Today's edition features:
• Armadale Capital (LON:ACP)
• Bushveld Minerals (LON:BMN)
• Nu-Oil & Gas (LON:NUOG)
• Tiziana Life Sciences (LON:TILS)
Markets
Europe
The FTSE-100 finished yesterday's session 0.67% higher at 7,433.03 whilst the FTSE AIM All-Share index was up 0.08% at 1,003.01. In continental Europe, the CAC-40 finished 0.71% higher at 5,176.61 whilst the DAX was up 0.71% at 12,263.86.
Wall Street
In New York last night, the Dow Jones ended 0.12% higher at 22,024.87, the S&P 500 rose 0.14% to 2,468.11 and the Nasdaq climbed 0.19% at 6,345.11.
Asia
In Asian markets this morning, the Nikkei 225 and the Hang Seng were both flat midway through an up-and-down session at 19,728.48 and 27,408.66, respectively.
Oil
In early trade today, WTI crude was up 0.28% at $46.19 per barrel and Brent crude was 0.5% higher at $50.52 per barrel.
Headlines
Trump ends business groups as CEOs quit
President Trump has said he is scrapping two business councils after more bosses quit over his handling of violent clashes in Virginia. Business leaders left the White House manufacturing council after the backlash against how he reacted to the far-right rally last weekend. The clashes culminated in a woman's death and nearly 20 wounded when a car ploughed into a crowd of anti-fascists. Mr Trump's reaction has sparked outrage and generated global headlines. His announcement on Twitter came as the heads of 3M, Campbell Soup, Johnson & Johnson and United Technologies announced their resignations on Wednesday. Mr Trump said: "Rather than putting pressure on the businesspeople of the Manufacturing Council & Strategy & Policy Forum, I am ending both." Before Mr Trump's announcement, the Strategy and Policy Forum announced it was a joint decision to disband the council. Businesses have been under pressure to distance themselves from Mr Trump over his handling of the clashes in Charlottesville, Virginia.
Source: BBC News
Company news
Armadale Capital (LON:ACP, 1.28p) – Speculative Buy
Armadale has completed its first phase of this year’s drilling at its flagship graphite project in Tanzania, Mahenge Liandu. The drilling targeted near surface mineralisation and successfully defined a 1.2km strike length with good widths. Metallurgical test work of a bulk sample is also underway and initial results show good recoveries - 98% at the rougher stage. A second stage of RC drilling will look to increase the strike to 2.4km, both phase 1 and 2 should add considerably to the maiden resource of 41Mt grading 9.4% total graphite carbon.
Our View: This is a a very positive news release. Armadale is moving quickly, adding tonnes and focusing on metallurgical work concurrently. This project looks to have substantial scale and initial work on the metallurgy of the ore is encouraging. Note that the Tanzania graphite in this area has very low levels of deleterious elements, something that some Mozambican projects struggle with. We have a Speculative Buy recommendation.
Beaufort Securities acts as a corporate broker to Armadale Capital PLC
Bushveld Minerals (LON:BMN, 9.50p) – Speculative Buy
Bushveld Energy (subsidiary of Bushveld Minerals) published an update on its vanadium redox flow battery business. Working with the Industrial Development Corporation, in 2H16 Bushveld commissioned market studies to estimate African VRFB demand and global vanadium electrolyte demand. The study showed that African VRFB demand will mostly be for off-grid power applications, while global vanadium electrolyte demand will increase to 40-60 megalitres of vanadium electrolyte per annum. Bushveld and IDC are also progressing a “techno economic study” of a vanadium electrolyte production plant in South Africa. This is particularly interesting since 70% of the manufacturing cost of electrolytes is the vanadium feedstock where, through Vametco, Bushveld has a source of long term low cost supply. The capital cost of a vanadium electrolyte plant is circa $10m so well within Bushveld’s funding capabilities. The next stage is a more detailed study of a vanadium electrolyte production plant to determine production costs, site locations (in SA) and technical studies on the quality of an electrolyte produced from Vametco.
Our View: The vanadium electrolyte market is a fast growing an exciting space which provides the longer lasting battery storage that lithium batteries do not. Bushveld is extremely well placed to build a vanadium electrolyte business, especially since it has access to vanadium supplies and the capex of a plant is relatively modest. We have a Speculative Buy recommendation.
Beaufort Securities acts as a corporate broker to Bushveld Minerals plc
Nu-Oil & Gas (LON:NUOG, 1.12p) – Speculative Buy
NU-Oil & Gas has received confirmation that its Western Newfoundland petroleum lease PL2002-01(A) has been renewed for 5 years. NU-Oil’s partner PVF is providing 100% of the finance to try and restore production on the PAP#1-ST#3 well. Once PVF has recouped its costs, net revenue will be shared 50:50 between PVF and NU-Oil. PVF’s work programme involves a workover and insertion of an artificial lift system. PVF may also look to drill additional wells, although this would be under a new agreement. We expect newsflow regarding the PVF worker in the coming weeks.
Our View: NU-Oil remains committed to its strategy of building a marginal field development business. However, its project in Newfoundland should provide positive news and has the potential to generate significant cashflows for NU-Oil. Obviously this will depend on the success of PVF’s worker and recompletion programme. We have a Speculative Buy recommendation.
Beaufort Securities acts as a corporate broker to Nu-Oil & Gas plc
Tiziana Life Sciences (LON:TILS, 160.12p) – Speculative Buy
Tiziana, the clinical stage biotechnology company developing targeted drugs for cancer and autoimmune diseases, yesterday announced that with respect to the to the proposals announced on 12 July 2017, the holders of the Company's Convertible Loan Note (‘CLN’) and Warrant have agreed to convert all of the loan notes and vary the terms of the warrants substantially prior to the intended deadline. The proposal was that CLN Holders be offered an additional bonus coupon of three years of interest at the relevant applicable rate of return for agreeing to the immediate conversion of the CLNs into ordinary shares. The CLN Holders have now agreed to the proposal and the Company therefore has issued 27,645,013 new ordinary shares to the CLN Holders (represent 22.3% of the enlarged share capital of the Company). All of the new shares are subject to a restriction on disposal for a period of 12 months. Further to this, the Company also proposed to vary the terms of the warrants associated with the CLNs by extending the exercise period of these warrants to 31 December 2021. The Warrant Holders have agreed the proposal, including acceptance of the condition that the ordinary shares they receive upon conversion of the warrants will also be subject to a restriction not to dispose of the relevant underlying shares for a period of 12 months following exercise of the warrants. Outstanding warrants to subscribe for totaled 4,239,579 ordinary shares at exercise prices between 50p and £2.50. Beside this, the Company has granted options over a total of 10,149,403 ordinary shares of which 4,752,500 are vested at exercise prices between 15p and £1.25p per share and 5,396,903 remain subject to vesting conditions (at potential exercise prices ranging from 15p to £1.925 per share). Altogether, the total number of Ordinary Shares in issue (including CLN conversion) will be 123,827,938, whilst fully diluted issued share capital of the Company assuming all options and warrants, vested and unvested, exercised and exercisable, were converted is 138,216,920 ordinary shares. Tiziana’s Chairman, Gabriele Cerrone, commented “Now that we have moved into Phase II clinical trials we have been focusing on increasing our exposure to both institutional investors and other international trading markets”.
Our View: The market reacted positively to yesterday’s announcement. The full conversion of CLNs into 27,645,013 new ordinary shares means the Company is now debt free and that its simplified capital structure enables it to improve both the trading liquidity and visibility. Successful conversion along with the 12 months disposal restriction on the new equity demonstrates continuing support and confidence from the CLN holders with respect to Tiziana’s pipeline and business plan. Tiziana continues to make encouraging operational progress. Last month, for example, the Company enrolled first patient for its phase IIa clinical trial of milciclib, a novel inhibitor of cyclin-dependent kinases (CDKs), in patients with refractory hepatocellular carcinoma (‘HCC’). HCC is the 5th most common cancer worldwide and the 2nd most common cause of death from cancer worldwide affecting both men and women (S. Mittal & H. El-Serag, 2013). The top line data is expected to be announced during Q4 2018. Tiziana is now also preparing clinical trials to show the efficacy of foralumab, a fully human anti-CD3 monoclonal antibody, in patients with Non-alcoholic steatohepatitis (‘NASH’) and type 2 diabetes. The recent publication of a research article in a prestigious journal, Clinical Immunology, highlighted the potential of oral therapy with foralumab for inflammatory diseases including NASH. Tiziana's foralumab is the only fully human engineered anti-CD3 monoclonal antibody (mAb) in clinical development to date. Beyond this Tiziana has an exciting pipeline of products and opportunities; for prudence, however, Beaufort has modelled its valuation of Tiziana based just on milciclib and foralumab, applying a relatively aggressive 15% discount to its long-run cashflow model. This creates a valuation more than twice the current level based on anticipated milestone fees & royalties. Beaufort reiterates its Speculative Buy rating on the shares together with a price target of 400p/share.
Beaufort Securities acts as a corporate broker to Tiziana Life Sciences plc