Today's edition features:
• Fox Marble (LON:FOX)
• Mineral & Financial Investments Limited (LON:MAFL)
• Sunrise Resources (LON:SRES)
Markets
Europe
The FTSE-100 finished Friday's session 0.28% lower at 7,535.44 whilst the FTSE AIM All-Share index was up 0.14% at 1,031.26. In continental Europe, the CAC-40 finished 0.17% lower at 5,351.74 whilst the DAX was 0.07% higher at 12,991.87.
Wall Street
In New York on Friday night, the Dow Jones closed 0.13% higher at 22,871.72, the S&P-500 added 0.09% to finish at 2,553.17 and the Nasdaq ended the week 0.22% to the good at 6,605.8.
Asia
In Asian markets this morning, the Nikkei was up 0.7% at 21,303.19 and the Hang Seng added 0.06% at 28,476.43.
Oil
In early trade today, WTI crude was 0.8% higher at $51.86 per barrel and Brent was up 0.1.07% at $57.78 per barrel.
Headlines
Interest rate rise should be delayed, EY Item Club says
The Bank of England should hold off from raising interest rates next month, according to a forecasting body. Bank governor Mark Carney has said rates could go up in the "relatively near term", with many analysts expecting a hike in November. However, the EY Item Club said such a move risked hurting the UK's "fragile economic outlook". The group called on the bank to wait another year before raising the benchmark rate from 0.25% to 0.5%. It comes after the British Chambers of Commerce and ratings agency Standard & Poor's suggested economic growth was not strong enough to warrant a rate rise. The EY Item Club, which uses the Treasury's forecasting model, predicted GDP growth would slow to 1.5% this year and 1.4% in 2018.
Source: BBC News
Company news
Fox Marble (LON:FOX, 7.25p) - Speculative Buy
The AIM listed company focused on marble quarrying and finishing in Kosovo and the Balkans region this morning confirmed that it had received the advance payment of US$500,000 from OM Enterprises, the leading tile manufacturer and distributor based in Kolkata, India. As management detailed on 28 September 2017, Fox Marble signed a sales agreement with OM Enterprises, to purchase 5,000 tonnes of material over three years. As part of the agreement, OM committed to this advance payment. OM has selected its first order of 411 tonnes of marble blocks, which is currently being shipped to Mundra in India. OM's first order comprises a range of Fox Marble stone, including Argento Grigio, Illirico Selene, Breccia Paradisea and Bianco Illirico. OM was founded by Mr Mahawar, a Kolkata based entrepreneur, as part of his multi-sector business group. The company started as a wholesaler for ceramic tiles in West Bengal for one of the leading ceramic companies, specialising in the largest tiles by size, available domestically in India. In 2013, the company was appointed as a distributor of another fast growing ceramic company and it is now the largest tile distributor by sales volume in West Bengal. Recently, the company ventured into the retail segment and opened a 4,000 square foot showroom at a prime location of Kolkata. Chris Gilbert, Chief Executive of Fox Marble, noted in the release: "This latest sales agreement underpins the progress Fox Marble is making in increasing its global footprint as we continue to build ourselves into a fully integrated production, processing and distribution company of pre-eminent quality marble. We are pleased to have received this first advance payment of US$500,000 from OM and look forward to supplying to them over the next three years. We are continuing our sales penetration into major marble markets such as India thereby increasing revenues and shareholder returns."
Our View: Revenues looking set to increase sharply in coming years. The critical factor for Fox Marble is to convert its order book into sales and cash. Although management has already warned shareholders only to expects sales of €2.0m to be recognised within 2017 financial year (FY 2016: €801,040, the OM deal now provides a springboard for much higher sustained activity from 2018E. Providing visibility for the next three years and beyond, it provides a big 'tick' of credibility for Fox's offering as a good proxy for the highest quality Italian stone. With the Group's multiple 'teething' problems now dealt with, its state-of-the-art factory now has the capacity to produce up to 440,000 square metres per annum of cut and polished slabs; it also has stockpiled a large number of blocks, which can be cut and processed during planned quarry winter shutdown to fulfil orders for processed marble. The Group's business model is based around a largely fixed cost operation, meaning higher activity levels will drop significantly to the bottom line. Indeed, Beaufort has long held confidence in Fox's exceptional high grade, multiple type/colour dimensional stone (found on surface while remaining open at depth) effectively provides it with infinite resource to supply to a growing US$10bn+ global market. Positioning itself as a low-cost, high-quality wholesale supplier of choice with elementary open pit workings, low cost labour and excellent infrastructure against a backdrop of Kosovo's prospective EU accession, Fox Marble dispels most of the fears normally associated with such early stage producers. If there has been a problem, however, it is that access this giant, but overwhelmingly fragmented market, depends on reputation, foremost with international distributors, who remain the key 'door openers'. Achieve that, become a default supplier of choice for, say, half an acre of flawless Argento Grigio for a new corporate headquarters in Dubai, then Fox Marble's quarries could become very profitable indeed. Repeat orders along with the new arrangement with Pristine Stone should ensure the starting point for 2018E is something over €6m. Gross margins are set to make a step improvement, while operational expenses will also start to reduce. While the 2017E should be expected to remain in net losses, with a high level of costs fixed there is finally reasonable confidence that next year will actually produce some (albeit modest) positive earnings. Hurrah!! The recent issue of an 8% CLN will remind investors that Fox has a relatively weak balance sheet, although existing facilities along with the up-front payment from OM, means it could avoid having to resort to further equity issuance to plug the gap. Altogether, there are tangible signs that the Group's extended run of bad luck and disappointing news might finally have run its course. Beaufort gives Fox Marble the benefit of the doubt, repeating its 'Speculative Buy', with a price target of 12p/share.
Beaufort Securities acts as corporate broker to Fox Marble plc
Mineral & Financial Investments Limited (LON:MAFL, 14.25p) - Speculative Buy
Mineral & Financial Investments (MAFL), the metals and mining focused investment company, announced today that TH Crestgate, a private investment company in which MAFL holds a 49% interest, has released assay results from LS-MS-06 at the Lagoa Salgada project in Portugal. Assay results returned 98m grading 8.42% Zn equivalent (from 127m), including 37m grading 16.83% Zn eq. and 27m grading 20.25% Zn eq. The 13,400ha Lagoa Salgada project is a polymetallic deposit with a preliminary resource estimate of 4.5Mt grading 2.79% Pb, 2.85% Zn, 0.34% Cu, 53.43g/t Ag and 0.81g/t Au for the LS-1 Zone. LS-MS-06 is the fifth of a six-hole drill programme designed to expand the current LS-1 resource. Assay results from LS-MS-05 are expected in the coming weeks and an updated resource estimate by year end. TH Crestgate has an exploration target of between 8.0Mt and 10.0Mt on the LS-1 Zone. In addition to the LS-1 Zone, Lagoa Salgada hosts at least 16 other gravimetric anomalies which have yet to be fully tested.
Our View: The lasted drill results are very encouraging indeed, 98m grading 8.42% Zn eq is a significant intercept that should substantially add to the current resource base. We also note that the average zinc grade increased with depth within drill hole LS-MS-06. Overall, the current drill campaign has expanded the dimensions of the mineralised zone. We look forward to drill results from the final hole of the current drill programme and the subsequent resource update for the LS-1 Zone by year end. In the meantime, we maintain a Speculative Buy on the Stock.
Beaufort Securities acts as a corporate broker to Mineral & Financial Investment Limited
Sunrise Resources (LON:SRES, 0.16p) - Speculative Buy
Sunrise has announced that ongoing test work at its flagship CS Pozzolan Perlite Project is producing excellent results. Also Sunrise has announced the discovery of a new project which for now it is calling "NewPerl Prospect". Material from NewPerl has been tested in Greece and shows good perlite properties (it has not yet been tested as a pozzolan). The RNS also states that management has developed a proprietary exploration technique which enabled the discovery of NewPerl, and is being used to find more perlite and pozzolan prospects in Nevada.
Our View: Sunrise has now tested material from across most of the CS Project. For the cement industry, material is being tested for Strength Against Index (SAI) and most samples are very significantly outperforming ASTM requirements for high quality natural pozzolan. On the perlite side, new samples have produced the same good results as before. The next stage for CS Project is more advanced testing and the start of mine planning. Regarding new projects, if Sunrise can build a portfolio of commercial (i.e. feasible) pozzolan and perlite projects, it will add value for shareholders and is more likely to make Sunrise an acquisition target. We maintain our Speculative Buy recommendation.
Beaufort Securities acts as a corporate broker to Sunrise Resources Plc