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Beaufort Securities Breakfast Alert: Galileo Resources and Solo Oil

Beaufort Securities Breakfast Alert: Galileo Resources and Solo Oil


The FTSE-100 finished Friday's session 0.07% higher at 7,560.35, whilst the FTSE AIM All-Share index was up 0.44% at 1,043.69. In continental Europe, the CAC-40 finished 0.14% higher at 5,517.97, whilst the DAX was up 0.28% at 13,478.86.
Wall Street
In New York on Friday night, the Dow Jones closed 0.10% higher at 23,539.19, the S&P-500 added 0.31% to end the week at 2,587.84 and the Nasdaq finished 0.74% stronger at 6,764.44.
In Asian markets this morning, the Nikkei 225 was up 0.04% at 22,548.35, while the Hang Seng was 0.20% lower at 28,545.69.
In early trade today, WTI crude was 0.32% higher at $55.82 per barrel and Brent was up 0.47% at $62.36 per barrel.

Paradise Papers: Tax haven secrets of ultra-rich exposed
A huge new leak of financial documents has revealed how the powerful and ultra-wealthy, including the Queen's private estate, secretly invest vast amounts of cash in offshore tax havens. Donald Trump's commerce secretary is shown to have a stake in a firm dealing with Russians sanctioned by the US. The leak, dubbed the Paradise Papers, contains 13.4m documents, mostly from one leading firm in offshore finance. Sunday's revelations form only a small part of a week of disclosures that will expose the tax and financial affairs of some of the hundreds of people and companies named in the data, some with strong UK connections. Many of the stories focus on how politicians, multinationals, celebrities and high-net-worth individuals use complex structures of trusts, foundations and shell companies to protect their cash from tax officials or hide their dealings behind a veil of secrecy.
Source: BBC News

Company news

Galileo Resources (LON:GLR, 1.58p) – Speculative Buy
Galileo Resources announced an update on its 51% owed Star Zinc project in Zambia. The Company has appointed Africa Technical Consultants (ATC) to assist with an environmental and exploration programme. The programme entails engaging with the local communities with regard to an exploration programme to collect soil samples and potential drilling in due course. Soil sampling will be conducted over a 400m x 200m grid using a portable XRF (x-ray fluorescence) spectrometry. The Star Zinc project is a historical high-grade zinc open pit mine that operated intermittently between 1950s and 1990s.

Our view: We are encouraged with the progress being made on the Star Zinc. GLR's goal is to upgrade the project's historical resource is to a compliant one whilst testing the potential to increase the current resource base. The availability of primary zinc deposits is diminishing and the Star Zinc project has a non-JORC compliant resource of 0.3Mt grading 20.2% Zn which remains open along strike and at depth. We also note the occurrence of high grade (>50% Zn) float 200m south of the current pit representing a potential new exploration target. We look forward to further updates on the project. In the meantime, we maintain a speculative buy on the stock.

Beaufort Securities acts as corporate broker to Galileo Resources PLC

Solo Oil (LON:SOLO, 5.25p) - Speculative Buy
Solo has published an update of production at Kiliwani North. Gas flow rates are "temporarily reduced" to below 1 million cubic feet per day. This will not affect cashflow until the new year due to the timing of payments. Aminex the operator is "evaluating a number of options to maximise future gas recovery and increase production rates". This includes wellhead compression and potential step out drilling. Only 6 bcf of 28 bcf gross 2C contingent resources have been produced (45 bcf original gas in place). Solo owns 7.55% in KN-1.

Our view: The KN-1 well is thought to be draining a single compartment which is being recharged via faults within the structure. i.e. the gas resource is there, but not as interconnected as interpreted. Solo believes this news does not affect the 28 bcf resource, which suggests step out should get production up to previous levels. Meanwhile, the large Ntorya gas condensate discovery remains the key value driver for Solo. Solo and Aminex are awaiting the development license which they applied for in September. We retain our Speculative Buy recommendation although put our financial forecasts under review.

Beaufort Securities acts as corporate broker to Solo Oil PLC

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