The Markets
Market opening: The FTSE-100 is expected to start this morning's session around 52-points higher.
New York: Wall Street ended in the green after Fed Chair Janet Yellen stated that the central bank would proceed cautiously on raising interest rates due to risks in the domestic and global economies. The S&P 500 rose 0.9%, with the information technology sector gaining the most.
Asia: Equities are trading mixed after dovish comments from Fed Chair Janet Yellen appeased concern over a near-term rate hike. The Nikkei 225 fell 1.3% as a stronger yen exerted pressure on export-driven socks. The Hang Seng was trading 1.4% up at 7:00 am, tracking the Chinese market.
Continental Europe: Markets ended higher as improvement in insurance shares offset losses in basic resource stocks. Investors awaited Janet Yellen’s comments regarding US interest rates. France’s CAC 40 and Germany’s DAX gained 0.9% and 0.4%, respectively.
Crude Oil: Yesterday, Brent and WTI oil prices declined 2.8% each. The spread between the two varieties stood at US$0.9 per barrel.
UK small caps: The FTSE AIM All-Share index closed 0.09% lower yesterday at 708.19.
Today's news
Eurozone money supply remains steady in February
As per the European Central Bank, the Eurozone’s M3 money supply grew 5% y-o-y in February following a similar rise in January and in line with market expectations. Growth in money supply averaged 4.9% in the three months to February. Conversely, the annual credit growth rate for residents in the euro area accelerated to 3.2% from 2.6% in January.
Company News
Advanced Oncotherapy (LON:AVO, 7.62p) - Speculative Buy
Yesterday the Company gave an update on the continuing progress of the milestones set in November 2014, later reiterated in May 2015. The Proton Source has now been fully assembled ready for initial testing on site in Bayeux, before shipping to AVO’s facility in Geneva. The four modules that make up the RFQ, a technology licensed from CERN and which first accelerates the protons to 5MeV, have now been assembled at its facility in Geneva and are ready for tuning, which will start at the end of March. Following first tests on the Side Coupled Drift Tube Linac (SCDTL) module, which commenced in July 2015, this unit is now ready for high power testing. The four SCDTL modules used in the LIGHT system accelerate the protons from the 5MeV produced by the RFQ to 37.5MeV. The Coupled Cavity Linac (CCL) then further accelerates the protons to the speeds needed to effectively treat radiosensitive tumours. The development of the LIGHT system remains in line with the timetable provided to shareholders in November 2014 and the Company will continue to update shareholders on the progress made during the further integration and testing of the modules which is expected to continue up to the end of 2016.
Our view: The team at Advanced Oncotherapy have been working hard in progressing the construction of its first LIGHT system and the Company remain on track, delivering to the timeline that they originally presented to shareholders in November 2014. Without doubt, The Company’s LIGHT system combines some remarkable technology and it is very pleasing to see it continue to take shape. Once completed Advanced Oncotherapy will have developed a game-changing type of proton therapy that will allow this specialist treatment to be available for cancer patients in a much more effective and affordable way. We continue to regard Advanced Oncotherapy as undervalued and meeting their stated milestones is both a tribute to the Company and augurs well for 2016 and beyond. We reiterate our Speculative Buy stance.
Beaufort Securities acts as corporate broker to Advanced Oncotherapy
Bezant Resources (LON:BZT, 2.13p) - Speculative Buy
Yesterday Bezant Resources published interim results to December. The highlight of the period was Bezant’s move into the platinum space. Following many months of due diligence, Bezant acquired an option over a 2750ha land package in Columbia which, post-period end, it exercised via cash consideration of $1.0M and 37m Bezant shares. Other important points for H1 2016 were cash burn of only £288k before investments and cash at period end of £1.55m.
Our view: Bezant’s management has an excellent track record of identifying, acquiring and adding value to mining projects. In 2013 it returned $7.5m to shareholders, making it one of a small handful of AIM resources companies that have given something back to investors. Management also understands the platinum business extremely well. Amongst other companies, Bezant’s chairman Mr Edward Nealon founded Aquarius Platinum and Sylvania Resources. Although, there is as yet limited information about the new Columbian platinum project, we believe management’s experience in the sector bodes extremely well for Bezant and its shareholders.
Beaufort Securities acts as corporate broker to Bezant Resources plc
Galileo Resources (LON:GLR, 0.95p) - Speculative Buy
Galileo Resources, the exploration and development mining company, announced yesterday the results of an initial, independent, non-compliant ore-body modelling study on its Concordia Concession in the Northern Cape of South Africa. The Concordia project covers a 19km2 area within the historically prolific Okiep Copper District. Galileo recently concluded (14 January 2016) the Co-operation and Joint Venture agreement with Shirley Hays and Shirley Hays, ipk (Pty) to earn-in and acquire an 80% interest in the Concordia Copper project. The Koeelkop and Wheal Julia prospects, located within the Concordia concessions, were remodelled by Minxcon Consulting, an independent mining and geological consulting firm. Ore-body estimates for the Koeelkop prospect returned 4.19Mt grading 0.59% Cu and 37.69Mt grading 0.55% Cu for the Wheal Julia prospect, based on a 0.35% Cu cut-off for both prospects. These non-compliant estimates confirm Galileo’s in-house modelling results. Modelling and optimisations studies will continue on other prospect within the Concession and on identifying key mineralised trends and structures.
Our view:While results of the modelling of the Koeelkop and Wheal Julia ore bodies are considered non-compliant, they do confirm Cu mineralisation within the Concordia concession. The results will also help Galileo identify key mineralised structures and trends through the area, we are encouraged with the initial results and the potential for additional deposits within the well-known Okiep mining district. Galileo now plans to fast track the modelling to an initial mine concept and thereafter expand the mineralised zones. In the meantime, we maintain our speculative buy on the stock.
Beaufort Securities acts as corporate broker to Galileo Resources plc
Stellar Diamonds (LON:STEL, 9.25p) - Speculative Buy
Yesterday Stellar Diamonds published interims results to December. Highlights include reduced corporate overheads by 29% to $0.65m and the addition of a new strategic shareholder to the register. Deutsche Balaton AG (DB) now has a 26.77% interest in Stellar which would increase to 37.5% should it exercise a convertible note. DB recently maintained its position in a £600k equity fundraise. On the operational front, during the period Stellar has been progressing its evaluation of Baoule in Guinea. It is now 73% of the way through a 10,000 carat bulk sampling programme which has thus far generated revenues of c.$1.0m. At Stellar’s flagship project Tongo, the recent (post-period) fundraise will go towards increasing the resource base. This should improve project economics (which are already attractive) and help Stellar source the $25m capital required to build a mine.
Our view:In the current market, where equity capital for junior miners is scarce, the support shown by DB is a very significant positive for Stellar. The Baoule bulk sampling programme and upcoming resource statement should add value for Stellar shareholders, although in Beaufort’s opinion Tongo in Sierra Leone is the key asset. Economic studies suggest a project NPV of $53m from Dyke 1. If Stellar can add to the mining inventory from one or more of the other dykes (primary target is Dyke 4) this should provide additional tonnage throughout the mine life and improve Tongo’s overall economics. We maintain our Speculative Buy recommendation.
Beaufort Securities acts as corporate broker to Stellar Diamonds plc
Hayward Tyler Group (LON:HAYT, 84.0p) - Speculative Buy
Yesterday, Hayward Tyler Group announced the completion of the sale and leaseback of its 11.5-acre site in Peterborough with Helical (Peterborough) Ltd (HPL), a special-purpose vehicle owned by Helical Bar. According to the agreement, HPL has acquired the property for £7.5m, with Peter Brotherhood Ltd as tenant and Hayward Tyler Group as guarantor. Peter Brotherhood continues to occupy the site and has signed a 15-year lease agreement at a market rent of £575,000 per year, subject to review after 5 and 10 years.
Our view: The sale and leaseback agreement mentioned above follows the acquisition of Peter Brotherhood by Hayward Tyler Group last year. The group had acquired the 11.5-acre site as part of the acquisition. The sale of the site would enable the group to pay back senior debt in advance, saving an estimated interest cost of £250,000 per year. The agreement, along with additional revenues that Peter Brotherhood brings to the group, further underlines the value of the acquisition to Hayward Tyler Group. This is an exciting time for the group as it looks to strengthen its balance sheet and increase its presence in the power generation, oil and gas, and industrial sectors. Therefore, we maintain a Speculative Buy rating on the stock.
GlaxoSmithKline (LON:GSK, 1,392.0p) - Buy
Yesterday, GlaxoSmithKline (GSK) announced that it had received approval from the Japanese Ministry of Health, Labour and Welfare (MHLW) for Nucala (mepolizumab), as asthma treatment for patients whose symptoms cannot be fully dealt through standard treatment. In Japan, Nucala is allowed for adults and adolescents aged 12 years or above.
Our view: GSK receiving approval for Nucala from the MHLW is an important development. Nucala is a monoclonal antibody that stops IL-5 from binding to its receptor on the surface of eosinophil. Inhibiting IL-5 binding this way reduces blood, tissue and sputum eosinophil levels. The drug has huge growth potential in Japan; given about 10 million people in the country have asthma. GSK has already received approval for Nucala in the US. Moreover, approvals across countries strengthen GSK’s market position in respiratory medicines. GSK plans to commercially launch Nucala in Japan at the earliest to meet the needs of patients with asthma caused by eosinophilic inflammation. Meanwhile, GSK is making good progress on other therapy areas such as HIV vaccines, oncology, cardiovascular and immune inflammation. We believe GSK is moving in the right direction, supported by some world-class assets and technology, to deliver long-term growth and generate stable returns for shareholders. Therefore, we maintain a Buy rating on the stock.