The Markets
Market opening: Markets are likely to open lower today. FTSE 100 futures were trading 11.80 points down at 7:00 am.
New York: Wall Street ended in the green amid optimism over Greek debt talks. Strong trade and jobs data from the US added to the upside. The S&P climbed 0.2% yesterday.
Asia: Equities are trading mixed this morning. The Nikkei 225 tracked global equities to close 0.1% higher. The Hang Seng was trading 1.0% down at 7:00 am on liquidity pressure amid new share offerings.
Continental Europe: European markets reported modest gains on an unchanged central bank policy and European Central Bank (ECB) President Mario Draghi’s assurance that quantitative easing would continue until September 2016. ECB retained the benchmark interest rate at 0.05%. Germany’s DAX and France’s CAC 40 rose 0.8% and 0.6%, respectively.
Crude Oil: Yesterday, prices of Brent and WTI crude oil slipped 2.6% each. The spread between the two varieties stood at US$4.2 per barrel.
UK small caps: The FTSE AIM All-Share index closed 0.35% higher yesterday at 778.15.
Today’s news
OECD cuts global growth forecast
The Organization for Economic Cooperation and Development (OECD) said it expects the global economy to grow at a slower pace of 3.1% in 2015 compared with the previous forecast of 3.6%. The agency also slashed the growth estimate for 2016 to 3.8% from 3.9%. The revisions are largely ascribed to weak investments and subdued growth in the first quarter.
Company News
MySQUAR – AIM IPO of a Myanmar-based Internet-build group, focussed on Mobile Social Media Services
You may have seen reference in the Financial Times and other press sources of this upcoming AIM IPO in which Beaufort is sole broker.
MySQUAR is a technology group focussed on internet-content build in Myanmar, a country which until recently had been effectively cut-off from the rest of the world. Its first main product now rapidly building users is ‘MyCHAT’, a free to use social media and mobile chat service. The Company has recognised that offering local language and locally-derived content is the best route to acquisition and retention of massed users still very new to the worldwide web. Within a short 15 months its services could be accessible by over 40m residents. MySQUAR is positioned to be the local platform of choice in what will shortly become Southeast Asia’s fastest growing online territory. The Company is expected to have over 1m users by the end of the year with rapid growth continuing into the foreseeable future. With users comes monetisation opportunities, including gaming, news, information, financial and payment services.
Should wish to have more information or are interested in getting involved, please contact your Beaufort Broker on 020 7382 8300 (London) or 0117 910 5500 (Bristol).
Kefi Minerals (LON:KEFI) – Speculative Buy
Kefi Minerals, the gold exploration and development company with projects in the Federal Democratic Republic of Ethiopia and the Kingdom of Saudi Arabia, announced today an exploration update near its planned 1Moz Tulu Kapi gold project in Ethiopia. Management believes there is potential to add to the Tulu Kapi production plan through exploration both under the planned open pit and in the adjacent exploration licenses where two parallel shear zones host a number of gold prospects. The Komto-Guji and the Bila-Gulliso shear zones have similar geology to Tulu Kapi and could potentially act as satellite deposits to feed the planned plant. A total of eight trenches have been excavated and all trenches returned ore grade intercepts over a 3km strike length, best results include: 7m grading 7.27g/t Au (K1003), 13m grading 1.07g/t Au (K2012) and 6m grading 1.24g/t Au and 5m at 1.07g/t (K2013). The Komto and Guji prospects are located within 7km of the planned Tulu Kapi mine site and the potential to host heap leachable oxide resources. The Soyoma prospect, within the Bila-Gulliso shear is 15km west of Tulu Kapi consisting of gold bearing quartz veins where previous trenching returned 14.2m grading 8.2g/t Au. Individual veins have also been channel sampled returning 3m grading 4.2g/t Au, 2m grading 2.75g/t and 1m grading 2.65g/t Au.
Our view: In addition to developing the 1Moz Tulu Kapi gold mine, Kefi is focused on the exploration potential on the adjacent license areas. The trenching results have, so far, returned encouraging results indicating a potential for additional mineralisation near Tulu Kapi. Kefi is targeting satellite deposits to help feed its planned central processing plant or possible standalone heap leach projects and hopes to double the current 1Moz gold reserve at Tulu Kapi. Thus in view of the progress to date, we maintain a Speculative Buy on the stock.
Beaufort Securities acts as a corporate broker to Kefi Minerals plc
Eurasia Mining (LON:EUA) – Speculative Buy
Yesterday, Eurasia Mining announced its audited final results for the year ended 31st December 2014. The company’s pre-tax loss declined to £502,500 from a loss of £750,339 in 2013. Loss per share stood at 0.01p as compared to 0.08p. On the operational front, Eurasia made significant progress at its West Kytlim project and Monchetundra project. During 2014, all required steps were undertaken by the company for becoming a platinum producer. Now, the company is waiting for its mining license for the project to start work. Meanwhile, at the Monchetundra project, the company expects good exploration results and for this purpose it plans to seek help from a new partner for the project to expand into a much larger discovery. The company is also actively involved in several non-core, innovative mining solutions including the Kamushanovsky Uranium Project in Kyrgyzstan. Cash at the end of period was £210,160.
Our view: 2014 showed considerable developments and marked good progress with the company being well on track towards utilising its current potential of platinum mining operations. Besides, the company is expected to receive the Mining Licence once the country’s Prime Minister gives the final nod. While awaiting the licence approval, the company prepared and provisioned for the production phase at the asset. The outlook for the West Kytlim looks positive in view of the economic benefits and the accelerated move towards production. Also, the company remains optimistic that the mineralization at West Nittis and at Loipishnune in Monchetundra can be developed into a significant asset. On the other hand, the company’s other business operations in Eurasia continue to make progress and we look forward to further encouraging updates. Thus in view of the above, we retain a Speculative Buy on the stock.
Beaufort Securities acts as a corporate broker to Eurasia Mining plc
Ferrex (LON:FRX) – Speculative Buy
Yesterday, Ferrex announced its interim results for the six months ended 31st March 2015. The company reported a pre-tax loss of £659,000, slightly lower than the loss of £745,000 incurred last year. On the operational front, the company continued to focus on advancing its Nayega Manganese Project in Togo, which has great potential for manganese and iron ore. Definitive Feasibility Study (DFS) on the Nayega Manganese Project suggests viability of a 250,000 tonne per year 38% manganese product operation. In addition, negotiations over the Mining Convention towards fiscal, environmental and social issues governing the company’s and Togolese Government’s commitments to each other were also finalized. Ferrex also remains confident of receiving the Mining Permit for the project after the formation of a new government in Togo. The company is in talks with several parties for funding the construction of the Nayega Mine and expects due diligence evaluation and field visits to be carried out during second half.
Our view: Positively, the Company detailed signs of growth during the period along with activities undertaken to develop the Nayega Project into a 250,000tpa manganese export operation. We are encouraged with the potential reduction in both capital and operating costs for the accelerated start-up, due to simplification and modularisation of the process circuit which will allow for rapid construction and development. Given that Ferrex is already in discussions with several parties for funding, along with further plans for diligence evaluation and field visits during second half. Beaufort maintains its speculative buy recommendation on the stock.
Beaufort Securities acts as a corporate broker to Ferrex Plc
Savannah Resources (LON:SAV) – Speculative Buy
Yesterday, Savannah Resources said that it has confirmed gold mineralisation and associated copper mineralisation at the Salahi 1 prospect at Block 4 in Oman. The company from its recent trench sampling results identified a gold prospect at the Salahi 1 area having samples producing results of up to 72.2 grams per tonne of gold, with finds including 12 metres at 11.87 grams per tonne of gold. Moreover, the gold mineralisation has a good strike length of 180m, varying in width from 12m to 1m, which remains open to the north and south and additional trenching is underway as a precursor to drilling. Meanwhile, the company expects that there remains a potential for other metals in the Block 4, which is in addition to its copper potential. Savannah Resources has a 65% stake in the Omani company, Al Thuraya LLC, the 100% owner of the Block 4 licence.
Our view: With confirmation of high-grade gold mineralization at the Salahi 1 Prospect, Savannah seems to be well encouraged and focussed on further defining and expanding the gold zones, within the Block 4 project area. In addition to this, Salahi 1 Prospect also suggests potential for other metals within Block 4. Separately, the company’s Jangamo project in Mozambique has also encountered several high grade HMS mineralization zones of late. In light of the recent successes, we reiterate a Speculative Buy on the stock.
Horizonte Minerals (LON:HZM) – Speculative Buy
Yesterday, Horizonte Minerals announced the final results from its Phase 4 infill resource drilling programme at its 100% owned Araguaia Nickel Project in Para State, north central Brazil. The company stated that high-grade nickel intersections from the Phase 4 infill resource drilling on the Pequizeiro deposit include 11.30 meters grading 2.95% nickel, 9.21 meters grading 2.50%, 11.82 meters grading 2.39%, 14.05 meters grading 2.33%, and 18.99 meters grading 2.27%. The high-grade nickel intersections from infill resource drilling on the Jacutinga deposit include 4.44 meters grading 3.04% nickel, 12.13 meters grading 2.43%, 17.44 meters grading 2.38%, 19.67 meters grading 2.07%, and 17.30 meters grading 2.07%. Moreover, the results for the drilling across Pequizeiro and Jacutinga deposits mention that the areas will support a mine life of 8 to 10 years.
Our view: The company’s flagship Araguaia Nickel Project continued to witness considerable progress with successful high-grade drill results from its Phase 4 infill resource drilling programme. The company seems to be confident that the results will help support the high-grade zones within the current NI 43-101 Mineral Resource Estimate and there will be no significant decrease in the planned nickel grades over the early period of mine life. Meanwhile, the company is also making good progress on other areas of the Feasibility work at Araguaia. Thus in view of the promising result from the drilling programme, we retain our Speculative Buy on the stock.
Economic News
Nationwide House Prices
In May, the UK house prices were up 0.3% m-o-m, on a seasonally adjusted basis, after rising 1.0% in the prior month, the Nationwide Housing Society said yesterday. Economists were expecting an improvement of 0.4% for the month. Average cost of a house in the UK reached £195,166 in May. Without seasonal adjustments, prices climbed 4.6% y-o-y in May after rising 5.2% in April.
US MBA Mortgage Applications
US mortgage applications dropped 7.6% in the week ended 29th May after sliding 1.6% in the prior week, the Mortgage Bankers’ Association said yesterday. The refinance index also fell 12.0%, while the seasonally-adjusted purchase index declined 3.0%.
ADP Employment Change
US ADP employment index increased by 201,000 in May from revised 165,000 in April, driven by job gains in trade, transportation and utilities sector. Analysts estimated ADP would tally 200,000.
Trade Balance
US trade deficit expanded to US$40.9bn in April from a revised reading of US$50.6bn in March, the Commerce Department said yesterday. Economists had expected the trade gap at US$44.0 in April. Overall imports of goods and services declined 3.3% to US$230.8bn. Exports climbed 1.0% to US$189.9bn