Today's edition features:
• Bezant Resources (LON:BZT)
• KEFI Minerals (LON:KEFI)
• easyJet (LON:EZJ)
Markets
Europe
The FTSE-100 finished Friday's session 0.20% higher at 7,522.87 whilst the FTSE AIM All-Share index was up 0.18% at 1,021.24. In continental Europe, the CAC-40 finished 0.36% lower at 5,359.90 whilst the DAX was 0.09% lower at 12,955.94.
Wall Street
In New York on Friday, the Dow Jones closed 0.01% lower at 22,773.67, the S&P 500 fell 0.11% at 2,549.33, while the Nasdaq added 0.07% to end the week at 6,590.18.
Asia
In Asian markets this morning, the Nikkei is closed and the Hang Seng declined 0.3% at 28,372.55.
Oil
In early trade today, WTI crude was 0.32% higher at $49.45 per barrel and Brent was up 0.23% at $55.75 per barrel.
Headlines
UK retailers 'need EU workers after Brexit'
Prices may rise and home deliveries could be slower unless the retail sector retains access to all EU workers after Brexit, a trade body has warned. EU citizens account for just 6% of the industry's 170,000 workforce, the British Retail Consortium said. However, they are concentrated in warehouse and distribution jobs, its annual workforce survey suggested. More than half of retailers said their EU employees were worried about their right to remain in the UK. Just over a fifth of retail firms had had some European staff leave the UK already, the BRC survey suggested. The trade body said ending of free movement for EU nationals could lead to higher costs for businesses and consumers, "from the service delivered in a store to next day delivery of an online order... to the prices of what you buy". It argued that the retail sector should keep access to non-graduate European workers without the need for employer sponsorship after the UK leaves the EU. BRC chief executive Helen Dickinson said the Brexit decision had created uncertainty for both business and their EU workers. "It is not right that 16 months after the referendum these people still don't have the security they need to continue their lives," she said. "And from our data it is clear that unless we have the right structures in place to support retailers attract, recruit and retain workers, consumers will soon start to see and feel an impact as they shop."
Source: BBC News
Company news
Bezant Resources (LON:BZT, 1.15p) – Speculative Buy
Bezant Resources announced an update on its Choco gold-platinum project in Western Columbia. The Company noted that following completion of the current stage of open pit development and infrastructure work it has started extraction and processing of the higher-grade virgin gravels. Since mid-August, Bezant has been developing an open pit and ramp structure while simultaneously extracting and processing tailings, overburden and lower grade material that sits above higher-grade material. Based on the Scoping Study (announced March 2017) the estimated cut-off grade for mining and processing operations is 238mg/m3 (or 0.17 g/t) for combined Au and Pt. Recoveries from the high-grade material are currently being assessed against the estimated cut-off grade, at which point the Company will commence with production ramp-up.
Our View: The above announcement is an important milestone for Bezant as it continues to deliver on its strategy of developing a low-capital intensive gold and platinum recovery model. We are encouraged with the first extraction and processing of the higher-grade material. Whilst Bezant is currently producing from the FKJ-083 licence, we also note that the Company has a large footprint under licence in a region with widespread platinum and gold alluvial deposits. We look forward to the announcement of initial grades and recovery rates from the higher-grade material in the coming weeks. In the meantime, we maintain a Speculative Buy recommendation on the stock. Beaufort Securities acts as corporate broker to Bezant Resources plc
Cora Gold (LON:CORA, 16.5p) – Speculative Buy
Cora Gold, the West African focused gold exploration company, announced today that its ordinary shares will commence trading on the AIM market. As part of the admission process, Cora has raised £3.45m (US$4.6m), before expenses, through a placing and subscription of 20,928,240 new ordinary shares of no par value at a price of 16.5p, implying a market cap of £9.07m. Net proceeds will be used for an exploration on the Company's flagship project, the Sanankoro gold deposit in southern Mali, as well as exploration activities on its other properties. Previous drilling at Sanankoro has identified two parallel and mineralised structures each with a 14km strike length. Most of the exploration work has been done on the Eastern Structure with the best drill intercepts returning 3m grading 2.7g/t Au, 27m grading 1.7g/t Au and 3m grading 9.0g/t Au, while the Western Structure has seen limited drilling. Sanankoro will be the focus of the Company's activities in the near term with the main objective to establish a mineral resource estimate.
Our View: Today's listing is an important milestone for Cora and we are encouraged with the interest the Company has received during the IPO process. Whilst its flagship Sanankoro gold project currently lacks a compliant resource, management believes that the delineation of significant amount of inferred resources is currently achievable with the potential of +1Moz with additional exploration work. We note that the Sanankoro project is located within trucking distance to existing gold processing sites (Yanoflila and Sadiola) which provides Cora with the potential for early cash flows. We also see additional exploration upside from Cora's other tenements covering in excess of 1,700km2 within a highly prospective area that is host to numerous developing and producing gold projects. We look to exploration results and a maiden mineral resource estimate from Sanankoro. In the meantime, we have a Speculative Buy recommendation on the stock. Beaufort Securities acts as corporate broker to Cora Gold plc
KEFI Minerals (LON:KEFI, 4.32p) – Speculative Buy
KEFI has published its 3Q update which summarises progress made during the period (e.g. Oryx funding mandate, VAT refund received) and includes details of new plans to increase the plant's capacity. Oryx has agreed to provide additional funds to help fund the extra processing capacity. The financing process is well underway, and will culminate in the issue of listed bonds which is on track to complete this year. Other significant news during the period includes the end of Ethiopia's state of emergency and the full support of Tulu Kapi by the government. This is evidenced by the fact that two of the directors on the project company (Tulu Kapi Gold Mining) are Ethiopian government representatives.
Our View: This is a positive update from KEFI. Mine financing remains a challenge for junior mining companies. However with the support of Lycopodium, Oryx, Ausdrill and the Ethiopian government, KEFI should complete mine financing and start construction within the next 6 months, potentially within 4. The capacity increase plan is also very good news. We expect more details in due course but we would expect the extra 300,000 tonnes per annum to significantly improve both the IRR and NPV, as well of course as the annual EBITDA. KEFI is entering an important few months and if the bond issue succeeds as expected, KEFI shares should react very significantly. We reiterate our Speculative Buy recommendation.
Beaufort Securities acts as corporate broker to KEFI Minerals plc
easyJet (LON:EZJ, 1,263.00p) – Buy
easyJet, a low-cost European short-haul airline company, on Friday announced its trading update for the 3 months ended 30 September 2017 ('Q4 FY2017'). With September's traffic statistic of +11% growth in passenger traffic to 7.7 million customers and +2.5% improvement in the load factor to 93.6%, the Group saw a record passenger number and load factor of 24.1 million and 95.6%, respectively, for the full year. Revenue per seat at constant currency fell by -3.7% during the Q4, meaning reduction of -1.4% in the H2. Capacity has grown by +8% in the Q4, continuing to build market share at key airports. Headline cost per seat excluding fuel at constant currency is expected to increase by c.+1% for the full year, in line with guidance, while including fuel, the figure is expected to decrease by -4.4%. Non-headline costs are expected to be c.£23m. Impact from adverse exchange rate movements is expected at c.£100m on headline profit before tax, in line with guidance. easyJet's unit fuel bill for the full year is expected to decrease by between £230m and £235m (previously: £230m-£245m). Net cash at the period end is expected to be £357m. easyJet's CEO, Carolyn McCall, commented "easyJet has finished the year with continued positive momentum delivering both a strong final quarter and a strong second half. Passenger numbers and load factor in the final quarter set new records and the second half profit was over £100m higher than summer 2016. The market continues to be challenging and easyJet has had to absorb a significant currency impact of £100m in the year. However, easyJet continues to operate Europe's strongest network and the current turmoil in the sector provides easyJet with opportunities to capitalise on its strong customer proposition and grow and strengthen our positions in Europe's leading airports still further". easyJet is scheduled to publish its full year results on 21 November 2017.
Our View: easyJet reported strong passenger traffic and load factor data for September, which combined with rest of the months, reached a record year-on-year passenger and load factor growth for the FY2017. Having seen its rivals' disruption, such as Ryanair's flights cancellation, Monarch's administration, insolvency of Air Berlin, the recent ticket price for short-haul flights have increased by up to 43%, according to Skyscanner. This helped easyJet to announce slightly better than expected decline in revenue per seat, together with support from strong ancillary revenue performance. With headline cost per seat and FX impact were in line with expectations, altogether, these results in full year headline pre-tax profit expectation of £405m to £410m (previously: £380m and £420m), at the upper end of guidance range. Looking ahead, in FY2018, easyJet said it expects benefit of between £125m and £145m based on today's fuel prices, while impact from adverse FX movement is expected at £20m. The Group said it is planning to grow capacity by c.6%, repeating its confidence that the challenging market environment is an opportunity to build and strengthen its network and customer proposition for the long term. So, given good financial performance and confident in its prospects, what worried its shareholders yesterday was that the Group continue to expect pressure on yields as ongoing growth in market capacity that is currently forecast to be around 5% in the Q1 FY2018 may impacts its passenger growth, load factor and revenue per seat. Beaufort considers, however, that the business model for low-cost airlines remains intact particularly for those supported by a strong balance sheet, such as easyJet (period-end net cash expectation of c.£357m). The Shares are valued at FY2017E and FY2018E P/E multiple of 15.2x and 13.0x, with dividend yields of 3.2% and 3.8%, respectively. Beaufort retains its Buy rating on the Shares, while keeping one careful eye on fuel prices and movements in market capacity.