Proactive Investors - Run By Investors For Investors

Beaufort Securities Breakfast Alert - Debt fears for poorer households

Beaufort Securities Breakfast Alert - Debt fears for poorer households

The FTSE-100 finished yesterday's session 0.12% lower at 7,769.14, whilst the FTSE AIM All-Share index was down 0.05% at 1,065.54. In continental Europe, the CAC-40 finished 0.13% lower at 5,509.69 whilst the DAX was down 0.34% at 13,200.51.

Wall Street
Last night in New York, markets were closed for Martin Luther King, Jr. Day.

In Asian markets this morning, the Nikkei 225 was 1.00% higher at 23,951.81 and the Hang Seng was up 1.44% at 31,788.91. The Shanghai Composite was 7.44 points higher at 3,417.93.

In early trade today, WTI crude was up 0.31% at $64.50 per barrel and Brent was down 0.38% at $69.99 per barrel.



Debt fears for poorer householdsA third of the lowest-income households in Britain have loans and credit card debts that outstrip the assets they hold, research has found. This debt can become a problem to repay, even if the total amount borrowed is relatively low. The Institute for Fiscal Studies (IFS) analysed official figures to estimate the extent of unmanageable debt. Unsecured borrowing, such as loans, overdrafts and credit cards, has been rising by nearly 10% a year in the UK. The IFS found that a quarter of very low-income households have high debt repayments or are behind on bills or repayments. Helen Barnard, from the Joseph Rowntree Foundation, which commissioned the report, said: "The government, regulators and lenders need to not only look at increasing access to affordable credit, but also at the financial pressures that can lead families to take on debt in order to get by." The report found that about half of British households have some unsecured debt. Some 43% of this is loans from banks and other financial institutions, with credit and store card debt (25%) and hire purchase debt (21%) the other major contributors. The majority of this debt could be paid off, the report found. "More than 60% of unsecured debt is held by households with above-average incomes, and more than half of households with unsecured debts have more than enough financial assets to pay them off," it said.

Source: BBC News


Company news

Hummingbird Resources (LON:HUM) 37.40p – Speculative Buy
Hummingbird Resources announced its Q4 2017 review of activities which saw commissioning of the 1.24Mtpa carbon-in-leach (CIL) processing plant and its first gold pour on budget and on schedule from its Yanfolila gold project in Mali. Commercial ramp up is expected during Q1 2018 with a target of delivering approximately 130,000oz of gold during the first full year of production, which could generate US$70m of free cash flow based on a US$1,250/oz gold price. Plant throughput reached 75% capacity in January and the first shipment of gold dore bars to the refinery has been completed.

Our view: Q4 2017 was transformational for the Company as it graduated from developer to producer. We continue to be impressed with the progress being made at Yanfolila and look forward to the announcement of commercial production in the coming months. In the meantime, we maintain a Speculative Buy rating on the stock.

Beaufort Securities acts as a corporate broker to Hummingbird Resources plc

Jubilee Metals Group (LON:JLP) 3.78p– Speculative Buy
Jubilee has increased its share in the Kabwe zinc-lead-vanadium project by acquiring a 29% interest in BMR Group. The consideration was £500k cash and the remainder in Jubilee shares. Jubilee will have an effective 57.41% interest in Kabwe assuming it chooses to develop an operation. Although Jubilee has not yet committed to developing Kabwe (i.e. its due diligence is not fully complete), increasing its stake is a strong suggestion that it will in due course. Management clearly believes it can develop a profitable zinc, lead and vanadium operation. Indeed the RNS (released yesterday afternoon) stated “I was particularly encouraged by our metal recovery trials which included the leachability of the zinc, lead and the vanadium. These results confirmed the recoverability of the targeted metals”.

Our view: Jubilee should soon have 57.4% and effective control of Kabwe, a much improved situation. We believe Jubilee has the technical ability to design and build a low capital cost, profitable Kabwe operation, so the larger its share of Kabwe the better. As a reminder, Kabwe has a JORC resources of 164 000 tonnes of zinc and 272 000 tonnes of lead. So a very substantial quantum of metal, which as surface dumps do not require mining. We reiterate our Speculative Buy recommendation.

Beaufort Securities acts as a corporate broker to Jubilee Metals Group plc

Savannah Resources (LON:SAV) 5.92p – Speculative Buy
Savannah announced that three applications have been submitted to the Ministry of Mineral Resources and Energy in Mozambique for mining leases for the Mutamba Mineral Sands projects. The applications cover a total area of 417.3km2 over the Jangamo, Dongane, Ravene and Chilubane deposits. The Ministry has six months (from date of submission) to respond to the applications and mining leases are generally granted for 25 years and can be renewed at the end of their terms. Savannah is the operator and holds a 20% interest in the Mutamba project with the right, subject to key milestones being met, to earn up to a 51% as stated in the Consortium Agreement signed with Rio Tinto on 11 October 2016. On aggregate, the current resource for the Mutamba project stands at 4.4Bt grading 3.9% THM (total heavy minerals).

Our view: We are encouraged with the pace of development occurring at Mutamba. The above announcement is an important milestone as it the final formal step in securing the mining leases required to extract heavy mineral sands over the Mutamba deposits. This follows the recent commissioning of the 20 tonnes per hour pilot plant that will produce bulk samples of concentrate for metallurgical and product testwork as part of the Pre-Feasibility Study (PFS). The TiO2 pigment industry continues to gain strength on the back of strong demand for feedstock which should help support current prices moving forward. On aggregate, the Mutamba resource compares favourably with other major African based mineral sand deposits. We look forward to further updates as the project moves through the mining lease application phase. In the meantime, we maintain a Speculative Buy rating on the stock.

Beaufort Securities acts as a corporate broker to Savannah Resources Plc

Important Risk Warnings and Disclaimers 

This report is published by Beaufort Securities Ltd ("Beaufort Securities"). Beaufort Securities Ltd is Authorised and Regulated by the Financial Conduct Authority and is a Member of the London Stock Exchange. 


This document is not an offer to buy or sell any security or currency. This document does not provide you with individually tailored investment advice. It has been prepared without regard to the your financial circumstances and objectives The appropriateness of a particular investment or currency will depend on your individual circumstances and objectives. The investments and shares referred to in this document may not be suitable for you. 

This research is non-independent and is classified as a Marketing Communication under FCA rules. As such it has not been prepared in accordance with legal requirements designed to promote independence of investment research and it is not subject to the prohibition on dealing ahead of the dissemination of investment research in COBS 12.2.5. However Beaufort Securities has adopted internal procedures which prohibit analysts from dealing ahead of non-independent research, except for legitimate market making and fulfilling clients' unsolicited orders. 

By receiving this document, you will not be deemed a client or provided with the protections afforded to clients of Beaufort Securities. When distributing this document, Beaufort Securities is not acting for you and will not be responsible for providing advice to you in relation to this document. Accordingly, Beaufort Securities will not be responsible to you for providing the protections afforded to its clients. 

Beaufort Securities may effect transactions in shares mentioned herein and may take proprietary trading positions in those shares, and may receive remuneration for the publication of its research and for other services. Beaufort Securities may be a shareholder in any of the companies mentioned in this report. Accordingly, this document may not be considered as objective or impartial. Additionally, information may be available to Beaufort Securities or the Group, which is not reflected in this material. The remuneration of the author of this report is not tied to the recommendations on any shares mentioned nor to the any transactions undertaken by Beaufort Securities or any affiliate company. Further information on Beaufort Securities' policy regarding potential conflicts of interest in the context of investment research and Beaufort Securities' policy on disclosure and conflicts in general are available on request. Please refer to 

Past performance is not a guarantee of future performance. Investments may go down in value as well as up and you may not get back the full amount invested. The listing requirements for securities listed on AIM or the ICAP Securities & Derivatives Exchange are less demanding and trading in them may be less liquid than main markets. This may make it more difficult to buy and sell these securities. 


This document includes certain statements, estimates, and projections with respect to the anticipated future performance of securities listed on stock exchanges and as to the market for these shares. Such statements, estimates, and projections are based on information that we consider reliable and may reflect various assumptions made concerning anticipated economic developments, which have not been independently verified and may or may not prove correct. No representation or warranty is made as to the accuracy of such statements, estimates, and projections or as to its fitness for the purpose intended and it should not be relied upon as such. Opinions expressed are our current opinions as of the date appearing on this material only and may change without notice. Other third parties may have issued other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. Those reports reflect the different assumptions, views, and analytical methods of the analysts who prepared them. This report has not been disclosed to any of the companies mentioned herein prior to its publication. 

This document is based on information Beaufort Securities has received from publicly available reports and industry sources. Beaufort Securities may not have verified all of this information with third parties. Neither Beaufort Securities nor its advisors, directors or employees can guarantee the accuracy, reasonableness or completeness of the information received from any sources consulted for this publication, and neither Beaufort Securities nor its advisors, directors or employees accepts any liability whatsoever (in negligence or otherwise) for any loss howsoever arising from any use of this document or its contents or otherwise arising in connection with this document (except in respect of wilful default and to the extent that any such liability cannot be excluded by the applicable law). You should not rely on this document and should not use it substitution for the exercise of the independent judgment of yourself or your adviser. 

The information contained in this document is confidential and is solely for use of those persons to whom it is addressed and may not be reproduced, further distributed to any other person or published, in whole or in part, for any purpose. Other persons who receive this document should not rely on it. Beaufort Securities, its directors, officers and employees may have positions in the securities mentioned herein.


© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use