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Beaufort Securities Breakfast Alert - Debt fears for poorer households

Beaufort Securities Breakfast Alert - Debt fears for poorer households

Markets
Europe
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.

Asia
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.

Oil
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.

 

Headlines

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

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