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Northland Capital Partners View on the City Premier African Minerals and Tavistock Investments

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Premier African Minerals (LON:PREM) – SPECULATIVE BUY* RHA update
Market Cap: £13m; Current Price: 1.9p
Plant modifications installed and loan accounts registered in Zimbabwe

  • The modifications to the RHA processing plant (08.07.15) have now been installed and the plant is now expected to operate at the design tonnage. At present, fine tuning and optimisation is continuing.
  • Based on the current APT price of c. US$203/mtu, Premier African Minerals believes a higher volume and lower grade production schedule will generate higher returns at the mine. Prem is in discussion with its offtake partners regarding this strategy. Darwin Strategic has consented to lower the Conversion Trigger of the existing loan notes from 60% to 50% WO3 in the concentrate, allowing the Company to proceed with this strategy.
  • At US$203/mtu Prem expects to receive between US$130/mtu and US$120/mtu. Opex has risen above the US$89/mtu expected, due to additional costs, processing plant delays and expedited pit development. Opex is expected to fall as larger tonnages are processed and recoveries improve.
  • Concentrate shipments are expected to resume from 28/08/2015.
  • Prem’s loans to RHA have now been registered with the Zimbabwe Reserve Bank and foreign exchange approvals have been granted for the repatriation of debt payments (US$9.5m) from Zimbabwe to Prem.
  • Prem plans to further beneficiate the wolframite concentrate from RHA.

NORTHLAND CAPITAL PARTNERS VIEW: Premier African Minerals appears to be getting over the teething issues associated with the ramp up of new plant. Design deficiencies meant that the plant could not accept the designed tonnage and up to 40% of the feed was rejected as oversize and stockpiled. Prem expects to process the stockpile this week and then will continue to process run-of-mine ore. The continued fall in the ammoniumparatungstate price (APT) and increase in opex will squeeze margins in the near term but opex is expected to reduce as the plant ramps up. Importantly Prem’s loans to RHA have now been registered ensuring that the Company can recover its capital expense. We note that Prem has indicated it plans to further beneficiate the wolframite concentrate at RHA which could lead to the production of a higher value product.

Tavistock Investments (LON:TAVI) – CORP: Finals
Market Cap: £17.0m; Current Price: 5.87p
Considerable progress in building an integrated financial services business

  • Revenue of £5m for the 15 month period (the comparator period was when the company operated its now discontinued software business) with a post tax loss of £0.9m and EBITDA loss of £0.4m. Group was established last May with the acquisitions of Tavistock Partners, an IFA, and Tavistock Wealth, an investment management business. Net assets of £11.4m with £4.7m in cash (following February’s £3.3m raise).
  • Strategic commercial relationship with Novia Financial last September whereby Tavistock Wealth has endorsed Novia as a preferred wrap platform and Novia will introduce advisers to Tavistock on a selective basis. Novia also invested £250k in shares and provided a £750k unsecured convertible loan facility.
  • In October, Tavistock Wealth launched a discretionary fund management service. It now manages £150m on behalf of 1,800 clients. In February, Tavistock increased its geographic reach and operational scale through the acquisition of Standard Financial. In March, it took on various books of client relationships through the acquisition of Cornerstone Asset Holdings and in May acquired Duchy Independent Financial Advisors, a West Country IFA.
  • 236 financial advisers from Financial Limited have now transferred to the newly established Tavistock Financial network. Together with the Tavistock Partners network, Duchy IFAs and new joiners, Tavistock now has more than 270 advisers looking after 65,000 clients with more than £3bn assets under advice.

NORTHLAND CAPITAL PARTNERS VIEW: Considerable progress made during the year as the company looks to build an integrated financial services business with a number of acquisitions made. Management is now focused on integrating those acquisitions, establishing the necessary infrastructure (including the deployment of automation software) and the increasing the uptake of investment management services to generate profits and a dividend stream. The market remains fragmented and there is scope for further acquisitions.

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