON:CZA) 3.2pence, Mkt Cap £62.5m –September quarter highlights search for a cash generating asset
Coal of Africa reports that the Integrated Water Use Licence for its Makhado coal project in the Limpopo Provicen of S Africa remains suspended following an appeal by a group called the Vhembe Mineral Resources Forum to Department of Water and Sanitation. The appeal was announced in April this year and though discussions are reported to be continuing, there does not appear to be much sign that a resolution is imminent while the appeal process follows its course.
When the regulatory issues have been resolved, the Makhado project will require a 26 month construction period followed by a 4 month period to ramp production up to a planned production of 5.5mtpa of saleable coal.
Elsewhere, the company’s Mooiplaats thermal coal mine remains on care and maintenance while discussions with potential purchasers proceed and a decision on whether to proceed with the plant modification project awaits the outcome of an application to divert a non-perennial stream.
The company’s current “focus is to obtain a cash generating asset for the group. This will allow the Company access to sufficient funds over time to cover company overheads, pre production development costs for the Makhado Project and all regulatory charges to ensure the continuation of full compliance on all the current assets.”
The company notes that “the coal commodity market has experienced a sensational recovery during CY 2016” with a year to date increase of 142% to over US$210/tonne and a 56% rise in the thermal coal price.
Conclusion: It appears that there has been little progress in advancing the company’s projects while management addresses the regulatory obstacles,  which must be particularly frustrating at a time when the company is observing a significant turnaround in coal commodity prices.

Birimian Limited (ASX:BGS) A$0.35, mkt cap A$63.6m – high-grade lithium resource reported at Goulamina within the Bougouni license in Mali
Birimian reports a high tonnage and high-grade lithium deposit at Goulamina within the Bougouni lithium project in Mali
The new JORC resource contains 15.5mt grading 1.48% Li2O for 229,000t of contained lithium oxide
High grade near surface should allow for early cash flow generation.
Further drilling is expected to add to the resource through resource extensions with 1.67% seen in the West Zone
This resource grade ranks Bougouni grade as the fifth highest on our list of known hard rock lithium resources and no. 15 in terms of resource size though it looks like it will become a larger project..
There is little difference in the grade and tonnage of the resource by varying the cut off grades from 0-0.6/0.7% Li2O suggesting this is a robust resource.
The resource looks very professionally done and presented by Cube Consulting with support by CSA Global who did work on a preliminary mining study.
The company press release contains full details of the JORC resource along with pictures of the block model, cross sections, plan views and a particularly grade/tonnage curve. See:

FinnAust Mining* (LON:FAM) 6.5p, Mkt Cap £32.1m – Huntsman raise price for titanium dioxide pigment effective Jan 2017
BUY Target Price 15p
·        Huntsman increased the price of titanium dioxide pigment effective from January 2017 by US$0.07/lb
Prices will rise by €150/t or $160/t t in the EMEA, APAC and Latin America regions and $0.07/lb in North America.
·        The price move should translate into higher prices for titanium mineral sand concentrates
We recently published an initiation note on FinnAust see link for full note click here for full note
*SP Angel act as nomad and broker to FinnAust

Golden Star Resources (CVE:GSR) C$1.17, Mkt Cap C$385m – Mining Lease for Mampon deposit
Golden Star reports that it has secured the mining lease for the high grade oxide gold deposit at Mampon in Ghana. Mampon which contains a 45,000 oz resource at a grade of 4.6g/t gold and is located approximately 80km north, via existing good quality roads, of the company’s processing plant at Bogoso.
The ability to blend this higher grade material with material from the company’s Prestea open pits which are being used “to bridge the gap between the Bogoso refractory operations ceasing production and the commencement of production from the high grade Prestea Underground Gold Mine … which is expected to occur in the second quarter of 2017.” should extend the life of the open mining operations and perhaps help to contain costs during the transition period.
The company notes that the life of the open pits at Prestea has already been extended until the second half of 2017 from the original expectation that they would become exhausted by the end of Q3 2016.
Additional production from Mampon had not been included in the company’s published guidance that 2016 production is expected to fall in the range 180,000 -205,000 at costs between US$815-925/oz.
Golden Star is moving into high grade non-refractory underground mining operations at both Prestea and Wassa which the company expects to increase annual gold production to around 280,000oz pa at cash costs of US$695/oz and AISC of US$903/oz for the five year period from 2017 onwards.
During H1 2016, the company produced 95,677 oz of gold at a cash cost of US$826/oz.
Conclusion: The company is in the process of a strategic shift into high grade underground mining at Prestea and Wassa as it phases out production of lower grade refractory open-pit ore. In our opinion, securing the licence for Mampon provides a readily mineable, source of high grade oxide feed to help smooth the transition and maintain production.

Fri, 28 Oct 2016 11:09:00 +0100
Beaufort Securities Breakfast Alert: Advanced Oncotherapy, BT Group, Debenhams, Smith Markets

The FTSE-100 finished yesterday's session 0.41% higher at 6,986.57, whilst the FTSE AIM All-Share index closed 0.20% down at 823.01. In continental Europe, the CAC 40 index ended the day 0.14% lower at 4,533.57 and the DAX closed 0.04% down at 10,717.08.
Wall Street
In New York overnight, the Dow Jones shed 0.16% to 18,169.68, the S&P-500 fell 0.3% to 2,133.04 and the Nasdaq eased 0.65% to 5,215.98.
In Asian markets this morning, the Nikkei 225 had risen 0.61% to 17,442.15 and the Hang Seng had lost 0.55% to 23,004.47.
In early trade today, WTI crude was up 0.08% to $49.76/bbl and Brent was up 0.16% to $50.55/bbl.

Royal Bank of Scotland sees more losses in third quarter

Royal Bank of Scotland (RBS.L) has reported a £469m loss for the July-to-September period as "legacy issues" continue to overshadow its performance. The bank received a £45.5bn bailout during the financial crisis and has been tackling a range of problems. But once restructuring costs and provision for litigation were excluded, the bank made an adjusted quarterly operating profit of £1.3bn. A spokeswoman said RBS's core business was producing "really strong profits".

Company news

Advanced Oncotherapy (LON:AVO, 102.00p) – Speculative Buy
Advanced Oncotherapy, the developer of LIGHT, a next-generation proton therapy systems for cancer treatment, yesterday announced that Nicolas Serandour, Chief Operating Officer and Chief Financial Officer, will become Chief Executive Officer with immediate effect. Michael Sinclair, currently Chief Executive Officer and Executive Chairman, will retain his role as Executive Chairman.

Our view: At such an important stage of its development, shareholders will be delighted that AVO has chosen to split the roles of CEO and Executive Chairman. This means, of course, Nicolas Serandour now holds three important and distinct executive roles for the Group and, although he clearly has the perfect credentials for each position, it would be realistic to expect some sharing of these responsibilities or other succession planning to be detailed in the relatively near term. This might be expected following the completion of the Open Offer that is currently underway. As already advised, this entails a maximum of some £4.02 million (being below the €5 million threshold which would require the publication by the Company of a prospectus under the Prospectus Rules) to be raised at 100p/share from Qualifying Shareholders through the issuance of up to 4,020,587 new shares, being conducted on the basis of 1 Open Offer Share for every 13 Existing Ordinary Shares held as at the Record Date of 13 October 2016. As part of the Open Offer, an Excess Open Offer Entitlement facility also permits excess applications over and above Qualifying Shareholders' Entitlements to be accepted from such holders to the extent that others do not take up their Entitlement. The new shares to be issued pursuant to this are to be admitted to trading on AIM, which is expected to take place at 8.00 a.m. on 1 November 2016. A further announcement will be made in due course. Beaufort recommends existing investors take advantage of this proposal, recognising the latest time and date for receipt of completed Application Forms and payment in full is 11:00hrs on 31st October 2016. Beaufort retains its Speculative buy recommendation on Advanced Oncotherapy shares.

Beaufort Securities acts as corporate broker to Advanced Oncotherapy plc

BT Group (LON:BT.A., 379.25p) – Buy
BT Group, a global provider of communications services and solutions, yesterday announced its second quarter results for the period ended 30 September 2016 ('Q2 FY2016'). During the period, revenue advanced +35% to £6.0bn and pre-tax profit increased +5% to £671m. Basic earnings per share fell by -10% to 5.7p. On adjusted basis, underlying revenue excluding EE acquisition rose +1.1%, adjusted EBITDA jumped by +31% to £1,888m and adjusted pre-tax profit grew +24% to £873m, consequently, adjusted basic earnings per share improved by +4% to 7.2p. In the H1, the BT's normalised free cash flow increased by +£667m to £1,342m and net debt widened by £3,654m to £9,573m year-on-year. On the operational front, the Group added 280,000 net mobile pay monthly customers with sustained low churn rate. BT's CEO Gavin Patterson commented "This is a positive set of results, both operationally and financially, and we remain on track to achieve our full year outlook. We've made good progress on the integration of EE and the delivery of our synergy targets. Our consumer facing lines of business have performed well, but in the enterprise space, UK public sector continues to be a challenging market. Across the group, we continue to drive cost reduction and productivity improvements." The Group declared an interim dividend of 4.85p, up +10%.

Our view: BT continued to make a progress in the Q2, with both revenue and pre-tax profit registering growth, with the Group remaining on track to meet full year expectations. The acquisition of EE on 29 January 2016 contributed revenue of £1,277m, EBITDA of £282m and free cash flow of £135m during the Q2. Meanwhile, BT is working extensively to improve its customer experience. The Group is expected to strengthen its investment in the H2 with over 1,000 new UK-based customer service staff, with an aim to service 90% of all enquiries from the UK. Estimating the shares trade on a FY2017E and FY2018E P/E multiple of 12.8x and 11.9x, together with a dividend yield of 4.0% and 4.5%, the shares continue to represent a good value. Beaufort retains its Buy rating on the shares.

Debenhams (LON:DEB, 55.35p) – Hold
Debenhams, a leading international, multi-channel brand clothing retailer, yesterday announced its full year result for the 53 weeks ended 3 September 2016 ('FY2016'). During the period, gross transaction value advanced +1.3% to £2,938.5m and statutory revenue fell -0.5% to £2341.7m, against 52 weeks to 29 August 2016. Like-for-like ('LFL') sales improved by +0.6%. Gross margin has declined by -0.1% and reported pre-tax profit fell -10.4% to £105.8m result in basic earnings per share down -1.3% to 7.8p. On the operational front, the Group opened Shanghai sourcing office in August to enhance its supply chain for international and multi-channel growth. The Group declared final dividend of 2.4p per share, bringing full year dividend to 3.425p, up +0.7%.

Our view: Debenhams performed in line with expectation for the full year FY2016. Revenue from UK declined, which dragged down the overall Group performance even after its international division performed positively. Pre-tax profits were also hit as a result of a £12.4m exceptional items taken during the period associated with restructuring of the Group's Irish business, head office reorganisation including the movement to category buying plus the alignment of store and online operations, and a write-off of legacy IT systems following the launch of a new international website. Debenhams' strategy to shift towards non-clothing categories amid weaker market demand supported its performances while registering encouraging growth in beauty, gifting and food categories. The shares are currently trading on FY2016E and FY2017E P/E multiples of 7.9x and 8.4x along with dividend yields of 6.3% and 6.5% respectively. On this basis the shares are not expensive, but with limited growth option with a tough and rapidly changing trading environment against a uncertain economic background, they deserve to be. The new management under CEO, Sergio Bucher, seek to turn to fortunes of Debenhams around and shareholders should give him the benefit of the doubt while the shares continue to provide reasonable income. In view of this, Beaufort maintains its Hold rating on the shares.

Smith (DS) (LON:SMDS, 400.60p) - Buy
DS Smith Plc, the leading supplier of recycled packaging for consumer goods, has issued a positive pre-close trading update in respect of the half-year ending 31 October 2016. The business has again made good progress and performance remains in line with management expectations. Volume growth continues to be supported by strong ongoing growth with their large pan European customers. The return on sales and return on capital employed are expected to show progression over the comparative period last year despite the initially dilutive effect of recent acquisitions. As in previous periods, the Company has invested in both organic and inorganic opportunities in the half-year and are pleased with the initial performance of the recently acquired display businesses, Creo and Deku-Pack, which form an important part of the Company's strategy for this growth market segment.

Our view: Despite raw material pricing pressure we still see organic growth in volumes in 2017 (circa 3%), and contribution from M&A and a FX tailwind. This positive update confirms DS Smith's excellent record of organic growth and their success in M&A. It deserves its premium rating and we confirm our Buy rating on the stock.

Fri, 28 Oct 2016 07:56:00 +0100