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Northland Capital Partners Limited Morning Report: Savannah Resources; Edenville Energy

Northland Capital Partners Limited Morning Report: Savannah Resources; Edenville Energy

SAVANNAH RESOURCES (LON:SAV)

SECTOR – MINING

RATING – CORP*

MARKET CAP – £57.7m

CURRENT PRICE – 6.7p#

ANALYST – BARRY GIBB

                    DR RYAN LONG                                                                                                 

 

Year-end Dec

2016A

2017A

 

 

 

Revenue (£m)

-

-

No forecasts provided

EBITDA (£m)

(1.8)

(2.8)

Adj. pre-tax Profit (£m)

(1.8)

(2.8)

Adj. EPS (p)

(0.46)

(0.53)

DPS (p)

-

-

Net Cash/(Debt) (£m)

0.7

1.2

P/E (x)

-

-

Dividend yield (%)

-

-

EV/EBITDA (x)

-

-

 

SOURCE: Northland Capital Partners Limited estimates. #Priced at prior trading day close. *Northland Capital Partners Limited acts as Nomad and provides commissioned research coverage to Savannah Resources and therefore this information should be viewed as a Marketing Communication.

 

Settlement of Portuguese project deferred consideration

 

NORTHLAND VIEW

  • Savannah Resources announced that it has commenced the settlement of the second and final deferred consideration tranche in accordance with the terms of the acquisition of the Company's portfolio of Portuguese projects in May 2017, which includes the flagship Mina do Barroso Project ('Milestone 2').
  • In accordance with the share purchase agreement dated 24 May 2017 between the Company and the vendors of the Company's Portuguese lithium portfolio, the Company has commenced the settlement of the Milestone 2 deferred consideration of AUD1.5m cash and the issue of 20,000,000 new ordinary shares, which will be subject to orderly market provisions for six months.
  • The Milestone 2 payment was triggered following the Company's announcement dated 10 September 2018, in which Savannah reported Western Europe's largest JORC-compliant spodumene lithium Mineral Resource of 20.1Mt at 1.04% Li2O. This comprises a further JORC-compliant Mineral Resource of 7.5Mt at no less than 1% Li2O in excess of the Milestone 1 target (initial JORC-compliant Mineral Resource exceeding 7.5Mt at greater than 1% Li2O, which was announced on 26 February 2018 and settled in March 2018). Settlement of Milestone 2 represents the full and final satisfaction of the consideration payable to the Vendors. The Deferred Equity Consideration will be issued at 6.75 pence per Ordinary Share, and it is expected that Admission will become effective on or around 12 October 2018.

Moving forward as expected. Settlement of the second and final deferred consideration is now underway, providing visibility as the Company advances towards making a development decision for its flagship lithium project next year. This progress should offer the potential for a long-life asset that can anchor the up-stream end of the European lithium value chain, with the region being the world’s second largest consumer.

 

COMPANY DESCRIPTION

Savannah Resources is an energy metals group with copper-gold projects located in Oman, lithium projects in Portugal, and a operates a mineral sands project in Mozambique that is a JV with Rio Tinto

 

Edenville Energy (LON:EDL)

SECTOR – MINING

RATING – CORP*

MARKET CAP – £4.1m

CURRENT PRICE – 0.26p#

ANALYST – BARRY GIBB

                    DR RYAN D. LONG  

 

Year-end Dec

2016A

2017A

 

 

 

Revenue (£m)

-

-

No forecasts provided

EBITDA (£m)

(3.2)

(1.2)

Adj. pre-tax Profit (£m)

(3.2)

(1.2)

Adj. EPS (p)

(0.5)

(0.1)

DPS (p)

-

-

Net Cash/(Debt) (£m)

0.1

0.8

P/E (x)

-

-

Dividend yield (%)

-

-

EV/EBITDA (x)

-

-

 

SOURCE: Northland Capital Partners Limited estimates. #Priced at prior trading day close. *Northland Capital Partners Limited acts as Nomad and Broker to Edenville Energy and therefore this information should be viewed as a Marketing Communication.

 

Significant contract for the supply of a specialised coal product

 

NORTHLAND VIEW

  • Edenville Energy plc announced that that it has signed a significant contract for the supply of a specialised coal product. The customer, an industrial group operating in East Africa, will use the coal as part of its manufacturing process.
  • Edenville has been working with this customer for some time to create a product specifically suited to its operations and has been supplying test batches of coal to match its needs. The upgrades currently being undertaken at the Company's Rukwa project site will ensure this contract, along with our other customer deliveries, can be met.
  • The customer’s initial contract duration extends to a period of two years, supplying coal with an average gross calorific value of 5,500kCal/kg. Pricing has been agreed and is based on local commercial rates; the customer will be responsible for transport from the mine gate for the contract which is to supply of 3,500 tonnes per month with an option for the customer to increase this to as much as 6,000 tonnes per month.

 

In our view, Edenville’s signing of its largest single coal contract to date demonstrates the viability of its business plan to become a significant supplier of coal in east Africa. Taken together the Company now has regular supply agreements for in excess of 8,000 tonnes per month, and is now busy implementing expansion plans at its site in anticipation of confirming further medium-to-longer term supply contracts. Management is also seeking to deepen its client relationships and raise prospective interdependence by examining ways in which it might further assist customers with mining related tasks going forward. Rufus Short, CEO of Edenville noted “I look forward to providing further updates on the progress of the operation as we continue to establish the project as a significant supplier of coal in East Africa”.

 

COMPANY DESCRIPTION

Edenville Energy is moving the Rukwa Coal Project towards near-term production alongside advancing its Coal to Power Project.

 

 

1. Northland Capital Partners Limited (“Northland”) acts as Nominated Advisor and/or Broker to the company.

2. Northland) and/or its affiliates companies do beneficially own 1% or more of any class of the issuer’s equity securities, as of the end of the month immediately preceding the date of issuance of the research report or the end of the second most recent month if the issue date is less than 10 calendar days after the end of the most recent month. 

3. The authoring analyst or any associate of the authoring analyst does maintain a long or short position in any of the issuer’s securities directly or through derivatives, including options or futures positions.

4. Northland, its affiliated companies, partners, officers, directors or any authoring analyst of Northland has provided services to the issuer for remuneration during the preceding 12 months other than investment advisory or trading services.

5. Northland or any of its affiliated companies has performed investment banking services for the issuer during the 12 months preceding the date of issuance of the report.  

6. A partner, director, officer, employee or agent of Northland or any of its affiliated companies is an officer, director, employee or advisor of the issuer.  Disclosures are applicable for all companies

7. The authoring analyst, or any associate of the authoring analyst, has viewed the material operations of the issuer. 

8. The authoring analyst, or any associate of the authoring analyst, received reimbursement for travel expenses.

9. Northland makes a market in the securities of this company.

 

 

DISCLAIMER

This document is provided solely to enable clients to make their own investment decisions. It may therefore not be suitable for all recipients and does not constitute a personal recommendation to invest. It does not constitute an offer or solicitation to buy or sell securities or instruments of any kind. If you have any doubts about the suitability of this service, you should seek advice from your investment adviser. This document is produced in accordance with UK laws and regulations. It is not intended for any person whose nationality or residential circumstances may render its receipt unlawful.

The past is not necessarily a guide to future performance. The value of shares and the income arising from them can fall as well as rise and investors may get back less than they originally invested. The information contained in this document has been obtained from sources which Northland Capital Partners Limited believes to be re¬li¬able. The Com¬pany does not warrant that such information is accurate or complete. All estimates and prospective figures quoted in this report are forecasts and not guaranteed. Opinions included in this report reflect the Company’s judgement at the date of publication and are subject to change without notice. If the investment(s) mentioned in this report are denominated in a currency different from the currency of the country in which the recipient is a resident, the recipient should be aware that fluctuations in exchange rates may have an adverse effect on the value of the investment(s). The listing requirements for securities listed on AIM or PLUS markets are less demanding, also trading in them may be less liquid than main markets.

Northland Capital Partners Limited and/or its officers, as¬sociated entities or clients may have a position, or other material interest, in any securities men¬tioned in this report. Northland Capital Partners Limited does not provide recommendations on securities of firms with which it has a corporate relationship. More information about our management of Conflicts of Interest, Investment Research Methodology & Definition of Recommendations can be found at www.northlandcp.co.uk 

Northland Capital Partners Limited is authorised and regulated by the Financial Conduct Authority and a Member of the London Stock Exchange.

Published by/copyright: Northland Capital Partners Limited, 2013. All rights reserved

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