INTRODUCTION
In the news: North River Resources, MYCELX Technologies & Base Resources
Interims for an exploration and development company are usually pretty academic, but North River Resources’† (LON:NRRP) are interesting. This is because it closed the Open Offer element of its fully underwritten US$4m Open Offer & Placement yesterday. The raise should enable the group to: undertake Front End Engineering & Design (FEED); see early development of the Namib Project’s North decline; and source plant and equipment. This is along with the ongoing underground development programme required to establish access for the next phase of resource expansion drilling and the early-stage recruitment of technical and operational staff. North River acquired the first loader in the period after bringing the underground development activities in-house and is now focusing on mining development productivity.
James Beams, the CEO, is in Namibia right now. He has meetings with the Ministry of Mines and Energy, among other things. The main catalyst for the stock in the near term should be the receipt of a mining licence, so let’s hope James has worn a suit and tie and polished his shoes!
The statement tells us that cash as of 30 June 2015 was £602,093. With the US$4m (£2.6m) coming in at 0.2p, it puts the group on a very sure footing to progress the Namib Zinc-Lead Project to a construction decision. For full details on the interims.
We are keeping a close watch on the progress that MYCELX Technologies is making. The company has reported that it has received a purchase order for a paid-trial relating to an additional application of the MYCELX system at an Enhanced Oil Recovery site in India. As Imogen Whiteside’s recent initiation report (MYCELX Technologies — A Differentiated Oil Services Company, 29 September 2015) noted, a key driver for the stock will be positive newsflow relating to ongoing trials, especially those in target markets such as India. This latest update would seem to tick all the right boxes.
We also have news on Base Resources’*† updated resources and reserves below. For more details on the company please see the full piece released by Jim Taylor and Imogen Whiteside last week: Base Resources — FY15 Results and Valuation Update, 23 September 2015.
METALS & MINING EQUITIES
Base Resources*† (ASX:BSE) — Updated Resources and Reserves as of June 2015 — The ASX-listed mineral sands producer focused on its Kwale operations in Kenya has published an update of its resources and reserves.
Total resources were reported to be 143Mt grading 4.4% heavy minerals (HM), within which reserves were 110Mt grading 5.0% HM.
The reduction in reported resources for the year was entirely accounted for by depletion as a result of production from the Central Dune over the year to June (ie, 9.7Mt @ 8.7% HM containing 0.84Mt HM).
For the change in reserves, although depletion accounted for much of the change, reserves were also affected by changes in modifying factors as a result of updated technical studies and experience gained from operations. Specifically, this resulted in the removal of low-grade areas from the reserve, mainly due to limiting the maximum depth of the Ore Zone 3 material in the Central Dune to 3m and the curtailment of the economic pit boundary on the western side of the South Dune. We note the very low-grade nature of this material.
RFC Ambrian Comment: This is pretty neutral. The overall net change in the amount of heavy minerals in the reserve as a result of factors other than depletion is minimal (0.13Mt or -2.3%). However, the net change of the removal of 16Mt of very low-grade material results in a reduction in the reserve life of around a year, but also increases the average reserve grade from 4.5% to 5.0%.
OIL & GAS EQUITIES
MYCELX TECHNOLOGIES*† (LON:MYXR) — Progress Update on Trials — The AIM-listed company offering patented water purification solutions targeted towards the global oil and gas and petrochemicals markets has released an update regarding trials of the MYCELX system on Enhanced Oil Recovery Opportunities (EOR) in India.
The company has been engaged in paid-for trials to increase access to the EOR market, with a specific focus on India, the Middle East and Canada. Building on this, it has received a purchase order for a paid-for trial to verify an additional application of the MYCELX system for produced water treatment at an EOR site. This represents the anticipated next step at an ongoing project, further serving to establish the company’s presence as a player in the EOR space in India.
RFC Ambrian Comment: We consider that continued positive newsflow from ongoing trials serves to enhance the outlook regarding pipeline conversion, while also raising the company’s profile, specifically in the new Indian market. It is also a clear positive to see MYCELX continue to gain traction in the EOR space, where traditional technologies are typically challenged by the high-contaminant produced water, and the MYCELX method has proved to be highly effective. We published a 48-page piece on the company earlier this week: MYCELX Technologies — A Differentiated Oil Services Company, 29 September 2015.