INTRODUCTION
In the news: Glencore, Antofagasta & Savannah Resources
The big story today, of course, is about Glencore (LON:GLEN). Worries over its debt levels have been building all summer, so the news that it has suspended a US$1.6bn final dividend and launched a capital raising of US$2.5bn, along with various other cost cutting measures as it tries to cut its net debt from US$30bn to US$20bn, shouldn’t be that major a surprise. The stock has risen around 10% in trading this morning.
While management got ‘locked in’ at the company’s IPO four years ago, the final staggered lock-up period expired on 24 May this year. Ivan Glasenberg, however, was locked in for a full five years, and other than a few executives who have left the company since the IPO there doesn’t seem to be any evidence of the executive team selling down according to a Bloomberg report. The capital raising is to be underwritten 78% by Morgan Stanley and Citi, with management agreeing to buy the remaining 22%, which is creditable.
It is also worth mentioning that Antofagasta (LON:ANTO is up 7.5% today on the back of this. As part of the package, Glencore announced the suspension of two of its copper mines in Africa, cutting its copper output by a fifth. The two mines under review are Mopani in Zambia and Katanga in the DRC, which together produced 127,000t of copper in the first half of this year.
METALS & MINING EQUITIES
Savannah Resources*† (LON:SAV) — Drill Targets Identified on Block 4 — The AIM-quoted resources company focused on base metals and mineral sands exploration in Oman and Mozambique has announced that the remodelling of the results of a VTEM survey has led to the identification of 29 VTEM targets, of which seven were classified as Priority 1 targets, 19 as Priority 2 targets and three as Priority 3 Targets. These anomalies are across seven areas and are located near to known VMS deposits.
RFC Ambrian Comment: The interpretation of the preliminary results from the VTEM survey on Block 4 was announced on 29 June 2015, outlining 43 targets. The modelling of the final VTEM data, as announced here, has resulted in the definition of a total of 29 targets. The targets were based on their proximity to existing VMS mineralisation, geology, geochemistry, structure and geophysical signatures.
The priority targets will now be followed up with further geological mapping, geochemistry and ground geophysical surveys to prioritise them for drilling, which the company aims to commence by the end of September.