After Drax’s £2 billion carbon capture biomass project was rejected for Track-1 status by Energy Secretary Grant Shapps, the owner of the UK’s largest power station is urgently seeking a lifeline.

Following the announcement, Drax’s shares fell by up to 12% on Thursday morning but later rose by 5.4% after the company was invited to participate in “formal bilateral discussions” with the government.

The UK government plans to release its biomass strategy by the end of June, which will outline how the technology can be implemented.

During a parliamentary session, energy minister Graham Stuart emphasized that Drax and its carbon capture technology are “critically important” to the country. Drax plans to invest £2bn in fitting the Bioenergy with Carbon Capture and Storage (BECCS) technology to some of the units at its Selby plant in North Yorkshire, which could create up to 10,000 jobs.

CCS, which stands for carbon capture and storage, is a technique that involves capturing and storing carbon dioxide prior to its release into the atmosphere. This technology can capture up to 90% of the CO2 emissions that result from the combustion of fossil fuels in activities like electricity generation and cement manufacturing.

After capturing CO2 emissions, the gas is compressed into a liquid state and can be transported by ship, pipeline, or road tanker. The CO2 can then be pumped underground into depleted oil and gas reservoirs or coal beds for storage. According to Will Gardiner, the CEO of Drax, the implementation of BECCS at the Drax power station will play a significant role in helping the UK achieve its net zero targets, create jobs across the north, and ensure the country’s long-term energy security.

Mr. Gardiner confirmed that the government has verified their project’s deliverability and remains committed to achieving 5Mtpa of engineered greenhouse gas removals by 2030, a goal that cannot be accomplished without BECCS at Drax Power Station.

Therefore, Drax will enter formal discussions with the government to move the project forward. However, concerns were raised in Whitehall this month that Drax may shift its £2bn carbon capture investment to the US after Joe Biden’s green subsidy package, which provides subsidies and tax credits worth about $370bn (£309bn) for a range of green technologies.

According to Mr. Gardiner, if the UK government does not continue to move forward at a rapid pace, the investment may shift to other countries, including the US, and the UK may become less of a priority over time.

WTI (May) $72.97 -23c, Brent (May) $78.28 -37c, Diff -$5.31 -14c. 

Author @mgrahamwood

USNG (Apr) $2.03 u/c, UKNG (Apr) 105.5p +0.17p, TTF (Apr) €43.0 -€0.995.

Oil price

Oil is a bit better today, yesterday’s inventory stats were very helpful in crude and gasoline with big draws of 7.5 and 2.9m respectively but distillates disappointed with a modest build. With the Brent contract about to expire and the Iraqi pipeline showing no signs of reopening the market looks tight to me.

If you can bear it I would like to reprint an article written by the highly acclaimed bond and currency expert Marcus Ashworth in which he takes an interesting but very useful view on the dollar, if he is right, and he usually is, then greenback weakness might be worth noting. I’m sure next week’s Opec meeting will bear it in mind…

World Will Welcome the Dollar’s Coming Slide: Marcus Ashworth

(With thanks for permission to use of course)

(Bloomberg Opinion) — The dollar has lost some of its
luster over the winter. The twin supports of its status as the
preferred haven during the pandemic and being backed by the
world’s strongest economy are fading. And now another prop for
the greenback is wobbling amid doubts about how much higher the
Federal Reserve will raise US interest rates as it has second
thoughts on the likelihood of a recession. The dollar looks
likely to suffer an extended bout of weakness.
This has no bearing on the dollar’s unrivalled position as
the global reserve currency: King Dollar sits serenely on its
throne. But what’s not so good for the dollar’s relative value
is better for the rest of the world, because less focus is
needed on keeping up with the dollar. This has led to oversized
interest rate hikes to shore up currency valuations, above and
beyond what monetary policy has needed to do to address specific
domestic requirements on fighting inflation.
This shift is helping to correct a serious imbalance, known
as the dollar smile, that had skewed too much in the favor of
the US currency for much of this decade. We are likely more
towards the base of the smile’s curve, where the dollar weakens
steadily, as opposed to the raised sides when monies flow in on
either a flight to quality or the perception that returns in the
US will be superior to those available elsewhere.
The regional US banking crisis, which has seen the failure
of three banks so far, is the type of stumble that could hasten
an economic downturn. Furthermore, the perception of dollar
safety is undermined if its banking system is under stress,
particularly if the rest of the world’s financial system isn’t
similarly challenged; the failure of Credit Suisse Group AG is
being perceived as a one-off and, importantly, did not lead to a
surge into dollars.
Minneapolis Fed President Neel Kashkari, a Federal Open
Market Committee voter this year and an outspoken hawk,
highlighted last weekend that bank strains bring the risk of
recession closer. Although he was careful not to prejudge the
outcome of the next FOMC meeting on May 3, he did emphasize how
closely the Fed is monitoring the risks of a credit crunch.
Currently, the futures market suggests it’s a coin toss as to
whether official rates rise by another quarter-point in May.
Expectations are then for borrowing costs to start falling in
the second half of the year, which is a big drag on the dollar’s
forward pricing.
Any currency pair is a combination of relative value, and
the most commercially important comparison is to the euro. The
European Central Bank forged ahead with another 50 basis-point
hike on March 16, whereas a week later the Fed chose to play
safer with a more modest quarter-point raise. The shift in
perceptions about the likely path of central bank rates is
reflected in the euro’s 12.5% gain in the past six months to
over 1.08 euros per dollar, reversing an 11-week period between
August and November last year when the common currency dipped
below parity versus the greenback.
Policymaker rhetoric also steers forward rate expectations
and currency values. At the last ECB meeting, Executive Board
Member Isabel Schnabel pushed for explicit wording that further
rate hikes were possible, according to Bloomberg News. President
Christine Lagarde, at the post-meeting press conference, only
gave verbal assurances that a bias to tighten remains if its
economic projections proved accurate. This dispute keeps alive
the possibility that the ECB tightens policy to a greater degree
than the Fed in the coming months.
According to economists surveyed by Bloomberg, the
probability of a recession in the euro zone has almost halved
this year, to below 50%. It’s now lower than the US, which is
seen as having a 60% chance of a protracted contraction. That is
a notable shift of expectations as the euro zone had been on the
precipice of recession prior to the pandemic and has suffered
most from the surge in natural gas prices since Russia’s
invasion of Ukraine.
Among G10 currencies, only sterling has performed better
than the euro, rising more than 14%. The Japanese yen is 10%
firmer to the dollar. The typical rule of thumb is that the
large manufacturing export hubs of the euro zone and Japan
benefit from a stronger dollar making their products look
cheaper; but the sharp rise in energy prices has placed them in
the same boat as all other hydrocarbon-dependent economies.
The biggest gainers from a relatively weaker dollar, though,
have been in Eastern Europe and South America, with the Chilean
peso notching a 22.5% gain. It’s notable that the broadest gains
are from energy-importing countries which had been hit hardest
by the surge in gas prices. As most of the world’s commodity
complex is priced in dollars, an appreciation of the value of
local currencies to the dollar offers much-needed respite.
Nonetheless, the sharp appreciation of the dollar through
2021 and much of last year caused a lot of problems in
developing and developed countries alike, as central banks
scrambled to raise interest rates to prevent their own
currencies from collapsing as the Fed tightened conditions. The
world will be thankful for the calm of a more subdued value for
the global reserve currency.

PetroTal Corp

PetroTal has reported its operating and audited financial results for the three months and year ended December 31, 2022.

Select financial, reserves and operational information is outlined below and should be read in conjunction with the Company’s audited consolidated financial statements, management’s discussion and analysis and annual information form for the year ended December 31, 2022, which are available on SEDAR at www.sedar.com and on the Company’s website at www.PetroTal‐Corp.com.  Reserves numbers presented herein were derived from an independent reserves report prepared by Netherland, Sewell & Associates, Inc. effective December 31, 2022.  All amounts herein are in United States dollars unless otherwise stated.

Manuel Pablo Zuniga-Pflucker, President and Chief Executive Officer, commented:

“I am proud of our performance in 2022, a year in which the Company was resilient despite facing a number of challenges.  We are pleased with 2022’s operational and financial results, having significantly improved the operating stability of the Company in recent months from both a sales and balance sheet perspective.  In addition, it was equally important that we fulfilled our promise to investors to fully repay our bonds and initiating a return of capital program to our patient and deserving shareholder group. 

In closing, I would like to thank our shareholders for their continued support, the PetroTal team for their considerable contributions to the Company, and our Board for strategic guidance.”

PetroTal are sans doubt delivering on their promises, good levels of historic production and even better at the moment mean that the balance sheet is strong and the bond has been repaid. That production has been 20,500 b/d in March and primarily sold through the higher priced Brazilian exit route. 

The company have indeed set up a particularly generous return of capital to shareholders scheme which consists of a buy-back of 10% of the public float, starting in Q2 2023 as well as a quarterly dividend of $0.015 per share an annualised 0.06c which gives a yield of 13.9% at 45c share price.

The shares today are 43.25p up some 10% which sounds good but my target price of 150p and in place for some considerable time is not an exaggeration of the value of PetroTal. In my view it would not be inconceivable if PTAL were to attract interest from the bigger beasts in the industry just sayin….. 

2022 Key Milestones and Highlights

·    Achieved average annual production and sales of 12,200 and 13,168 barrels of oil per day (“bopd”) respectively, up 36% and 56% from 2021;

·    Delivered a 46% increase in 2P reserves value per share (NPV-10, after tax) to US$1.75/share (CAD$2.29 and GBP1.45), and a 24% increase in 2P reserves to 96.8 million barrels;

·    Provided strong 2022 year-end 1P and 2P reserve replacement ratios of 179% and 418%, respectively;

·    Set a record for daily production of over 26,000 bopd on June 30, 2022 confirming the current facility oil handling capacity;

·    Drilled and completed four highly productive horizontal oil wells in 2022, with wells 10H and 11H delivering initial production rates in excess of 10,000 bopd;

·    During well 13H’s drilling operation the technical team encountered the target producing formation approximately three meters higher than prognosis which contributed to oil-in-place and reserves upgrades in the 2022 year-end reserve report;

·    Generated record annual net operating income (“NOI”) of $274 million ($56.90/bbl) and adjusted EBITDA inclusive of realized derivative impacts, of $256 million ($53.28/bbl);

·    2022 free funds flow totalled $161.9 million, prior to working capital adjustments and debt service, and after $94.2 million in total capital expenditures.  This equates to a 38% free funds flow yield using the December 31, 2022 market capitalization and was approximately $33.66/bbl;   

·    Announced in September 2022, Messrs. Luis Carranza and Jon Harris were elected as directors for the Company following the retirement of Messrs. Gary Guidry and Ryan Ellson; and,

·    Exited 2022 with approximately $120 million in cash ($15.6 million restricted) and a $74 million net surplus on the balance sheet allowing for full bond repayment subsequent to December 31, 2022.

Selected Q4 2022 and 2022 Financial and Operational Highlights

1.  Approximately 71% of sales in 2022 were through the Brazilian route vs 27% in 2021.

2.  Royalties in Q3 and Q4 2022 include the impact of the 2.5% community social trust retroactive to the beginning of 2022.

3.  Netback per barrel (“bbl”) does not have standardized meaning prescribed by GAAP and therefore may not be comparable with the calculation of similar measures for other entities. See “Selected Financial Measures” section.

4.  Adjusted EBITDA is Net Operating Income less G&A and plus/minus realized derivative impacts. See “Selected Financial Measures” section.

5.  Market capitalization for 2022 and 2021 assume share prices of $0.50 and $0.33, respectively.

6.  Free funds flow is defined as adjusted EBITDA less capital expenditures.

7.  Includes restricted cash balances.

8.  Net Surplus/Debt = Total cash + all trade and VAT receivables + short and long term net derivative balances – total current liabilities – long term debt – non current lease liabilities – deferred tax – other long term obligations.

Selected Q4 2022 and FY 2022 Financial and Operating Highlights

Production and sales.  Production and sales for the quarter averaged 10,374 and 10,420 bopd respectively.  Production was significantly constrained during October and November 2022 due to low river levels and a river blockade, however, the Company was able to produce an average of 20,766 bopd during the last two weeks in December once these two issues were resolved which allowed quarterly production to average above 10,000 bopd.

Net Revenue profile.  Oil revenue in Q4 2022, net of tariffs, fees, and differentials was $63.8 million ($66.51/bbl) compared to Q3 2022 of $84.2 million ($75.07/bbl) and Q4 2021 of $39.2 million ($58.9/bbl).

High margin operational cash flow.  Generated Q4 2022 NOI and Adjusted EBITDA of $48.4 million ($50.51/bbl) and $36.3 million ($37.87/bbl), respectively, compared to $62.3 million ($55.58/bbl) and $84.2 million ($75.10/bbl), respectively, in Q3 2022 and $25.7 million ($38.61/bbl) and $11.9 million ($17.84/bbl), respectively, in Q4 2021.  Net operating income for 2022 represents a 57% margin on contracted gross sales revenue allowing sufficient margin to fund CAPEX, G&A and debt service.

Capital expenditures.  Capital deployed in Q4 2022 totalled $32.0 million, of which approximately 65% was allocated to drilling and completing wells 12H and 13H and commencing drilling on the Company’s next water disposal well, 4WD.  For the year ended December 31, 2022, the Company invested a total of $94.2 million in capital expenditures, a $12.1 million (15%) increase from 2021, driving a 36% increase in year-over-year production.

Substantial Net income.  PetroTal posted Q4 2022 net income of $37.2 million, making Q4 2022 the 12th quarter in a row with positive net income.  Net income for the year ended 2022 was $188.5 million ($0.22/share) and approximately 44% of PetroTal’s exit 2022 market capitalization.

Solid balance sheet metrics allowing flexible capital allocation.  Year-end 2022 short and long term debt was $81.4 million including accrued interest payable generating an exit debt to 2022 adjusted EBITDA ratio of 0.3x.  Including working capital and cash, the Company exited 2022 with a net surplus of $74.2 million or approximately 17% of the Company’s market capitalization at year-end 2022.

Net derivative asset balance.  The total net derivative asset on the balance sheet as at December 31, 2022 was $20.4 million, an increase of $16.8 million from Q3 2022, driven by mark-to-market changes in the value of oil in the Northern Peruvian Oil Pipeline (“ONP”).  As at December 31, 2022 approximately 2.4 million barrels remained in the ONP with an average cost base of approximately $70/bbl.

Petroperu payment schedule finalized to reduce receivable balances.  During Q4 2022, PetroTal and Petroperu finalized a repayment agreement for the $64 million in true-up revenue owed to the Company by Petroperu from a July 2022 oil export of 720,000 barrels.  As at March 1, 2023 the Company has received nearly $27 million (40%) in accordance with the scheduled payments.  

Robust production from wells 13H and 12H.  Well 13H was drilled and completed in late Q3/early Q4 2022 and generated an initial peak production rate of 8,000 bopd during its first week of production.  The drilling team encountered the target formation approximately three meters higher than prognosis which positively impacted 2022 year-end reserves and oil-in-place estimates.  Well 12H was completed and tested around December 16, 2022, however due to export constraints the well’s pump was not activated to constrain higher production rates until mid Q1 2023. 

Financial and Operating Highlights Subsequent to December 31, 2022

Continuous development to increase production.  Drilling commencement of drilling 14H began on February 8, 2023 following the successful drilling and coring of the Company’s third water disposal well on January 29, 2023.  Well 14H will be the longest horizontal well ever drilled in Peru with a total measured depth of around 5,135 meters.  The well took 38 days to drill and encountered excellent Vivian sands with over 840 meters of net pay.  Available production capacity is essential for allowing the Company to ramp up production quickly when additional sales capacity become available.

Full repayment of bonds.  On February 15, 2023, the Company made the regularly scheduled payment to bondholders totaling $25 million, plus accrued interest.  In addition, on March 24, 2023, PetroTal fulfilled its promise to shareholders and repaid the remaining $55 million of bonds, plus $3 million of accrued interest and prepayment fees, thereby allowing for shareholder return commencement. 

Production resumes at over 20,000 bopd from barge travel normalization.  Low river levels late in 2022 caused an overweighting of available barges to the field in late December 2022 and early 2023.  During January and February 2023, the Company was only able to produce approximately 7,600 bopd and 8,000 bopd, respectively.  Late in February 2023, the Company was able to ramp up production and will now produce and sell into an evenly distributed and expanded barge fleet chain for the remainder of the year.  Production from March 1, 2023 until March 29, 2023 has averaged approximately 20,500 bopd.

Well 12H on pump and producing at strong rates.  During Q1 2023, well 12H was put on pump and has averaged approximately 5,200 bopd since it was put on pump the last week of February, following the field’s type curve for horizontal wells.  This drilling location has increased the probability for additional drilling locations to the south of well 12H and 13H.  

Return of capital focused 2023 budget.  On January 16, 2023, PetroTal announced a $125 million fully funded capital program that targets average production between 14,000 and 15,000 bopd in 2023 with possible river level upside allowing 17,000 bopd in the second half 2023.  Under base case production guidance, EBITDA is projected to be $220 million using an $84/bbl average 2022 Brent oil price.  This generates after-tax free funds flow of $55 million, strengthening total accessible cash in 2023 to $241 million prior to debt service. 

TSX-V award winner and TSX graduation.  PetroTal was recognized as a top TSX Venture exchange performer for 2022 ranking 4th in share performance and market capitalization size in the energy sector.  On February 16, 2023, PetroTal graduated to the TSX under the same trading symbol “TAL”.

2.5% community social trust approved into Supreme Decree.  On March 9, 2023, the Company announced the publication of the Supreme Decree signed by Peru’s President authorizing Perupetro to execute the amendment incorporating the 2.5% Community Social Trust Fund into the Block 95 License Contract.  Bylaw approvals for the trust are expected to occur by the end of April 2023, at which time the amendment to the License Contract shall be executed.

Barging fleet expanded.  The Company has expanded its gross contracted barging fleet by over 25% to 1.5 million barrels from the previous capacity of 1.2 million.  By increasing the fleet export capacity, the Company will be better able to mitigate situations where barge carrying capacity is limited and/or slow moving.  The Company anticipates selling approximately 640,000 barrels of oil in March 2023, mostly through the Brazil export route, and expects deliveries of 550,000 barrels in April 2023, under normalized river conditions.  March would then be the first month in PetroTal’s history that 600,000 barrels of oil are sold via Brazil, which was an initial goal when the first 140,000 barrel Brazilian export was completed in December 2020.  Now the Company is committed to replicating this on a consistent basis.  

New working capital credit line secured.  PetroTal has successfully secured a revolving working capital line of credit for approximately $20 million with a Peruvian bank.  The working capital line will allow the Company to better manage a stable return of capital program, in conjunction with ensuring cash liquidity.  The revolving working capital line can be drawn and repaid at any time.

Return of Capital Update

PetroTal is now long-term debt free and is excited to announce Board approval of a normal course issuer bid (“NCIB”) share buyback program.  Subject to approval by the Toronto Stock Exchange, the NCIB will allow the Company to purchase up to 10% of PetroTal’s public float, over a period of twelve months, commencing in Q2 2023.   Under the NCIB, common shares may be repurchased on the open market through the facilities of both the TSX and AIM exchanges, in accordance with TSX and AIM regulations.  

In addition, PetroTal is pleased to reinstate a US$0.015 per share quarterly eligible dividend⁽¹⁾ with expected record and payment dates in June 2023.  On an annualized basis, this represents US$0.06/share and an approximate yield of 13.9% based on a trading price of US$0.45/share.  This quarterly cash dividend will be designated as an “eligible dividend” for Canadian income tax purposes.

(1)       See reader advisories.

Petrofac-Do I like orange…

• Petrofac and Hitachi Energy have been awarded a multi-year Framework Agreement by TenneT as it works to expand offshore wind capacity in the Dutch-German North Sea
• The Framework Agreement, which represents the largest in Petrofac’s history, covers six projects. Each project comprises the EPCI of an offshore HVDC transmission station, onshore converter station and associated infrastructure
• Each project will be executed under a standalone contract valued at over 2 billion euros, split approximately equally between Petrofac’s and Hitachi Energy’s scopes. The first of these contracts has been awarded alongside the Framework

Petrofac, a leading international service provider to the energy industry, and Hitachi Energy, a global technology leader, have been selected by TenneT, the Dutch-German Transmission System Operator, to supply multiple offshore platforms and onshore converter stations to accelerate the integration of bulk renewables into European power grids.

Petrofac and Hitachi Energy were awarded the multi-year Framework Agreement as part of TenneT’s ambitious 2 gigawatt1 (2GW) high voltage direct current (HVDC) offshore wind programme.

The agreement includes an initial commitment to deploy six record-breaking renewable integration systems, five of which will connect offshore wind farms to the Dutch grid and the sixth to the German grid. Each of these connection systems has a capacity of 2GW and a voltage level of 525 kilovolt – a world-first for offshore wind.

The landmark Framework Agreement represents the largest in Petrofac’s history. It enables Petrofac and Hitachi Energy to plan in advance, secure the required resources and yard space, as well as capturing synergies between successive projects to meet in-service dates.

Petrofac will undertake the Engineering, Procurement, Construction and Installation (EPCI) of the offshore platforms and elements of the onshore converter stations. Hitachi Energy will supply its HVDC Light® converter stations, which convert AC to DC power offshore and DC to AC onshore.

The first contract under the Framework, for the Ijmuiden Ver Alpha project, was awarded with immediate effect. The second, Nederwiek 1, is expected to be awarded later in the year. The Framework also includes projects Doordewind 1, Doordewind 2, Nederwiek 3 and LanWin5, expected to be awarded over a 2024 – 2026 timeframe.

Sami Iskander, Petrofac’s Group Chief Executive, said:

“Today’s announcement represents an exciting next step in Petrofac and Hitachi Energy’s collaboration. We have already secured key resource and the yard capacity required to expedite the first two projects in TenneT’s ground-breaking programme. By combining Petrofac’s industry-leading EPCI expertise and Hitachi Energy’s well proven technology, we look forward to supporting TenneT to connect larger, more effective wind farms to deliver affordable clean energy for millions of European homes.”

Tareq Kawash, who takes over from Sami Iskander as Petrofac’s Group Chief Executive on 1 April, added:

“Today’s award demonstrates the significant new growth horizon presented by the Energy Transition, and the role companies like Petrofac will play. I will be very proud to support Petrofac’s collaboration with Hitachi Energy and delivery of our role on TenneT’s 2GW programme over the coming years.”

Niklas Persson, Managing Director  at Hitachi Energy’s Grid Integration business said:“This innovative business model will set the course for the integration of a huge amount of offshore wind power and gives visibility of the future.  In fact, we are already hiring to expand our global delivery capacity and effectively fulfill these and other orders. We’re proud to be part of this journey and, along with our partner Petrofac, we are setting the benchmark for deploying offshore HVDC technology at scale and with speed.”

Marco Kuijpers, Director Large Projects Offshore TenneT said: “The new long term approach goes hand in hand with a fundamental change in values towards a strong partnership. This approach enables both sides with more flexibility, technological progress, and planning security. This benefits all parties and secures employment, growth, and the strengthening of supply chains. We can already see that our partners invest in extra resources and facilities.”

Petrofac and Hitachi Energy began working together in June 2022, to provide joint grid integration and associated infrastructure solutions to support TenneT’s 2GW Programme2.

In the same year, Germany, the Netherlands, Denmark and Belgium agreed to install at least 65 gigawatts of offshore wind energy combined by 2030, as announced with the inter-governmental Esbjerg Declaration3. At 40 gigawatts, almost two-thirds of this capacity is accounted for by TenneT, with 20 gigawatts each in the German and Dutch North Sea sectors.

For someone who went a bit early on PFC late last year this has more than saved my bacon, I had written about how the PFC order book should gain in a number of key areas and wind farms is one, we have clambered over enough giant structures not to make it pay. 

With results due next month and currently in closed period there won’t be much to add until then, in the meantime I’m staying positive about Petrofac. 

Trinity Exploration & Production

Trinity has announced some key operational updates.

ABM-151 Onstream

The ABM-151 well in the Brighton Marine block, offshore the West Coast of Trinidad, was returned to production on 21 March 2023 following an extensive refurbishment of surface facilities and the installation of remote surveillance technology.  Trinity has a 100% interest in the Brighton Marine licence.

Trinity anticipates steady-state production from ABM-151 in the range of 60-110 bopd.  Production has gradually increased since the well restart and has flowed at rates over 200 bopd on a 10/64″ choke with 0% water cut.  The well will be managed closely in the coming weeks to achieve stabilised production rates within the target guidance and will further benefit from the SCADA automation system the Company has installed.

Jacobin Well Update

Wellsite preparation for the onshore deep Jacobin well is underway, with the well expected to spud in late April, in line with previous guidance.  Trinity has a 100% interest in the Palo Seco area sub-licences, where nine deeper prospects have already been mapped.

The Jacobin well has been designed to test an extensive and lightly-drilled Miocene age deeper turbidite play across the prolific southern onshore basin and will provide the Company with critical new data on this extensive play and the wider Palo Seco acreage.

The well objective is a structural prospect defined on 3D seismic.  The well will target mean oil in-place volume of 5.7 million barrels and an upside (P10) case of over 10 million barrels in-place.

Onshore Bid Round Update

On 20 March 2023 Trinity gave its Technical Presentation on the Company’s bid for the Buenos Ayres block in the 2022 Onshore and Nearshore Competitive Bid Round to the Government of Trinidad and Tobago’s Ministry of Energy and Energy Industries (“MEEI”).

Buenos Ayres is located west of Trinity’s existing Palo Seco production sub-licences – Blocks WD-5/6, WD-2 and PS-4.

The MEEI is expected to announce awards of licences in the bid round during April 2023.

Jeremy Bridglalsingh, Chief Executive Officer of Trinity, commented:

“I am delighted that we have ABM-151 back in production.  We have been looking at ways to boost production across our asset base and identified ABM-151 as a well where we could achieve quick, effective results.  ABM-151’s initial performance underlines the potential of our West Coast assets, where we have a number of infill and appraisal opportunities to mature as we look to increase production across the asset base.

The Jacobin well is an important catalyst for Trinity, significant in itself but also the first part of an extensive play where we have mapped multiple further independent targets across our existing, relatively mature, onshore acreage as well as having further relevance with respect to the Buenos Ayres block which we have bid for in the onshore bid round.”

It’s still pretty quiet over at Trinity, the best news is that the ABM-151 well in the Brighton Marine block, offshore the West Coast of Trinidad, was returned to production on 21 March 2023 and it seems that the work done has increased production modestly. 

Apart from that the Jacobin well has yet to spud and of course Trinity are involved in the current bid round.

IGas Energy

Commenting today Chris Hopkinson, Interim Executive Chairman, said:

“The production drive we initiated in October last year proved that we can overcome technical and operational challenges and I am delighted that we continue to maintain the momentum into the new financial year.

The higher oil and gas prices have been a welcome boost to revenue and cash generation giving us greater financial flexibility and enabling us to repay debt.   However, we believe now is the right time, given the prevailing price environment, to focus on driving opportunities for production, that pay back in a short time frame, and to that end we will seek to finance these near-term projects.  

It is also critical that we maximise the value of our oil and gas assets to facilitate a “just transition” to a renewable energy future through the growth of our geothermal heat business. Momentum is building in the geothermal business and we look forward to achieving financial close for the Stoke-on-Trent geothermal project and moving into the execution phase of that project during the year.”   

Things are changing over at IGas big time, someone has been to business school and the strategy has changed, to be renamed Star Energy to get rid of the shale fraccing baggage,the company is transitioning to become a geothermal company. ‘Energy security through decarbonisation’ is the slogan in the IGas rebranding exercise…

In the meantime the company is apparently ‘buzzing’ as the board has decided to fund the portfolio of existing projects which at current prices pay back in next to no time and should substantially increase production. That number was somewhat disappointing last year, just missing guidance at 1,898 b/d the board have settled on a hardly challenging 2,000 b/d for this year. 

Clearly the board think that the short term investment in the portfolio will carry the company over until geothermal delivers the goods, they have some 35 projects from a number of different users ranging from the public sector to commercial and corporate clients. 

Financial Performance

* Adjusted EBITDA, Net Debt (borrowings less cash and cash equivalents excluding capitalised fees) and Underlying Operating Profit are used by the Group, alongside IFRS measures for both internal performance analysis and to help shareholders, lenders and other users of the Annual Report to better understand the Group’s performance in the period in comparison to previous periods and to industry peers

Corporate and Financial Summary

·    Higher operating cash flow resulted in a significant reduction in the Group’s net debt to £6.1 million. Cash balances as at 31 December 2022 were £3.1 million

·    The Group made a loss after tax of £11.8 million. This was after deducting a £30.0 million impairment of our shale assets following the reimposition of the moratorium on hydraulic fracturing

·    Net cash capex of £7.9 million in 2022 primarily on our conventional assets 

·    Successful RBL redetermination confirming $17.0 million (£14.0 million) of debt capacity

·    We remain focused on maintaining a strong balance sheet and funding to support our strategy. We will continue to assess funding opportunities to optimise our capital structure and manage our debt facilities effectively

·    60,000 bbls hedged for H1 23 at an average swap price of $94.9/bbl (we are no longer required to hedge under the terms of the RBL)

·    Energy Profit Levy charge for 2022 of £nil

·    Ring fence tax losses at 31 December 2022 were c.£260 million

·    As the Company has been reshaping its strategic direction to reflect the transition to a lower carbon economy, the Board is proposing a change in the Company’s name to Star Energy Group PLC (subject to shareholder approval at the AGM in June 2023)

Operational Performance

·    Restructuring and reorganisation of the business to enable improved strategic planning and more efficient decision making

·    Net production, averaged 1,898 boepd for the year, heavily impacted in the first half by equipment failure caused by supply chain issues, which was subsequently resolved

·    A production drive was initiated in October leading to a strong recovery in H2 resulting in peak production (averaged across 5 days) of 2,432 boepd and December production averaged 2,221 boepd (net to IGas)

·    Reserves and Resources updated CPR values 1P NPV10 of $144 million (2021: $139 million): 2P NPV10 of $215 million (2021: $190 million)⁺

·    Planning permission submitted and validated for Glentworth Phase I – potential for additional 200 bbls/d

·    The drilling of a new well in Corringham is planned for H2 2023 with both planning and permitting in place, which, if successful, is anticipated to add 110 bbls/d peak production

·    Awaiting imminent outcome of the Green Heat Network Fund grant application for Stoke-on-Trent geothermal project

·    We anticipate notification as to our success in the five NHS tenders through the Carbon and Energy Fund in Q2 2023

Outlook

·    We anticipate net production of c.2,000 boepd and operating costs of c.$41/boe (assuming an average exchange rate of £1:$1.23) in 2023

·    2023 abandonment costs of c.£6.5 million as we ramp up the abandonment and restoration of old and uneconomic fields, in line with our licence obligations and to focus on profitable fields.

·    In the process of purchasing a rig as part of setting up a dedicated abandonment division

·    We expect cash capex of £15.3m in 2023

o This includes £5.9 million for near-term incremental projects to generate c.150-170 boepd and £4.0 million to develop the Bletchingley gas-to-wire project which is expected to generate circa 47 GWh of power from late 2024/early 2025, subject to financing, and £1.0 million to progress developments at Singleton and Bletchingley

o The remaining capex will be spent on the maintenance and optimisation of our existing conventional sites

Author @mgrahamwood

Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. The writer may or may not hold investments in the companies under discussion

Zak Mir talks to Craig Foster, CEO of Ondo InsurTech, regarding the provider of claims prevention technology for home insurers, and prospects for an ongoing rollout in Europe and the U.S.

About Ondo InsurTech PLC

Ondo InsurTech Plc is a world leading provider of claims prevention technology for home insurers. Ondo’s focus is on the global scale-up of LeakBot – claims prevention technology that prevents water damage claims in houses.  Water damage is the single biggest cause of home insurance claims, accounting for $17bn of claims every year in the USA and UK combined.  LeakBot is a patented self-install solution that connects to the home wireless network and, if it detects a leak, notifies the customer via the LeakBot mobile app and provides access to a team of expert LeakBot engineers to ‘find and fix’ the problem.  Recent independent research by Consumer Intelligence found LeakBot can reduce the cost of water damage claims by 70%.

LeakBot partners with 11 insurance carriers – including Admiral, Direct Line Group, Hiscox, Mapfre and TopDanmark – across 5 different countries, in Europe and the USA.

In March 2022 LeakBot became the first InsurTech to IPO in London, as Ondo InsurTech Plc (LSE: ONDO).

Zak Mir takes a charting look at some of the most followed small caps on the London stock market. Today’s charts are FTSE 100, Dax, Dow, Bitcoin, Andrada, Celadon, Dekel, eEnergy, Greatland, Petrotal, Predator, Prospex, Saietta, TM1, Versarien, Xtract.

Disclaimer:

Zakmir.com is a purely journalistic website – Zak Mir is a member of the National Union of Journalists. There is no intention here of providing financial advice. It is recommended you seek an independent professional opinion before deciding whether or not to take any action with regard to anything written here.

Copper prices climb as falling smelting charges indicate tight supply

MiFID II exempt information – see disclaimer below

Anglo Asian Mining* (AAZ LN) BUY, 201p – Strategic plan to become mid-tier copper/gold producer

Centamin (CEY LN) – Targeting a 30% reduction in greenhouse gas emissions by 2030

Great Western Mining* (GWMO LN) – Progress report on Nevada exploration and mill development

Power Metal Resources* (POW LN) – CEO underlines focus on progressing the Botswana projects and on uranium exploration

Rambler Metals and Mining* (RMM LN) Suspended – Operations cease as Transamine declines due payments

Scotgold Resources (SGZ LN) – Six months of challenges at Cononish squeeze working capital

Copper prices on course for the 10^th daily gain in 11 trading sessions on signs of tighter concentrate supply, Bloomberg writes.

• Signs of tighter market include falling smelter charges with TCs currently standing at $81/t, down from $87/t hit in H/22.
• Supply has been affected by a series of recent mining disruptions in major producers’ nations including Peru and Indonesia.

Economics

Germany – Regional inflation data for March showed the pace of consumer price increases proved to be sticker than envisaged.

• A number of regions reported a slight increase in monthly rate of CPI growth.
• Nationwide numbers are due later this afternoon with estimates for a 08%mom/7.5%yoy headline reading from 0.8%mom/8.7%yoy in February.

Spain – Headline inflation halved in March to 3.1%yoy, although, core measure that adjusts for volatile fuel and food was little changed at 7.5%yoy.

• Persistent core inflation suggests the ECB is likely to press on with further tightening at the next May 04 meeting.

South Africa – The central bank is expected to hike rates by 25bp to 7.50%, the highest rate since mid-2009, later today.

• Inflation came in at 7.0% in February on the back of loadshedding driving prices for food and non alcoholic beverages.
• Further power tariff hikes planned for April is likely to add to challenges.
• Power outages saw the IMF cut its 2023 economic growth forecast to 0.1% from 1.2%.

Currencies

US$1.0867/eur vs 1.0834/eur yesterday. Yen 132.45/$ vs 131.89/$. SAr 18.070/$ vs 18.161/$. $1.236/gbp vs $1.233/gbp. 0.671/aud vs 0.668/aud. CNY 6.879/$ vs 6.889/$.

Dollar Index 102.47 vs 102.65 yesterday.

Commodity News

Precious metals:

Gold US$1,968/oz vs S$1,964/oz yesterday

   Gold ETFs 93.1moz vs US$93.1moz yesterday

Platinum US$971/oz vs US$965/oz yesterday

Palladium US$1,438/oz vs US$1,419/oz yesterday

Silver US$23.64/oz vs US$23.18/oz yesterday

Rhodium US$8,200/oz vs US$8,350/oz yesterday

         Base metals:   

Copper US$ 9,048/t vs US$8,940/t yesterday

Aluminium US$ 2,391/t vs US$2,387/t yesterday

Nickel US$ 23,720/t vs US$23,800/t yesterday

Zinc US$ 2,970/t vs US$2,926/t yesterday

Lead US$ 2,151/t vs US$2,137/t yesterday

Tin US$ 25,745/t vs US$25,770/t yesterday

           Energy:           

Oil US$78.8/bbl vs US$79.2/bbl yesterday

• Crude oil prices were broadly unchanged as the EIA reported a 7.5mb US crude inventory draw last week adding to a 3mb gasoline stock draw, with refinery utilisation up strongly by 1.7% to 90.3%.
• European gas prices were stable with EU natural gas storage levels flat w/w at 55.7% full (vs 34% 5-year average), with draws in Poland being offset by builds in Italy and Germany.
• US HH natural gas prices recovered somewhat as pipeline gas deliveries to US LNG export plants hit an all-time high of 14.24bcf/d (from zero in 2015), after the Freeport facility in Texas continues ramped-up volumes.

Natural Gas US$2.118/mmbtu vs US$2.008/mmbtu yesterday

Uranium UXC US$50.35/lb vs US$50.35/lb yesterday

Bulk:

Iron ore 62% Fe spot (cfr Tianjin) US$124.5/t vs US$123.3/t

Chinese steel rebar 25mm US$615.1/t vs US$612.0/t

Thermal coal (1st year forward cif ARA) US$134.5/t vs US$134.5/t

Thermal coal swap Australia FOB US$197.0/t vs US$192.4/t

Coking coal swap Australia FOB US$340.0/t vs US$340.0/t

 Other:  

Cobalt LME 3m US$34,930/t vs US$34,430/t

NdPr Rare Earth Oxide (China) US$77,793/t vs US$78,753/t

Lithium carbonate 99% (China) US$29,736/t vs US$30,558/t

China Spodumene Li2O 5%min CIF US$4,610/t vs US$4,660/t

Ferro-Manganese European Mn78% min US$1,343/t vs US$1,338/t

China Tungsten APT 88.5% FOB US$325/mtu vs US$325/mtu

China Graphite Flake -194 FOB US$790/t vs US$790/t

Europe Vanadium Pentoxide 98% 9.4/lb vs US$9.4/lb

Europe Ferro-Vanadium 80% 38.25/kg vs US$38.75/kg

China Ilmenite Concentrate TiO2 US$345/t vs US$345/t

Spot CO2 Emissions EUA Price US$95.6/t vs US$94.3/t

Brazil Potash CFR Granular Spot US$450.0/t vs US$450.0/t

 Battery News

Company News

Anglo Asian Mining* (AAZ LN) 121p, Mkt Cap £138m – Strategic plan to become mid-tier copper/gold producer

BUY – 201p

• The Company released its strategic plan for more than doubling annual production over the next five years and becoming a multi asset and mid-tier copper/gold producer by 2028.
• The plan involves commissioning of four new mines in Azerbaijan gradually expanding production to >36ktpa CuEq (~90% Cu), equivalent to 175koz AuEq, in 2028, up from current 50-54koz AuEq (~30% Cu).
• 2023 guidance is for c. 50-54koz AuEq (c. 10.3-11.2kt CuEq) comprised of 30-32koz gold and 4.1-4.3kt copper (2022: 43koz and 2.5kt).
• A change in the AuEq composition reflects lower agitational leaching plant throughput and doubling of the capacity at the flotation circuit.
• 2024-25 period guided to run at c. 70-75kozpa AuEq (c. 15.0-15.5kt CuEq) on the back of the high grade feed from the Gilar underground operation.
• 2026-27 period guided to run at c. 115-125kozpa AuEq (c. 24.0-26.0kt CuEq) reflecting contribution from the recently secured Xarxar copper deposit (extra ~9kt CuEq).
• 2028 guidance is for c. 175koz (c. 36.0kt CuEq), implying a ~3x increase in annual output rate, as the team is planning to develop and bring into production the Garadag copper deposit (extra >20ktpa CuEq).
• Gold and copper equivalent factors were calculated using $1,650/oz and $8,000/t prices, respectively.
• The composition of the Group production will gradually move towards predominantly copper from current ~20-30% to ~90% by 2028 after two copper projects are up and running (Xarxar and Garadag).
• The strategy involves two phases of growth including:
  • Phase 1 or Transition Phase delivers first growth leg with three new mines being commissioned at Zafar (Gedabek CA), Gilar (Gedabek CA) and Xarxar (Xaxar CA) complementing Gedabek and Gadir mines that approach their end of respective mine lives.
  • Additionally, the Company is doubling the flotation plant processing capacity (650ktpa to 1,300ktpa) accommodating the circuit for an increase in copper rich feed as well as allowing to reprocess agitation leaching plant tailings to recover copper from Gilar high grade ores.
  • Phase 2 or Transformation Phase builds on the first phase and takes Group production to >36ktpa CuEq on development and commissioning of Garadag (Garadag CA), where preliminary estimates indicate the potential to the largest copper inventory in the Group (~325kt Cu at 0.49% Cu).
• Indicative mine commissioning schedule includes:
  • Zafar (Cu/Au/Zn) in 2023/24;
  • Gilar (Cu/Au) in 2023/24;
  • Xarxar (Cu only) in 2026
  • Garadag (Cu only) in 2027/28.
• The team expects positive cash flows from existing operations at Gedabek, current cash balance (~$20m as of YE22), local bank and equipment vendor funding to fund the near to medium term expansion plan.
• The team is planning to complete a series of metallurgical tests to choose the optimal processing route for treatment of Xarxar and Garadag ores with options currently considered including bioleaching, flotation and/or in-situ leaching.
• Both Xarxar and Garadag are likely to be developed using shared infrastructure (deposits are 4km apart) offering potential for operational synergies.
• Final funding requirements are contingent on the treatment circuit selected given significant difference in development capital costs between various scenarios.
• In the meantime, the Company reiterated its commitment to maintaining the established dividend policy as it delivers on the growth strategy.
• The strategy does not include potential upside from extensive exploration portfolio as well as a potential restart of the Demirli Cu/Mo porphyry mine located in the northern part of the Karabakh economic region that may deliver extra >6ktpa Cu.
• The team also holds a strategic ~20% interest in Libero Copper & Gold, a TSX listed copper explorer with an extensive portfolio of prospective ground across Americas hosting a number of porphyry copper deposits including Mocoa (Colombia), Big Red (BC, Canada) and Esperanza (Argentina) among others, that may further add to attributable production should one of Libero portfolio assets come into development/production.
• The Company will hold an online investor presentation on 31 March 2023 at 12.00 BST via Investor Meets Company: https://www.investormeetcompany.com/anglo-asian-mining-plc/register-investor

Conclusion: The team delivers a strategic roadmap for potentially trebling the production rate to become a multi-asset and mid-tier copper/gold producer from 2028. The plan is based on a gradual ramp up in production through sequential commissioning of four new mining operations, expansion of the existing flotation plant and delivering new processing facility to support development of Xarxar and Garadag copper deposits. The sequential nature of expansion optimises upfront capital commitments and reduces commissioning/operational risks. The PSA framework allows for accelerated permitting and development of new operations at new contract areas. Existing cash generative operations at Gedabek provide expansion capital for future exploration and economic studies related work as well as allow the team to leverage off expected earnings for potential project bank funding in the future. The management has a track record of fast tracking projects into production in the past.

This is exciting period for the Company as the team sets out clear growth targets while significantly diversifying the asset base and growing its exposure to copper, the commodity behind the much needed infrastructure to support the energy transition.

In the light of the new strategic plan we have updated our earnings estimates and Group valuation. We used the guided mine plan for our production estimates in arriving to an updated risked NAV of ~$300m or 201p and reiterating our BUY recommendation. Further upside to our target valuation stems from de-risking development projects (ie reducing risk discounting), potential exploration related success as well as Libero investment, currently valued at market spot price. We will be releasing a note outlining production and cost forecasts in more detail shortly.

*SP Angel acts as nomad and broker to Anglo Asian Mining

Centamin (CEY LN) 101.25p, Mkt Cap £1,172m – Targeting a 30% reduction in greenhouse gas emissions by 2030

• Centamin has disclosed its decarbonisation plans aimed at achieving a 30% reduction in greenhouse-gas emissions by 2030.
• The planned reduction strategy rests on a three-pronged approach comprising:
  • Sourcing clean power “through the procurement or development of renewable energy supply”;
  • “Switching to lower carbon fuels, together with electrification as an alternative to diesel use applications”; and
  • “Continuous work to optimise and improve the energy efficiency of all our processes”
• Discussing renewable energy, Centamin describes the successful commissioning of 30MW of solar capacity at Sukari in 2022 and says that “extension to the existing solar infrastructure (totalling 50MW_AC) would fully meet the baseload power demand of the mine during peak daylight hours”.
• Centamin says that its “execution strategy involves installing 5MW_AC each year over four years from 2024. The estimated total capital cost for the 20MW_AC solar power expansion is between US$25 million and US$35 million”.
• The company also describes recent improvements in Egypt’s power distribution grid and says that “Establishing a 50MW_AC connection to the national grid, combined with the existing onsite solar plant, would fully meet the electricity needs of the mine without the requirement for onsite thermal power generation using diesel fuel”.
• Centamin aims to displace the need for diesel through electrification of its mining fleet which currently “represents approximately 50% of our GHG emissions at Sukari” through the replacement of existing face shovels with hybrid diesel electric equipment, the introduction of similarly powered loaders in underground operations and the use of “In-pit crushing and conveyors to replace open pit haul trucks for delivery of ore to the mill”.
• Commenting on energy efficiency, the company explains that “71% of stationary energy consumption is associated with comminution: the grinding and crushing of rock … [and says that it beleives] … there is opportunity to fragment particles using less energy than has conventionally been the case”.
• The company also describes plans to reduce the impact of the “The majority of Scope 3 emissions (98%) … [which] … are upstream to the Sukari operation and relate to purchased goods, services and capital expenditure … [by] … collaboration with the suppliers to first understand the sources of Scope 3 GHG emissions, then identify how these can be most effectively abated”.
• CEO, Martin Horgan, described Centamin having a “vision for a low carbon future is a mining business with sources of onsite and imported renewable energy, reductions in absolute energy consumption through operational efficiencies and creative new technological solutions, staged electrification of our mobile fleet and increased recycling in our supply chain”.

Great Western Mining* (GWMO LN) 0.1p, Mkt Cap £4.4m – Progress report on Nevada exploration and mill development

• Great Western Mining has described its work programme for 2023 in Nevada, where it is awaiting improved weather conditions to pour concrete at its 50% owned (with Western Milling) project where it plans to use gravity separation to recover precious metals from the waste of former mining activity.
• The company confirms that it has filed all the required permitting applications and that as “Virtually all equipment needed for the assembly of the plant is now available and there are unlikely to be significant delays in the overall programme as a consequence of the extended winter”.
• Initial drilling, supported by a recently recruited, locally-based geologist, is expected to start at the “OMCO Mine prospect at the Olympic Gold project, to follow up the 2022 discovery of an extension to the previously mined OMCO vein … [during] … April when weather and ground conditions permit”.
• The company is also reviewing the exploration potential of its M2 copper projects in the Black Mountains group of claims where a 2018 JORC compliant estimate identified “a copper resource, partly inferred/partly indicated, of 4.28 million tonnes at a grade of 0.45% Cu.^. This is a large resource at a significant grade but falls short of the tonnage required for commercial development”.
• Commenting on the exploration potential at M2, Great Western Mining says that the mineral resource report in 2018 described a central part of the M2 area, extending over 300m had “only been tested by two drillholes … [and] … is given a high probability of containing additional resources”.
• Executive Chairman, Brian Hall, confirmed that “Great Western’s near, medium and longer term objectives remain (1) completing the mill facility and bringing it on to production (2) continuing the search for precious metals and pinning down a discovery for development and (3) ensuring that the potential upside of the Company’s copper prospects is maximised”.
• He emphasised the importance of the mill development saying that “once the mill is producing we will become a revenue and cash generating business”.

Conclusion: When weather conditions improve Great Western Mining will be able to progress mill construction and start drilling at the Olympic Gold project.  The full potential of the company’s M2 copper project may ultimately prove to be larger than the 4.3mt JORC resource at 0.45% copper defined in 2018.  We await further news with interest.

*SP Angel act as Broker to Great Western Mining

Power Metal Resources* (POW LN) 0.85p, Mkt cap £14.8m – CEO underlines focus on progressing the Botswana projects and on uranium exploration

• In his AGM statement later today, Power Metal Resources’ recently appointed CEO, Sean Wade will provide a progress report on its project portfolio and provide guidance on expectations for the future of the main projects.
• Diamond drilling programmes have been completed at the Molopo Farms and Tati Gold projects in Botswana as well as at the Berringa project in Australia’s Victoria Goldfields.
• Assay results from the drilling are expected soon.
• Plans for the listing of Golden Metal Resources, which holds the Pilot Mountain tungsten project in the US are expected to “complete … shortly”.
• Mr. Wade confirms that “we have experienced considerable interest … [in] … Uranium Energy Exploration, and our wider uranium portfolio … [and we] … are working, not only on exploration preparations for 2023, but also reviewing various corporate initiatives to accelerate progress and value generation in the portfolio”.
• He confirmed that “We are focused on completing as many disposals in 2023 as possible, both to unlock value and to focus the Company on uranium exploration and the development of its key interests in Botswana”.

Conclusion: The new CEO is describing giving priority to the projects in Botswana and on uranium exploration with disposals of other assets to improve the focus on those objectives.

*SP Angel acts as Nomad and Broker for Power Metal Resources

Rambler Metals and Mining* (RMM LN) Suspended – Operations cease as Transamine declines due payments

• Rambler Metals and Mining has announced the cessation of “operations at the Ming Mine, the Nugget Pond Mill and Goodyears Cove effective as of 19.00pm Newfoundland Time 29 March 2023”.
• The operations had been running, with the sanction of the Supreme Court of Newfoundland and Labrador “under the protection of the Companies’ Creditors Arrangement Act … since 27 February 2023”.
• The company’s announcement says that the “cessation of operations was the direct result of a dispute … with Transamine Trading S.A. (“Transamine”) regarding the payment of approximately US$880,000 that was due from Transamine on 24 March 2023 and an additional payment of approximately US$1.78 million that is due from Transamine on or around 30 March 2023”.
• Rambler Metals confirms that “Transamine has advised Rambler that it does not intend to make those required payments … [and Rambler says that] … It is not expected that operations will resume for the balance of the SISP”.
• The company says that “All employees, suppliers and other stakeholders have been, or are in the process of being informed, and … [that it] … will be carrying out essential care and maintenance going forward”.

*SP Angel act as Nomad and Broker to Rambler Metals & Mining. An SP Angel analyst holds shares in Rambler Metals & Mining

Scotgold Resources (SGZ LN) 15p, Mkt Cap £9.1m – Six months of challenges at Cononish squeeze working capital

• Scotgold reports a pre-tax loss of A$9.5m from the production of 3,809oz of gold from its Cononish mine in Scotland over the six months to 31^st December 2021.
• While describing the period as “challenging”, Chairman Peter Hetherington, said that they had achieved “important milestones … [including] … initiatives for the underground mining operation and processing plant to enable our operation to run more efficiently”.
• Mr. Hetherington said that “Production for the three months ended 31 September 2022, totalled 2,004 ounces of gold, however this was lower than the 2,600 to 3,200 ounces targeted for the quarter, as a result of the successful, but delayed power and ventilation upgrades in the underground mine, which stalled mine development on the waste ramp in September 2022”.
• He said in the second three months up to 31^st December, “operational difficulties continued in the underground mine … [with] … changes in the short-term mine schedule to expedite continuous long hole stoping in the western areas of the mine in 2023 … [and] … harsher than expected weather conditions”.
• As a result, gold production of 1,805oz in the three months to 31^st December was below the forecast 3-3,500oz although “an additional 324 ounces was mined in December but stored underground as weather conditions didn’t allow for the mining trucks to move the ore to the ROM pad safely”.
• Since then development in January has focussed on “430 West ore drive, 415 East ore drive and the incline ramp accessing the 445 level and achieved record development rates with 3,003 tonnes of ore mined, and 2,620 tonnes of ore fed to the process plant. However, average grade of the ore processed was lower than predicted (5.65g/t actual vs 7.35g/t planned of gold)”
• Mining difficulties continued into March when “gold grades began to decline significantly, and the 430 West ore drive turned to waste, contradicting the grade control model. Total ore production in February was negatively impacted, with actual 977 tonnes mined and 1,441 tonnes processed”.
• Given the operational challenges and resulting cash constraints, “the Directors have determined to take steps to strengthen the Company’s cash position. The Company is in advanced discussions with its gold offtake partner, and is reviewing final documentation, to secure a US$500,000 advance to assist with short-term working capital. The Directors of the Company have also discussed, if the need arises, the provision of additional working capital, in the form of equity or a short-term convertible loan.”

Conclusion: Mining challenges at the Cononish mine are putting working capital under pressure and triggering discussions with the offtake partner to secure an advance and consideration of additional equity or short-term convertible loan finance

No.1 in Copper:  “The winner of the 2020 Fastmarkets Apex contest for copper was the team at SP Angel comprising John Meyer, Sergey Raevskiy and Simon Beardsmore, with an accuracy score of 93.8%”

No1. In Gold:  “SP Angel’s trio took the top spot for the gold price prediction throughout the year, with an accuracy score of 97.59%”

The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020

Analysts

John Meyer – John.Meyer@spangel.co.uk – 0203 470 0490

Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484

Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk – 0203 470 0474

Sales

Richard Parlons –Richard.Parlons@spangel.co.uk – 0203 470 0472

Abigail Wayne – Abigail.Wayne@spangel.co.uk – 0203 470 0534

Rob Rees – Rob.Rees@spangel.co.uk – 0203 470 0535

Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471

SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London

W1S 2PP

*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)

+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.

Lithium Carbonate, Ferro Vanadium, Tungsten, Spodumene, Ferro-Manganese, Graphite	Asian Metal

DISCLAIMER

This note is a marketing communication and comprises non-independent research. This means it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of its dissemination.

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SPA is registered in England and Wales with company number OC317049.  The registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP.  SPA is authorised and regulated by the UK Financial Conduct Authority and is a Member of the London Stock Exchange plc.

MiFID II – Based on our analysis we have concluded that this note may be received free of charge by any person subject to the new MiFID II rules on research unbundling pursuant to the exemptions within Article 12(3) of the MiFID II Delegated Directive and FCA COBS Rule 2.3A.19.

A full analysis is available on our website here http://www.spangel.co.uk/legal-and-regulatory-notices.html. If you have any queries, feel free to contact our Compliance Officer, Tim Jenkins (tim.jenkins@spangel.co.uk).

SPA research ratings – Based on a time horizon of 12 months: Buy = Expected return of more than 15%, Hold = Expected return between -15% and +15%, Sell = Expected return of less than 15%

Caracal Gold PLC, the expanding East African gold producer with over 1,300,000oz of JORC compliant gold resources, is pleased to confirm ongoing delivery of high-grade ore from the high-grade zone in the Kilimapesa Hill deposit to the Milling plant.

Highlights

· Ongoing 360tpd of high-grade material with average grades from 3.39g/t to 4.92g/t being processed,

· The initial mining plan has been extended to over 180 days of delivery of high-grade material to the milling plant ,

· Exploration to define the full potential of the high-grade zone in ongoing. 

The average grades for the period from 19^th March to 28^th March 2023 are detailed below:

 Hourly belt cuts are taken on the mill feed conveyor and the daily summary sampling sheets for samples are attached. These samples are assayed in the Kilimapesa laboratory. Sampling and analytical procedures are subject to a comprehensive quality assurance and quality control program. The QAQC program involves insertion of duplicate samples, blanks and certified reference materials in the sample stream. Gold analyses are performed by standard fire assaying protocols using a 50-gram charge with atomic absorption (AAS) finish and a gravimetric finish performed for assays greater than 10 grams per tonne.

Tonnages mined improved to over 400tpd from the high-grade zone, recoveries remained in line at 75%, the  plant availability was affected by power outages after pole on the main feed line to plant collapsed during a heavy rainstorm – plant availability for the period was 75%.

Robbie McCrae, CEO of Caracal commented:

“It has been 20 days since we started mining and processing ore from the Kilimapesa Hill high-grade zone and the team are pleased with the results across the board from the exploration to the mining and to the processing. The mining team have worked hard to complete the access roads and strip waste and now are focussed on increasing the tonnage mined and delivered to the Milling plant. At the Milling plant the focus Is to increase the tonnage from 360tpd to 500tpd over the next few weeks. We are looking forward to updating the market on the results from the exploration work on the high-grade zone in the near future”.

 * * ENDS * *

For further information visit www.caracalgold.com or contact the following:

This post was written by Zak Mir, a Technical Analyst, Events Host, Presenter, CEO Interviewer and established Market Commentator.

Author @ZaksTradersCafe

Ajax (AJAX), the UK listed SPAC with a focus on natural resources, provided an update on its target identification for opportunities with significant natural resource exploration, development, and production potential. The company said it is currently evaluating a selection of acquisition opportunities, ranging from early exploration to near-term production, located in Canada, USA, Zambia, Namibia, and Botswana. These assessments remain strictly at the review stage. Its strategy has the objective of creating shareholder value by developing a portfolio of assets that can generate revenue within 12-18 months of acquisition, as well as holding exploration opportunities with long-term mineral potential.

Poolbeg Pharma (POLB) a biopharmaceutical company, announced its audited results for the year ended 31 December 2022. The company said as it reflects on Poolbeg’s accomplishments in 2022, it is delighted with the progress made in its pipeline development, clinical programmes, and AI drug discovery programmes. Its strong cash position, coupled with the excellent data achieved in its LPS human challenge trial for POLB 001, positions it well for 2023 as it works towards its first partnering transaction. It remains committed to disciplined capital allocation, cost-effective R&D, and strategic partnerships, as it continues to pursue its goal of becoming a one-stop-shop for pharma and biotechs seeking products to in-license.

Comment: POLB has indeed made great progress over the past year, with it being able to finesse the transition from pandemic times back to “normality.” The big driver for 2023 could be the AI drug discovery programmes, given the way that AI is right on the zeitgeist currently.

Caracal Gold (GCAT), the East African gold producer, confirmed ongoing delivery of high-grade ore from the high-grade zone in the Kilimapesa Hill deposit to the Milling plant. The company said it has been 20 days since we started mining and processing ore from the Kilimapesa Hill high-grade zone and the team are pleased with the results across the board from the exploration to the mining and to the processing. At the Milling plant the focus Is to increase the tonnage from 360tpd to 500tpd over the next few weeks.

Comment: Kilimapesa was always supposed to be GCAT’s flagship, and this is now proving to be the case, ironically after some weak handed investors lost patience with the company. The chances now are that the company re-rates to where it was before some in the market were wrong-footed by the waiting game – now finally over.

KR1 (KR1:AQSE), a digital asset investment company, announced that the company has invested a total of $500,000 into Hydra Ventures (Cayman), LLC in return for 5,000 HYDRA tokens. Hydra Ventures is a newly launched investment DAO (Decentralised Autonomous Organisation) focusing on supporting and incubating investment DAOs across the web3 ecosystem. KR1 said it is excited to join Hydra Ventures, who are taking a unique approach to support investment DAOs and promoting the growth of the web3 ecosystem. As the DAO landscape continues to evolve and specialise, a ‘fund of funds’-style DAO becomes increasingly relevant.”

Comment: Anyone wishing to know what the latest trendy acronym / concept in the world of digital assets need look no further than KR1. For today’s lesson we have DAO. Of course, everyone already knows about web3…

genedrive (GDR), the point of care molecular diagnostics company, announced that the UK’s National Institute for Health and Care Excellence (NICE) has ratified and finalised its recommendation following a public consultation process that the Genedrive® MT-RNR1 ID Kit can be used by the NHS. The company said the review was conducted through NICE’s Early Value Assessment (EVA) programme, which was designed to select and recommend new technologies that will make a real difference to patients and provide the most value for the NHS.

Comment: The price action of Genedrive has indicated that the company was / is on the front foot, and this idea has been vindicated today. Receiving the thumbs up from NICE is no mean feat, and perhaps even more important a boost for the NHS’s long suffering patients.

TomCo Energy (TOM), the US operating oil development group, announced that the company has obtained an unsecured committed facility of up to £1,000,000 via a convertible loan note instrument and associated subscription and put option agreement entered into with certain subscribers introduced by Novum Securities Limited, the company’s broker. The company said this Convertible Loan facility provides the company with the flexibility to have financing available to drawdown whilst it seeks to finalise negotiations with a potential financing partner for a funding package that, if secured, would enable the company to execute on its development plans for Greenfield and the TSHII site.

Comment: If nothing else with TomCo’s news today, we are reminded that even in current straightened times one can rely on the good people of Novum to get a raise over the line.

Orcadian Energy (ORCA), the low-emissions North Sea focused oil and gas development company, announce its unaudited results for the six months ended 31 December 2022. The company said the second half of 2022 was dominated by political and fiscal turmoil. We all hope for calmer waters in 2023. Its absolute focus is to find a farm-in partner or a new owner for Pilot and its intention is to elicit offers during 2Q and 3Q of 2023 so that a new operator can take the project forward; a project which will help deliver a secure transition for the UKCS.

Comment: 2022 really was an annus horribilis for Orcadian, and it is perhaps correct to assume that 2023 could be no worse. What may help the situation is that ORCA’s market cap under £5m is so low that a farm-in partner / new owner should find this situation attractive.

Great Western Mining Corporation (GWMO), which is exploring and developing gold, silver and copper targets in Nevada, provided an operational update. The company said its near, medium and longer term objectives remain (1) completing the mill facility and bringing it on to production (2) continuing the search for precious metals and pinning down a discovery for development and (3) ensuring that the potential upside of the company’s copper prospects is maximised. Importantly, once the mill is producing it will become a revenue and cash generating business.

Comment: GWMO really would be transformed by a producing mill, something which the market certainly has not factored into the share price so far.

Cobra (COBR), a gold, rare earth and IOCG exploration company, announced the completion ahead of schedule of Reverse Circulation drilling focused on gold resource expansion. The company said McLeod Drilling has now mobilised an Aircore drilling rig to site and has commenced drilling, targeting rare earth resource expansion and other objectives. It expects expect results to materially contribute to a gold resource update later in the year.

Comment: It would appear that Cobra is on the runway to a decent gold resource update, something which should be reflected in the valuation, sooner rather than later. This is especially so given the way that the shares are currently trading at a third of where they were at the beginning of last year.

Technology Minerals (TM1), the first listed UK company focused on creating a sustainable circular economy for battery metals, announced that its 48.25% owned battery recycling business, Recyclus Group Ltd, has been awarded funding of £1.96m from the UK Government’s Innovate UK, to create a mobile battery recycling system capable of safely handling any type of lithium-ion battery.

Comment: It will be interesting to see whether nearly £2m in the kitty will finally move the dial as far as the recent downtrend in TM1 shares, as it should.

Author @ZaksTradersCafe

Disclaimer:

Zakmir.com is a purely journalistic website – Zak Mir is a member of the National Union of Journalists. There is no intention here of providing financial advice. It is recommended you seek an independent professional opinion before deciding whether or not to take any action with regard to anything written here.

According to a report by the City of London Corporation, the City of London is facing the possibility of losing its status as a leading financial center, as New York has caught up in the latest global finance rankings.

The study analyzed the performance of the world’s top financial centers based on 95 metrics, including innovation, business infrastructure, talent, skills, and regulation. The report showed that other financial hubs are growing at a faster rate than the Square Mile, with a key concern being the number of companies departing from the London stock market.

London received an overall competitiveness score of 60, up by one point from the previous year, but New York gained two points to equal London’s score. The declining number of international companies listed in London, as well as fewer international firms choosing to list there despite the listing rules’ changes, were highlighted in the report.

The City is losing its appeal as a financial center, with CRH and Arm announcing plans to leave the London stock market for New York.

Singapore ranked as the world’s third most competitive financial center, scoring 51, followed by Frankfurt with 46, Paris with 43, and Tokyo with 35. Chris Hayward, the policy chief at the City of London Corporation, warned that the UK’s competitive advantage is at risk and called for a long-term plan to stimulate growth in the financial and professional services sector. Despite better access to international markets than France, Japan, or the US, the UK is still facing the threat of losing its status as a global financial center.

Power Metal Resources PLC (LON:POW) the London listed exploration company seeking large-scale metal discoveries across its global project portfolio is holding its Annual General Meeting (“AGM”) today at 11 am.

#POW #AGM #Invest #Exploration
AGM Q&A@PowerMetRes CEO Sean Wade invites investors to submit questions about the #POW business for the upcoming AGM via social channels or email: info@powermetalresources.com. Q&A will be published after the AGM pic.twitter.com/bm8j0pHTa7

— Power Metal Resources (@PowerMetRes) March 29, 2023

At the AGM Sean Wade, Chief Executive Officer of Power Metal will provide the following statement:

“I have been in the role of Power Metal CEO for three weeks, and during that time, I have been working hard with the team to further accelerate our operational and corporate activities. We recognise the eagerness of shareholders to see the results of our strategy, and we are focused on delivering those as soon as possible.

Our aim is to unlock the inherent value existing in the portfolio and I am pleased to update shareholders on the progress we are making in that regard.

Diamond drilling at the Molopo Farms Complex Project in Botswana and the Berringa Project in the Victoria Goldfields was completed earlier this quarter, as was the first stage of the Tati Gold Project 2023 exploration programme including geophysics and trenching.

Complete accredited laboratory assay tests for all the above projects are expected to be received imminently and we look forward to releasing a series of exploration updates containing these results when they are received.

The focus of corporate activity has been the progression of the Golden Metal Resources PLC, First Development Resources PLC and Uranium Energy Exploration PLC planned IPOs.

For Golden Metal, in addition to the existing IPO financing interest, we are liaising with new institutional investors who recognise the strategic significance of Pilot Mountain Project, in an era of tungsten criticality for the United States. We aim to complete the Golden Metal IPO listing shortly.

Thereafter we will be focused on First Development Resources and its IPO financing and listing with the aim to also complete this process in the near term.

For Uranium Energy Exploration, and our wider uranium portfolio, we have experienced considerable interest and are working, not only on exploration preparations for 2023, but also reviewing various corporate initiatives to accelerate progress and value generation in the portfolio.

The Company therefore expects to release a series of announcements in respect of its corporate activities in the near term.

Each successful disposal or spin-out IPO will, in our view, add material value to our asset base and notably listed investments and will build on the Company’s total assets of circa £14.6 million (as of 30 September 2022 year-end).

We are focused on completing as many disposals in 2023 as possible, both to unlock value and to focus the Company on uranium exploration and the development of its key interests in Botswana.

I would like to thank the Power Metal team for their energy and enthusiasm in my first few weeks in the office. Also, my thanks go to shareholders for their engagement, support and patience as I have taken up this important role. I believe Power Metal has a great future ahead with a world-class portfolio providing multiple opportunities for creating shareholder value.”

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 (“MAR”), and is disclosed in accordance with the Company’s obligations under Article 17 of MAR.

For further information please visit https://www.powermetalresources.com/ or contact:

Power Metal Resources plc

Sean Wade (Chief Executive Officer)

+44 (0) 20 3778 1396

Significant milestones reached, well capitalised and positioned for future growth

London, UK 30 March 2023 – Poolbeg Pharma Plc (AIM: POLB, OTCQB: POLBF “Poolbeg” or the “Company”) a leading biopharmaceutical company focusing on infectious and prevalent diseases with a high unmet medical need, is pleased to announce its audited results for the year ended 31 December 2022.

Financial & Corporate Highlights

– Well capitalised with a cash balance of £16.2m at year end

– Poolbeg-led consortium awarded €2.3m in non-dilutive funding to progress its Oral Vaccine Platform

– Select experienced hires, bolstering the Company’s capabilities in core areas such as business development and clinical operations

Operational Highlights

· POLB 001 – potential blockbuster p38 MAP Kinase inhibitor for the treatment of severe Influenza and other acute inflammatory conditions

– Successfully completed the bacterial lipopolysaccharide (“LPS”) human challenge trial in 2022

– Positive results from the trial were published earlier this month. POLB 001 was shown to be safe and well tolerated and had a potent effect on systemic and localised inflammatory response in a dose dependent manner. This significant milestone demonstrates POLB 001’s expected utility in severe influenza and supports its continued development in other acute inflammatory conditions

– Poolbeg continues to evaluate POLB 001’s potential in additional indications to fully unlock the potential value of the molecule and strengthen Poolbeg’s position for partnering and out-licensing

· POLB 001 – Oncology

– Strategically expanded POLB 001 in January 2023 as a potential treatment option for Cytokine Release Syndrome (CRS), a side-effect associated with CAR T cell therapy. Clinical trial enabling activities are underway with trial initiation in CAR T cell patients expected in H1 2024

· Artificial Intelligence (“AI”) Programmes – a nalysis of unique disease progression data derived from human challenge trial samples

– Respiratory Syncytial Virus (“RSV”) AI programme with partner OneThree Biotech. Poolbeg embarked on a world first programme in February 2022 which yielded multiple novel RSV drug targets in November 2022. Following the discovery of these drug targets, the collaboration successfully identified a number of promising RSV drug candidates which can now be rapidly brought forward to lab-based validation

– Influenza AI programme with leading AI company, CytoReason, commenced in March 2022 and hit a major milestone in November 2022 as the construction of the computational artificial intelligence influenza disease model was completed

· Continued expansion and diversification of the pipeline

– POLB 002 – in-licensed an intra-nasally administered, RNA-based immunotherapy for pan-respiratory virus infections

– POLB 003 – in-licensed late-preclinical stage intra-muscular vaccine candidate for the prevention of Melioidosis, a predominantly tropical / subtropical disease with a high mortality rate and no approved vaccine available

– The Company continues to evaluate five other bacterial vaccine candidatesbeing developed at University College Dublin (“UCD”)under an ongoing option agreement

– Oral Vaccine Platform – licensed microencapsulation and nanoencapsulation technology aimed at triggering ‘mucosal immunity’ by delivering oral vaccines to the gut, preventing infections from taking hold in the body by counteracting them at the point of entry, both reducing transmission and preventing serious disease

– Oral Delivery of Metabolic Disease Treatments – licensed patented encapsulation technologies in metabolic syndrome related diseases, including obesity, pre-diabetes and diabetes

Jeremy Skillington, PhD, Chief Executive Officer, Poolbeg Pharma, said: “As we reflect on Poolbeg’s accomplishments in 2022, we are delighted with the progress we have made in our pipeline development, clinical programmes, and our AI drug discovery programmes. Our strong cash position, coupled with the excellent data achieved in our LPS human challenge trial for POLB 001, position us well for 2023 as we work towards our first partnering transaction. We remain committed to disciplined capital allocation, cost-effective R&D, and strategic partnerships, as we continue to pursue our goal of becoming a one-stop-shop for pharma and biotechs seeking products to in-license.”

Investor presentation

The Company will provide a live presentation relating to the results for the year ended 31 December 2022 via the Investor Meet Company platform on Thursday 30 March 2023 at 10:00 BST.

The presentation is open to analysts and all existing and potential shareholders. Investors can sign up to Investor Meet Company for free and add to meet Poolbeg Pharma here . Those who already follow Poolbeg Pharma on the Investor Meet Company platform will automatically be invited.

The Company’s Annual Report and Accounts for the year ended 31 December 2022 will be posted to shareholders in due course together with the notice of the 2023 Annual General Meeting, and will be available on the Company’s website: www.poolbegpharma.com/investors/documents/

– Ends –

Enquiries

Poolbeg Pharma Plc

Jeremy Skillington, CEO

Ian O’Connell, CFO

+44 (0) 207 183 1499

Great Western Mining Corporation PLC (AIM – GWMO, Euronext Growth – 8GW), which is exploring and developing gold, silver and copper targets in Nevada, is pleased to provide the following operational update:

· 2023 WORK SEASON AND PLANS FOR FIRST DRILLING

· MILL CONSTRUCTION STATUS

· COPPER POTENTIAL AT M2

· INVESTMENT ANALYSTS VISITING THIS WEEK

· CONFERENCE PRESENTATION

2023 WORK SEASON

Great Western’s team is now in Mineral County, Nevada, preparing for the start of drilling operations and the 2023 exploration programme. The team is being strengthened by the addition of a new full-time geologist, a US citizen who will be permanently based in Mineral County.

First drilling will be on the OMCO Mine prospect at the Olympic Gold project, to follow up the 2022 discovery of an extension to the previously mined OMCO vein, expected to commence in April when weather and ground conditions permit.

MILL CONSTRUCTION

It is now several weeks since groundwork was completed at the site of the Company’s 50%-owned milling joint venture in Mina, Nevada and the next stage is currently waiting on suitable weather conditions for pouring concrete, due to a recurrence of severe weather conditions this month.

As previously announced, all permit applications have been filed with the authorities and approval is awaited, timing of which is outside the Company’s control. Virtually all equipment needed for the assembly of the plant is now available and there are unlikely to be significant delays in the overall programme as a consequence of the extended winter.

REVIEW OF M2 COPPER POTENTIAL

As previously announced, the Company has been conducting an extensive review of its copper prospects during the winter, including the area known as M2 located in the Black Mountains group of claims.

At M2, a JORC-compliant independent report in 2018 established a copper resource, partly inferred/partly indicated, of 4.28 million tonnes at a grade of 0.45% Cu[1] . This is a large resource at a significant grade but falls short of the tonnage required for commercial development.

Included in the 2018 JORC-compliant independent resource report were the following two statements:

(1) The deposit contains a central area, 300 meters in length, which has only been tested by two drillholes. This area is given a high probability of containing additional resources. At a finding rate of 3,505 tonnes per meter we assume a probably target of 1 to 3 million tonnes, grading 0.4 to 0.6 percent total copper.

(2) The area of M2 IP anomaly comprises 163 hectares. Deducting the drilled area, which comprises 33 hectares, the target area consists of 130 hectares. Assuming a 65% probability of success, this target would consist of 9 to 14 million tonnes grading 0.4 to 0.6 percent total copper.

As the areas referred to in (1) and (2) above have not yet been drilled, they are categorised as Exploration Targets in JORC terminology and cannot be categorised as Resources. The recent review of all available data, taking into account the independent report on M2, has re-emphasised the exciting potential for M2 which could far exceed the Resource already reported.

If these independently calculated Exploration Targets prove to be correct, the Resource and the Exploration Targets together at M2 could become 14.3 – 21.3 million tonnes at 0.4 – 0.6 % copper, being several times larger than the existing Resource. Such an increase would be transformative for Great Western, but in addition it should be noted that the 1.5 km strike-length copper Resource at M2 lies within a 6.5 km belt of along-strike potential which is all within the Company’s claims, open to the northeast and southwest as well as down-dip to the southeast. The strongest IP anomaly, as yet undrilled, is located to the southwest of the existing Resource under tertiary lavas. To the northeast, where tertiary lavas do not obscure the host sequences, surface showings of copper occur for a further 1.5 km on Great Western’s claims.

Please visit the Black Mountain page on the Company website using the link below to view images showing (1) the M2 prospect within the Black Mountains group and (2) an overview of the regional setting of Great Western’s claims within an extensively mined area:

https://www.greatwesternmining.com/projects/black-mountain-group/

ANALYST VISIT

Great Western is hosting investment analysts in Mineral County, Nevada this week who are visiting the Company’s claims and reviewing progress at the mill site.

CONFERENCE PRESENTATION

Great Western Executive Chairman Brian Hall will be presenting at the 2023 Global Mining Finance Spring Conference on Thursday 20th April 2023. This is taking place at The Armourers’ Hall, 81 Coleman St, London EC2R 5BJ and will begin at 9.30 a.m. BST. Complimentary delegate passes can be obtained using the following link:

http://www.global-mining-finance.com/

Brian Hall, Executive Chairman commented: “In-depth work over recent months has made our copper potential look ever more interesting and we are actively seeking a development partner for M2. Once we have completed our studies of the Huntoon Valley and the Eastside Mine copper prospects, we will report on these as well. Great Western’s near, medium and longer term objectives remain (1) completing the mill facility and bringing it on to production (2) continuing the search for precious metals and pinning down a discovery for development and (3) ensuring that the potential upside of the Company’s copper prospects is maximised. Importantly, once the mill is producing we will become a revenue and cash generating business and we look forward to keeping shareholders informed on progress.”

Qualified Person Statement: The information in this announcement that relates to exploration results is based on information reviewed by Dr James Blight MGeol PhD MAusIMM who is Exploration Manager of Great Western Mining PLC. Dr Blight is a “Qualified Person” as defined in the “Note for Mining and Oil & Gas Companies” which form part of the AIM Rules for Companies. Dr Blight has reviewed and consented to the inclusion in the announcement of the information in the form and context in which it appears.

For further information:

Great Western Mining Corporation PLC

Brian Hall, Executive Chairman

+44 207 933 8780

Max Williams, Finance Director

+44 207 933 8780

The US Senate Finance Committee has accused Credit Suisse of aiding wealthy Americans in concealing their assets from tax authorities, even after a unit of the Swiss bank had pleaded guilty to tax evasion conspiracy almost a decade ago.

The committee found that the bank had breached the $2.6bn (£2.1bn) plea deal it had reached with the US Justice Department in 2014.

This further harms Credit Suisse, which was recently acquired by UBS. The committee chair, Senator Ron Wyden, described the case as a “massive, ongoing conspiracy to help ultra-wealthy US citizens to evade taxes and rip off their fellow Americans”.

The report suggested an “ongoing criminal tax conspiracy” involving nearly $100m in offshore accounts belonging to a family of dual US-Latin American citizens.

In response, Credit Suisse claimed that it has a zero-tolerance policy for tax evasion and that its new management is cooperating with the Justice Department, adding that it would close undeclared accounts and take disciplinary action against any employee who failed to follow bank policy or meet the bank’s conduct standards.

WTI (May) $73.20 +39c, Brent (May) $78.65 +53c, Diff -$5.45 +14c. 

Author @mgrahamwood

USNG (Apr) $2.03 -5c, UKNG (Apr) 105.33p +3.3p, TTF (Apr) €43.995 +€2.89. 

Oil price

Oil was slightly better yesterday as the Iraqi-Turkey pipeline remained offstream.

Genel Energy

Genel notes that DNO, as operator of the Tawke PSC (Genel 25% working interest), has today issued an update on licence activity.

DNO has started an orderly shutdown of the Tawke and Peshkabir oil fields in the Kurdistan Region of Iraq, four days after it was instructed to temporarily cease deliveries to the Iraq-Turkey Pipeline. Oil production had previously diverted to storage tanks.

The Tawke and Peshkabir fields averaged combined production of 107,000 barrels of oil per day in 2022, representing a quarter of Kurdistan’s total exports. Peshkabir production was halted last night and plans drawn up to conduct deferred maintenance. Tawke production shutdown has started but will take an additional day or so given the much larger numbers of wells spread across some 10 kilometers.

Production from Taq Taq (44% working interest, joint operator) continues to flow into storage, with capacity for approximately three weeks, while there remains storage capacity at Sarta (30% working interest, operator) for several days.

Not much to add to what I said on Monday, the wind down is getting underway by DNO as detailed above and as expected. Both KRG companies I follow have said that firstly it is important to realise that events like this are built into their models and that there is ample scope for continued dividend payments and in the long term a beneficial effect may be achieved by greater cooperation between the KRG and Baghdad on oil policy, either way it’s in nobody’s interest for this situation to continue. 

Kistos

Kistos has provided an update on its drilling activities in the Netherlands and the United Kingdom.

United Kingdom

The Benriach exploration well, located on block 206/05c (Kistos 25%) West of Shetland and operated by TotalEnergies E&P UK, has been spudded by the Transocean Barents. The operator estimates it is targeting P50 prospective resources of 638 Bcf (160 Bcf or 28mmboe net to Kistos). The well is expected to complete in Q3 2023. The dry hole post-tax cost net to Kistos is forecast to be ~£2.5 million as a result of Kistos’ tax paying position and the enhanced investment allowances from the Energy Profits Levy.

Netherlands

After arriving on location at the Q10-A gas field (Kistos 60%) in November 2022, the Valaris 123 rig recently departed after safely completing its work programme.  The results of the campaign were mixed. This was due to mechanical issues arising from utilising the existing well stock rather than reservoir performance issues. The Kistos technical team, with the assistance of external consultants, is undertaking a detailed evaluation of the results and future production enhancement options.

Future work programmes are being considered and could include the drilling of further Zechstein clastics wells in 2024 in combination with development drilling at the Orion oil field. Engineering design work has now been completed to enable the installation of two more risers on the platform, which would allow it to host additional wells. The Orion field continues to progress through the Concept Select Phase, which Kistos is undertaking with the assistance of Rockflow Resources.

Andrew Austin, Kistos’ Executive Chairman, said:

“We are excited that the Benriach well is underway. It is an important milestone for the Company with the potential to add significant reserves. I look forward to updating stakeholders with the results of the well in due course.

I would like to congratulate our team in the Netherlands on the safe completion under difficult weather conditions of the operational work programme. The process of fully evaluating the results of the campaign is ongoing, and will inform the planning of future work programmes, including the potential operational synergies with the Orion oil field development.“

Kistos has updated the market on both the UK and Netherlands drilling operations, partially as investors have been looking at marine trackers and in some cases getting the wrong readings. As it is I am very excited by the spud of Benriach which I have been waiting for ages for and could be a big plus for Kistos. Indeed with a combination of tax losses and the Looney tax enhanced investment allowances dry hole costs are just £2.5m.

In the Netherlands the ‘mixed’ campaign is not all bad in my view, whilst operational and mechanical difficulties are to blame rather than any reservoir disappointments, in due course new kit on the platform should mean more wells available.

Going forward I am confident that the outlook for Kistos remains exciting, I know the management team well enough to be able to say that I am sure that following recent choppy markets, for a number of well known reasons, deal flow has been slowed. I would bet that they are still on the acquisition trail but the stormy weather has slowed, rather than knocked off course the M&A activity. 

As a result when I do the quarterly update of the Bucket List in the next few days despite unusual recent performance it will show that if you believe the Kistos story, and I most certainly do, then it will look like the proverbial diamond in the rough and shares should be snapped up at these prices…

Southern Energy

Southern Energy today announced its:

·    2022 Year End Reserves Upgrade:

o  Highlights of the Company’s year end independent oil and gas reserves evaluation as at December 31, 2022 (the “NSAI Report”) include:

§ an increase in proved developed producing (“PDP”) reserves of 25% to 6.2 MMboe

§ an increase in total proved (“1P”) reserves of 44% to 14.1 MMboe

§ an increase in total proved plus probable (“2P”) reserves by 31% to 25.5 MMboe in 2022

§ before-tax net present value (“NPV”) of 2P reserves, discounted at 10% (“NPV10”), of $142.5 million (an increase of 61% on year end 2021) 

·    Gwinville Operational Update:

o  The Company announces the completion of its current drilling campaign of seven horizontal wells

o  Through technical improvements, Southern has reduced the average time from spud to total depth of its Gwinville wells from approximately 21 days to between 9-12 days and averaging 80-100% lateral placement in the high-graded porosity interval

·    Capital Budget Update:

o  In response to the current low natural gas prices, Southern plans to moderate the Gwinville organic growth program from the planned capital budget of US$101.0 million announced in November 2022 to approximately US$55.0 million

o  Under its revised capital plan, Southern will have drilled seven horizontal wells at the Gwinville asset, completed three wells and have four wells remain as drilled but uncompleted (“DUCs”) to be brought on in the future once natural gas prices are more supportive

·    Broker Appointments:

o  Stifel Nicolaus Europe Limited and Tennyson Securities have both been appointed as the Company’s joint corporate brokers with immediate effect

Ian Atkinson, President & Chief Executive Officer of Southern, commented:

“Although the drop in natural gas prices has brought us to the decision to moderate our Gwinville capital program, the overall impact of the applied learnings from the 2022 appraisal program have paid off and we are happy with the early results. In the current program we have drilled seven horizontal wells with longer laterals than the original appraisal wells in half the time on a per well basis and proven that the re-interpretation of our 3D seismic has improved our overall ability to stay within the targeted zone. We have positioned ourselves for the inevitable rebound in natural gas prices and look forward to moving equipment and manpower back into the Gwinville field quickly as price recovery occurs to re-initiate our organic growth plans and take advantage of maximising cashflows at the opportune time.”

Gary McMurren, Chief Operating Officer, commented:

“We are excited to report another year of material reserves growth in all major categories for the Company, highlighted by conservative additions to our Gwinville horizontal Selma Chalk inventory following our successful appraisal program in 2022. In our current development program, we will be testing two Lower Selma Chalk and two City Bank horizontal laterals with our modern completion design. The Lower Selma Chalk has only minimal reserve bookings in this year’s report, and we have yet to book any City Bank development reserves, so upon completion of these horizons over the next few months, we expect to continue to add significant and predictable reserves growth in Gwinville for years to come.

This is a lengthy update from Southern Energy which is stuffed full of data and into the bargain there is an updated presentation on the website. Starting with the reserves report the 2P number of 25.5m (20.2m)  is up 31% and I’m sure that talking to the management team today that they could have easily booked more reserves but that the full programme will deliver predictable, more material growth. 

The natural gas price has been remarkably weak in recent months, a combination of US production growth after Covid shut-ins, the delay over Freeport which is now coming back onstream and of course an unseasonably mild winter have all meant that prices have suffered. The company have, in my view wisely, cut the capital programme thus protecting the upside for what seem like inevitably better times. 

As for the recent drilling programme of 7 horizontal wells, 3 were completed and four are DUC’s waiting for a rebound in natural gas prices at which time the company plan on moving equipment and manpower back into the Gwinville field quickly as price recovery occurs.

There is plenty of material in this document and the new presentation that show that recent performance has been highly creditable with last year over 100% of PDP replacement in what was a conservative programme indicating that the company are taking a highly conservative view on both any future bet on natural gas prices whilst protecting the balance sheet. 

In my view this makes the company not only backed by a huge portfolio of high quality assets but also with an astonishing upside potential, the management are taking way the best action at the moment and SOUC remains in the Bucket List. 

The NSAI Report highlights the extensive running room and future development potential of only one of our existing core assets which will deliver long term sustainable free funds flow and organic growth. Further work is expected to unlock additional value for Southern shareholders, with the potential to significantly grow reserves in our portfolio in a short time frame.

With an average operating cost in 2022 of under $0.80/Mcfe, Southern has some of the highest margin natural gas assets in North America, which continues to benefit the business model and provide strong cashflow for the Company.“

Gwinville Operational Update

The Company is pleased to summarize the results of the current capital program to date as compared to the 19-3 padsite appraisal program:

Gwinville 18-10 Padsite

The Company is pleased to report the initial 30-day production rate (“IP30”) on the first well of the 18-10 pad out of a total of seven wells drilled to date in the capital program. The 18-10 #2 Upper Selma Chalk well recently reached an IP30 of 3.3 MMcf/d, which is similar to the 19-3 #3 and #4 appraisal wells, and below early type curve expectations for these Generation 3 well designs. The well encountered some unpredicted faulting and was drilled with only 50% of that lateral length within the high-grade porosity interval. Although below Generation 3 type curve estimates, the result is representative of a well with an effective lateral length in the high-graded porosity interval of less than 2,600 feet. 

The 18-10 #3 Upper Selma Chalk well achieved approximately 80% of the lateral within the high-grade porosity interval and was completed with a 44-stage stimulation. The Company experienced a mechanical wellbore integrity issue during the completion and plans to perform remedial work on the well and establish production in Q2 or Q3 of this year.

The 18-10 #1 City Bank well was drilled to a lateral length of approximately 5,744 feet with 100% of the lateral drilled in the target interval. The well was successfully stimulated with a 50-stage completion operation and is in early stages of completion flowback currently producing flowback water at 5% of load recovery. Southern does not expect to see peak gas rates until the well has recovered approximately 20% of load fluid based on historically stimulated vertical and Generation 1 horizontal wells in the City Bank reservoir at which time the Company will report on initial production. The Company is encouraged by the early results and looks to add significant net asset value to the reserve books in 2023 as no proven undeveloped or probable locations have been attributed to the City Bank zone to-date.

Gwinville Drilling Efficiencies

As a follow-up to the three well Upper Selma Chalk appraisal program from Q2 2022, which has recovered approximately 55% of upfront capital in less than nine months of production, Southern identified two major technical improvements to be employed on future activity. The re-interpretation of the 3D seismic to provide a higher resolution assessment of the reservoir, coupled with the utilization of a rotary steerable downhole drilling assembly that allows for immediate and more responsive corrections, has resulted in a significant improvement to the lateral length drilled in the high porosity interval and a significant reduction in overall drilling times. Utilizing these changes, Southern has reduced the average time from spud to total depth of these wells from approximately 21 days to between 9-12 days and averaging 80-100% lateral placement in the high-graded porosity interval. The learnings and cost savings achieved early in this program are expected to translate into all future Gwinville drilling.

The Company’s first padsite in the winter program was the 18-10 pad, which has two Upper Selma Chalk laterals and the first City Bank lateral. Next, the rig drilled the 14-06 pad that contained one Upper Selma Chalk lateral, and the first Lower Selma Chalk lateral. The rig has recently finished drilling the 13-13 pad with the second City Bank and Lower Selma Chalk laterals. The drilling rig has been released and the final four laterals will remain as DUCs until natural gas prices are more supportive of capital spending on organic growth. 

Capital Budget Update

In response to the current low natural gas prices and guided by principles focused on full-cycle value creation, Southern plans to moderate the Gwinville organic growth program from the planned capital budget of US$101.0 million announced in November 2022 to approximately US$55.0 million. Under its revised capital plan, Southern will have drilled seven horizontal wells at the Gwinville asset, completed three wells and have four wells remain as DUCs to be brought online in a higher natural gas price environment. These changes to the program at Gwinville will preserve capital, allow Southern the optionality to bring on high volume natural gas production at opportune natural gas prices and retain an inventory of high value development targets.

Year End Reserves Upgrade

Southern is pleased to announce selected highlights of the Company’s year end independent oil and gas reserves evaluation as at December 31, 2022. The NSAI Report was prepared by independent qualified reserves evaluator, Netherland, Sewell and Associates, Inc. (“NSAI”). All currency amounts are in United States dollars (unless otherwise stated) and comparisons refer to December 31, 2021. Financial information contained herein is based on the Company’s unaudited results for the year ended December 31, 2022 and is subject to change. The Company anticipates announcing its fourth quarter and audited year end 2022 financial results and filing an annual information form (“AIF”) for the year ended December 31, 2022, in April 2023.

Highlights:

•        Relative to year-end 2021, and accounting for 2022 production volumes, the NSAI Report states

•       an increase in PDP reserves of 25% to 6.2 MMboe

•       an increase in 1P reserves of 44% to 14.1 MMboe

•       an increase in 2P reserves by 31% to 25.5 MMboe in 2022

•       a reserve life index (“RLI”) of more than 8 years for PDP reserves and 15 years for 2P reserves, based on the 2023 production forecast

•        Successful organic growth and appraisal drilling resulted in strong reserves replacement (relative to 2022 production) in all reserve categories:

•       PDP replacement of 153%

•       1P replacement of 484%

•       2P replacement of 656%

•        At year end 2022, achieved record before-tax NPV10, evaluated using the average forecast pricing of four independent reserve evaluators as at January 1, 2023;

•       PDP: $51.6 million (59% increase on year end 2021)

•       1P: $85.3 million (59% increase on year end 2021)

•       2P: $142.5 million (61% increase on year end 2021) 

•       Additional drilling locations identified at Gwinville, based on 2022 Selma Chalk horizontal drilling success, which are expected to add material levels of production.

2022 Independent Qualified Reserve Evaluation

The following tables highlight the findings of the NSAI Report, which was prepared in accordance with definitions, standards and procedures contained in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and the most recent publication of the Canadian Oil and Gas Evaluation (“COGEH”). All evaluations and summaries of future net revenue are stated prior to the provision for interest, debt service charges or general and administrative expenses and after deduction of royalties, operating costs, estimated well abandonment and reclamation costs, and estimated future capital expenditures. The NSAI Report was based on the average forecast pricing of the following four independent external reserves evaluators: GLJ Ltd, Sproule Associates Limited, McDaniel & Associates Consultants Ltd and Deloitte LLP. Additional reserves information as required under NI 51-101 will be included in Southern’s AIF, which will be filed on SEDAR in April 2023. The numbers in the tables below may not add due to rounding.

Summary of Reserves Volumes as at December 31, 2022

The Company’s reserve volumes and undiscounted future development capital costs are summarized below as at December 31, 2022:

(1)      Gross working interest reserves before royalty deductions.

The following table outlines the changes in Southern’s reserves and reserve life index as at December 31, 2022 compared to December 31, 2021:

(1)       Percent change includes 2022 actual production of 948.4 Mboe

(2)       The RLI as at December 31, 2022 is calculated as gross working interest reserves divided by the projected annual production forecast in each reserve category for 2023.  See “Disclosure of Oil and Gas Information”

Southern’s total 2P reserves increased by 31% to 25.5 MMboe resulting in a 2P reserve life index of 15.1 years on projected annual 2P production for 2023.  Southern’s 2022 Selma Chalk horizontal well appraisal program helped the Company achieve a 25% increase in PDP reserves to 6.2 MMboe.

Net Present Value of Future Net Revenue as at December 31, 2022

The following table summarizes the net present value, at varying discount rates, of the Company’s reserves (before-tax) as at December 31, 2022.  The reserves value on a $/boe basis, discounted at 10% per year, is also summarized for each category.

(1)       Unit values are based on net reserves.  Net reserves are the Company’s working interest reserves after deduction of royalties

Forecast Prices Used in Estimates

The following table outlines the forecasted future prices used by NSAI in its evaluation of the Company’s reserves at December 31, 2022, for the NSAI Report, which are based on a four-consultant average price forecast, as detailed above. The forecast cost and price assumptions assume increases in wellhead selling prices and consider inflation with respect to future operating and capital costs.

Reserves Reconciliation

The following table sets out the reconciliation of Southern’s gross reserves based on forecast prices and costs by principal product type as at December 31, 2022 relative to December 31, 2021. The majority of 1P and 2P reserves increases, year-on-year, came from recognition of the Gwinville Selma Chalk horizontal locations from infill drilling.

(1)      Gross working interest reserves before royalty deductions

(2)      Technical revisions also include reserves associated with changes in operating costs and commodity price offsets

(3)      Produced volumes for the year ended December 31, 2022 are internally estimated

Arrow Exploration

Arrow has announced the results of its 2022 year-end reserves evaluation by Boury Global Energy Consultants Ltd. 

All reserves volume figures stated below are on a Working Interest Gross Reserve basis. Currency amounts are in United States dollars (unless otherwise indicated) and comparisons refer to December 31, 2021.

Highlights

–      Proved (“1P”) reserves:

o  Increased by 11% to 3.37 million barrels of oil equivalent (“MMboe“), driven principally through uplift at Tapir (Rio Cravo), Colombia; 

o  Net present value before tax, discounted at 10% (“NPV-10”) is $57.9 million ($17.15/boe) for 1P reserves.

–      Proved plus Probable (“2P”) reserves:

o  Increased by 4% to 7.69 MMboe; 

o  NPV-10 is $127.3 million ($16.56/boe) for 2P reserves.

–      Proved plus Probable plus Possible (“3P”) reserves:

o  Increased by 1% to 11.68 MMboe;

o  NPV-10 is $205.8 million ($17.57/boe) for 3P reserves.

–      Before tax NPV-10 values have increased 97% for 1P and 51% for 2P, over year-end 2021, due to reserves growth and an increase in the oil price forecast used by BouryGEC at year-end 2022;2022 Proved Developed Producing (“PDP”) reserves increased 27% to 1.31 MMboe supported by the improved performance of the new drilling in the Rio Cravo Field; PDP reserves represent 39% of 1P reserves, reflecting an attractive ratio of base production to low-risk drilling targets; and

–      Before tax NPV-10 per share of US$0.14/share, US$0.39/share, and US$0.63/share for 1P, 2P, and 3P reserve categories, respectively;

–      BouryGEC post tax NPVs impacted by changes in Colombian tax regime in the year but pre other corporate tax shelters (further detail below).

CEO Commentary

Marshall Abbott, CEO of Arrow, commented:

“Arrow delivered an increase in volumes and pre-tax values across 1P, 2P and 3P reserves in 2022. We are pleased with the results of the BouryGEC reserves evaluation, which reinforces the significant value of our Colombian and Canadian assets.

The BouryGEC 2022 report of course does not account for the current drilling campaign at Rio Cravo Este, where, given the encouraging results to date, we might expect further reclassifications and increase in reserves.  Additionally, with the imminent drilling of the Carrizales Norte wells, we would expect to continue growing reserves in the near future.

These very decent reserve numbers are made better by the fact that they are after a very good production number in the period they are calculated and show just how well the drilling programme in 2H 2022 went and it should be noted that the current highly successful well results are not included in these numbers. 

With this in mind this highly successful campaign is shortly to be concluded and succeeded by the drilling at Carrizales Norte which should add yet more to these figures. Accordingly I remain, as does the company, positive that the 3/- b/d target is well within reach.

No surprise then that my target price remains at 50p and accordingly the shares are incredibly good value at these knockdown levels. The long term outlook for Arrow is indeed extremely positive, the company has a very strong balance sheet, growth in production and resources and the discount to cash alone should be ringing bells with potential investors, the shares are cheap on any metric. 

2022 Year-End Reserves Summary

Management has presented below a summary of Arrow’s reserves as at December 31, 2022, on a working interest gross reserves basis, which have been taken from and reconcile directly to the reserves report prepared by BouryGEC, an independent qualified reserves evaluator.  The figures in the following tables have been prepared in accordance with the standards contained in the most recent publication of the Canadian Oil and Gas Evaluation Handbook and the reserve definitions contained in National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). In addition to the summary information disclosed in this announcement, more detailed information will be included in Arrow’s annual reserves evaluation for the year ended December 31, 2022 to be filed on SEDAR (www.sedar.com) and posted on Arrow’s website (www.arrowexploration.ca).

After tax values have been calculated without taking into account the tax shelter created by capital spending on projects that do not have reserve values associated with them, such as the Tapir 3D seismic project, drilling at Carazales Norte and annual G&A. Spending on these projects will provide tax shelter and result in a reduction of tax for future.

Brent Crude Oil Price and AECO Gas Price Forecasts in BouryGEC Reserves Evaluation

Year-End Working Interest Gross Reserves – Breakdown by Category and Country (Mboe)

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

(1)      “Core” assets include Arrow’s share of reserves in the Tapir Block, the Santa Isabel Block (Oso Pardo), and Mateguafa. Arrow’s 50% interest in the Tapir Block is contingent on the assignment by Ecopetrol SA of such interest to Arrow.

(2)      “Non-core” assets include the Ombu Block (which includes the Capella Field)

(3)      “Canada” assets include Fir and Pepper

Year-End Net Present Value at 10% – Before Tax ($ Thousands)

 Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

Year-End Net Present Value at 10% – After Tax ($ Thousands)

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

Year-End Net Present Value at 10% – After Tax ($ millions) – Sensitivity Cases

In the context of the Brent crude oil and AECO gas prices prevailing at the time of the publication of this press release, when compared generally to the Brent crude oil and AECO gas price forecasts used in the BouryGEC Reserves Evaluation for the year ended December 31, 2022, Arrow is also providing readers with the following sensitivity analysis as to the net present value of its reserves.

 Readers are cautioned that there is no certainty that the forecast price of crude oil or natural gas will increase as calculated by changes to the Dec. 31, 2022 BouryGEC price deck used in the Reserves Evaluation report.

Forecast Revenues and Costs – Undiscounted ($ millions)

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

(1)      BT = Before Taxes and AT = After Taxes

(2)      Operating Cost less processing and other income

(3)      Revenue includes Petrolco Income

2021 Year-End Working Interest Gross Reserves Reconciliation (Mboe)

Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.

Coro Energy

Coro has announced that it has entered into a revised Heads of Terms with the shareholders of KIMY Trading and Service JSC, following its due diligence process, in respect of the potential 3.25 megawatts acquisition, announced on 25 November 2022.

As announced on 25 November 2022, the Company entered into a period of exclusivity on a 100% interest in a leased rooftop solar portfolio in Vietnam across four locations close to Saigon with an aggregate generating capacity of 3.25 megawatts currently held by KIMY. The Portfolio has been operational for two years and benefits from an existing power purchase agreement with a remaining eighteen-year term, with the power off-taker being state owned Electricity Vietnam (EVN).

Following due diligence and site visits, legal work on the final transaction documents is now underway. The Company has renegotiated some elements of the Heads of Terms with the vendor to reflect some works that will be needed post completion and has now signed a revised Heads of Terms, which extends the exclusivity.  The total acquisition price remains circa US$1.7 million (US$548/MW) albeit with revised consideration scheduling as follows:

·    At completion:

o  Assumption by Coro (via acquisition of KIMY) of US$950,000 of existing specialist renewables debt with a Vietnamese bank;

o  US$130k cash payable, of which US$30k is ring fenced to secure certain required local fire safety certifications;

o  US$0.25 million payable in new ordinary shares in the Company, locked in for 18 months from completion;

·    A further US$80,000 cash and US$80,000 of new ordinary shares in the Company, payable after 2 months on demonstration that the local certification is in place with no curtailment

·    A further US$0.25 million in cash in six equal monthly instalments from completion.

Further protections in respect of the outstanding documentation will be incorporated into the final transaction documents albeit it is understood that achieving the documentation is purely an administrative process.

Little to add here, certainly not enough for explanatory comment from the company, a better deal than previously expected and pushes forward the move into South East Asia.

Predator Oil & Gas

Predator has announced the following update to the fund raising announced on 17 March 2023. 

On that date the Company  announced that it had conditionally placed 15,500,000 new ordinary shares of no par value in the Company and 20,863,636 existing ordinary shares of no par value in the Company transferred by a director of the Company, Paul Griffiths, at a placing price of 5.5 pence each to raise £2,000,000 for completion on 3 April 2023. The Company now confirms that the number of New Shares issued will be 14,174,056 whilst the number of Loan Shares to be transferred by Paul Griffiths will be 22,189,580. 

The total funds raised by the Placing remains at £2,000,000, which is conditional on the New Shares being admitted to listing on the Official List and to trading on the London Stock Exchange’s main market for listed securities on or around 3 April  2023.

Stock Lending Agreement

The Loan Shares will be documented in a single stock lending agreement between Paul Griffiths and the Company.

Under the unsecured Stock Lending Agreement between the Company and Paul Griffiths the return of 22,189,580 shares loaned to the Company are intended to be issued to Mr Griffiths when the Company has additional headroom and at an appropriate time, subject to the Company’s dealing policy. When repayment is due the Company will make the necessary listing and admission hearing applications to have those new ordinary shares admitted to trading.

Interest shall accrue on the Loan at a rate of 4%  above SONIA of the principal sum lent of £1,220,427, being the market value of 22,189,580 shares at the Placing Price. The default rate of interest under the Stock Lending Agreement for any sum which is not repaid when due is 12% per annum.

Related Party Transaction

Paul Griffiths is a director of the Company. The Stock Lending Agreement is therefore considered to be a related party transaction.

Lonny Baumgardner, Alistar Jury and Carl Kindinger, being the independent directors for the purposes of the Related Party Transaction consider that the terms and conditions of the Stock Lending Agreement are fair and reasonable insofar as the shareholders of the Company are concerned.

An application will be made to the FCA and to the London Stock Exchange Admission in respect of those 14,174,056 New Shares.  It is expected that Admission will become effective, and that dealings in such shares are expected to commence, at 8.00 a.m. on 3 April 2023.

The rights attaching to the New Shares will be uniform in all respects and will rank pari passu, and form a single class for all purposes with, the existing issued shares of no par value in the Company.

No surprises here, I have already written about the raise for Predator and for Mr Griffiths’ excitement for drilling in Morocco.

And finally…

In the final round of Euro qualifying Scotland pulled the result of the week out of the bag beating Spain 2-0. Wales also won beating Latvia 1-0.

Author @mgrahamwood

Disclaimer & Declaration of Interest
The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. The writer may or may not hold investments in the companies under discussion

Premier African Minerals Limited (“Premier” or the “Company”), is pleased to report on current status at Premier’s Zulu Lithium and Tantalum Project (“Zulu”).

• Plant assembly and construction is complete.
• Final instrumentation connections completed on 28 March 2023.
• Plant to point of mill feed has been run.
• Plant to Mica feed tank expected to run this morning.
• Wet section (floatation part of the plant) has water on and is pressurised.
• Ore is on the ROM pad, ready to feed.
• Crusher settling in pre-production runs are underway.
• First live production runs to produce spodumene expected this week provided final approvals from Zimbabwean authorities are received on time.

George Roach, CEO commented, “We expect to produce spodumene, a lepidolite mica rich concentrate and a tantalum rich concentrate late this week provided that final formal outstanding approvals from certain Zimbabwean authorities are received.

It should also be noted that an error on the part of the plant designers led to a late change in reagent dosing and reagent requirements. This and a combination of late delivery of certain components of the floatation system of the plant, a severe wet season in Zimbabwe and the continued issues of slow import clearance of essential plant at Beitbridge, have all combined to cause Premier’s self-imposed internal commissioning target of 14 February 2023 to be missed. I expect to be in a position to provide guidance on operating projections in the coming weeks.

Premier was adequately funded to that projected date and remains in funds at this time. It may be necessary to either increase the prepayment amount under current Marketing and Pre-Payment Agreement or accept a short-term loan facility secured against spodumene to be produced to meet operating costs at Zulu in the coming weeks. Should that arise, it will be announced at that time.

Premier has received a number of requests from other mining companies already well established in Zimbabwe to discuss our intentions in regard to the future of Zulu for either future offtake and/or direct equity investment into Zulu. At the same time, Premier is in discussions intended to see a quick increase in production and a broadening of the product base as the focus of production at the Zulu plant has only been the production of spodumene. This is likely to take the form of fully funded extensions and modifications to the existing plant. In that regard, I remind shareholders that the existing plant will only process approximately 60% of the ore feed through to the floatation circuits and the first upgrades will be targeted at increasing floatation capacity to increase concentrate production.

I am personally excited at this prospect of so significant a company-changing moment in the history of our Company and am somewhat in awe when I consider that in September 2022 this was virgin bush!

None of this would have been possible without the massive contribution made by so many of our staff and our contractors and the incredible support of our shareholders through some really trying years in getting to where we are today.”

Marketing and Pre-Payment Agreement (“Agreement”)

In accordance with the Agreement entered into between Premier and Suzhou TA&A Ultra Clean Technology CO. LTD. (“Suzhou TA&A”) as announced on 24 June 2022, Premier was required to supply product by the 31 March 2023. Suzhou TA&A will begin charging interest at rate 3.5% per annum on the prepayment amount of US$34,644,385 from the 1 April 2023. Premier will have until 30 May 2023 to begin providing Suzhou TA&A with product in accordance with the Agreement, a failure to do this will provide CanMax with the right to terminate the Agreement by notice in writing to Premier and Premier will need to enact repayment of the prepayment amount plus interest in full within ninety (90) days of such termination notice.

The person who arranged the release of this announcement on behalf of the Company was George Roach.

Enquiries:

George Roach

Premier African Minerals Limited

Tel: +27 (0) 100 201 281

Zak Mir takes a charting look at some of the most followed small caps on the London stock market. Today’s charts are FTSE 100, Dax, Dow, Bitcoin,  Angus, Berkeley, Caracal, Cizzle, eEnergy, GreenX, GSTechnologies, Insig, Marula, Premier African, Phoenix, Quantum Exponential, Saietta, Zenith.

Disclaimer:

Zakmir.com is a purely journalistic website – Zak Mir is a member of the National Union of Journalists. There is no intention here of providing financial advice. It is recommended you seek an independent professional opinion before deciding whether or not to take any action with regard to anything written here.

Metal prices little changed ahead of the US PCE data later in the week

MiFID II exempt information – see disclaimer below

Aura Energy* (AURA LN) – Enhanced DFS increases annual production rate at the Tiris uranium project to 2m lbs and boosts economic returns

Central Asia Metals (CAML LN) – 2022 dividend maintained at 20p/sh

Horizonte Minerals (HZM LN) – 2022 reports highlights progress towards early 2024 production at the Araguaia ferronickel project

Shanta Gold (SHG LN) – 2022 sales climb on a recovery in NLGM production with further growth expected following the Singida commissioning

Economics

Currencies

US$1.0834/eur vs 1.0830/eur yesterday. Yen 131.89/$ vs 131.21/$. SAr 18.161/$ vs 18.242/$. $1.233/gbp vs $1.233/gbp. 0.668/aud vs 0.669/aud. CNY 6.889/$ vs 6.886/$.

Dollar Index 102.65 vs 102.55 yesterday.

Commodity News

Risk sentiment picked up this morning on the news of a planned split into six business divisions that is seen by many as easing of tensions with Chinese regulators.

• Shares closed 12% up on the HK exchange while am measure of HK listed tech firms were up 2.5%.
• The US$ index edged higher after hitting the lowest level in eight weeks on Tuesday.
• PCE inflation data is out later this week that the Fed considers the preferred measure of changes in consumer prices.
• Markets are currently pricing a less than 50% chance that the central bank will hike by 25bp at the next meeting (03 May).

US – Consumer confidence surprised on the upside in March despite recent financial market turmoil leading to fears of a contagion in the regional banking system.

• The survey showed consumers remained cautious cutting on selected discretionary items like entertainment and dining out, however, were more inclined to purchase large tickets items like autos and white goods.
• The survey would have included effects from the baking covering the period up to March 20, a week over the news about the failure of SVB and Signature Bank.
• Strong labour market seems to be more than compensating for strong inflation challenges and higher borrowing costs.
• House prices continued to drop further in January cutting the annual growth rate to the weakest in over two years on the back of higher mortgage rates.
• Conference Board Consumer Confidence: 104.2 v 102.9 February and 101.0 est.
• S&P CoreLogic CS 20-City (%mom): -0.43 v -0.51 December and -0.50 est.
• S&P CoreLogic CS 20-City (%yoy): 2.55 v  4.65 December and 2.60 est.

Germany – Consumer sentiment improved marginally in April, although, continued to struggle with the survey concluding that “private consumption is unlikely to make a positive contribution to economic growth this year”, GfK said.

• “The expected loss of purchasing power is preventing a sustained recovery in domestic demand,” GfK wrote.
• GfK Consumer Confidence: -29.5 v -30.5 March and -30.0 est.

UK – Mortgage approvals ticked up in February, albeit from a low base currently running at the lowest since 2010 (excluding pandemic lows).

• British clothing retailer Next is guiding for challenging year in 2023 driven by “the combination of inflation in… cost base and top line sales, which are likely to edge backwards”.
• Mortgage Approvals: 43.5k v39.6k January and 41.3 est.

Precious metals:

Gold US$1,964/oz vs US$1,954/oz yesterday

   Gold ETFs 93.1moz vs US$92.9moz yesterday

Platinum US$965/oz vs US$970/oz yesterday

Palladium US$1,419/oz vs US$1,420/oz yesterday

Silver US$23.18/oz vs US$22.92/oz yesterday

Rhodium US$8,350/oz vs US$8,350/oz yesterday

           Base metals:   

Copper US$ 8,940/t vs US$8,994/t yesterday

Aluminium US$ 2,387/t vs US$2,381/t yesterday

Nickel US$ 23,800/t vs US$23,900/t yesterday

Zinc US$ 2,926/t vs US$2,910/t yesterday

Lead US$ 2,137/t vs US$2,148/t yesterday

Tin US$ 25,770/t vs US$25,665/t yesterday

           Energy:           

Oil US$79.2/bbl vs US$78.4/bbl yesterday

• Crude oil prices edged higher on news that Kurdistan’s oil fields were starting to shut-in production as revenue-sharing talks continue and after the API reported a 6mb draw in US crude oil stocks (vs 0.2mb build expected).
• European gas prices moved higher as lower wind power generation and colder temperatures forced European countries to start taking gas out of storage again after five days of inventory growth.
• US HH natural gas prices fell to the lowest levels since September 2020 following forecasts for more moderate temperatures in much of the Lower-48.

Natural Gas US$2.008/mmbtu vs US$2.095/mmbtu yesterday

Uranium UXC US$50.35/lb vs US$50.35/lb yesterday

  Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$123.3/t vs US$120.4/t

Chinese steel rebar 25mm US$612.0/t vs US$611.9/t

Thermal coal (1st year forward cif ARA) US$134.5/t vs US$134.5/t

Thermal coal swap Australia FOB US$192.4/t vs US$195.0/t

Coking coal swap Australia FOB US$340.0/t vs US$340.0/t

                       Other:  

Cobalt LME 3m US$34,430/t vs US$34,180/t

NdPr Rare Earth Oxide (China) US$78,753/t vs US$80,240/t

Lithium carbonate 99% (China) US$30,558/t vs US$31,442/t

China Spodumene Li2O 5%min CIF US$4,660/t vs US$4,710/t

Ferro-Manganese European Mn78% min US$1,338/t vs US$1,338/t

China Tungsten APT 88.5% FOB US$325/mtu vs US$325/mtu

China Graphite Flake -194 FOB US$790/t vs US$790/t

Europe Vanadium Pentoxide 98% 9.4/lb vs US$9.5/lb

Europe Ferro-Vanadium 80% 38.75/kg vs US$38.85/kg

China Ilmenite Concentrate TiO2 US$345/t vs US$343/t

Spot CO2 Emissions EUA Price US$94.3/t vs US$93.0/t

Brazil Potash CFR Granular Spot US$450.0/t vs US$450.0/t

Battery News

Company News

Aura Energy* (AURA LN) 15.5p, Mkt Cap £79m – Enhanced DFS increases annual production rate at the Tiris uranium project to 2m lbs and boosts economic returns

(Aura holds 85% of the Tiris Uranium Project, Mauritania)

• Aura Energy’s ‘Enhanced Definitive Feasibility Study’ (EFS) for its Tiris uranium project shows increased average annual production of 2mlbs of U3O8 over a slightly longer mine life compared to the 800,000lbs pa envisaged in the 2021 DFS.
• The company explains that the higher production rate is underpinned by “the recently announced 52% increase in Measured and Indicated Resources to 29.6 Mlbs U₃O₈, (62.1Mt at 216 ppm U₃O_8, at a 100ppm grade cut-off)”.
• Increased  mineral resources are now expected to deliver total production of 25.5mlbs of U₃O₈ at an average all-in-sustaining cost of US$28.77/lb over a 16 year mine life in the company’s base case.
• The study envisages a total capital investment of US$178.2m delivering an after tax NPV_8% of US$226m and IRR of 28% compared to the 2021 study which was based on the expenditure of US$74.8m to produce 800,000lbs annually and generated an after-tax NPV_8% of US$79.7m and IRR of 22%.
• Aura Energy uses a base case price of US$64/lb of U3O8 in its analysis and also describes an upside case using a price of US$79/lb in which the same capital expenditure delivers an NPV_8% of US$347m and IRR of 35% over a 17 year mine life.
• Aura Energy confirms that “Further project optimisation will be investigated as part of the FEED study which has commenced using the outcomes of the EFS”.
• The company explains that its 2022 infill drilling campaign increased the project’s ore reserve to 40.3mt at an average grade of 254ppm U₃O₈ with around 48% of the reserve tonnage (19.3mt at a grade of 257ppm) classed as ‘Proved’ with the balance defined as ‘Probable’ under the JORC (2012) classifications.
• The new reserve tonnage is 270% larger than the previous reserve estimate of 10.9mt (albeit at a lower grade compared to the 336ppm reported in the 2019 estimate) with total contained U₃O₈ 179% larger at 22.6m lbs.
• Managing Director, Dave Woodall, explained that the project benefits from “its low capital intensity, low operating costs, competitive all-in-sustaining cost and … [that] … key regulatory approvals in place … [and he also said that] … What differentiates Tiris is the ore quality that allows free-dig shallow open pit mining. Aura does not require expensive drill and blast operations or capital-hungry infrastructure for crushing and screening … [and a process route which relies on] … simple scrubbing and screening” prior to leaching.
• Mr. Woodall confirmed that the focus at the Tiris project “is now on the consideration of a Final Investment Decision as early as Q4 2023, which would see commissioning in late 2024 for commercial production in early 2025”.

Conclusion: Infill drilling last year has increased the mineral resources and reserves at Tiris and underpinned an expanded production rate which enhances economic returns compared to the previous, 2021, assessment. We look forward to the Final Investment Decision on Tiris later this year.

*SP Angel acts as Nomad and Broker to Aura Energy

Central Asia Metals (CAML LN) 238p, Mkt Cap £457m – 2022 dividend maintained at 20p/sh

• Central Asia Metals reports a 2022 profit of US$33.8m (2021 – US$84.2m) and EBITDA of US$131.6m (2021 – US$141.5m)
• The company is declaring a final dividend of 10p/share bring the distribution for the full year to 20p/share (2021 – 20p/share) representing “47% of 2022 free cash flow ^… (2021: 45%) in line with stated dividend policy”.
• Gross revenues for the year were US$232.2m (2021 – US$235.2m) reflecting the production of 14,254t of copper from Kounrad at a cash cost of US$0.65/lb and 21,743t of zinc in concentrate at a cost of US$0.78/lb from Sasa.
• The company says that Kounrad where the operation “continued to perform well … [and] … we enjoyed celebrating 10 years of copper production” output exceeded the company’s upwardly revised guidance range of 13,500-14,500t.
• The company comments that the costs at Sasa reflect “elevated electricity costs incurred during H2 2022” while costs at Kounrad “remained very low by global standards at $0.65 per pound, despite inflationary pressures”.
• Central Asia Metals also confirms that “In August, we made our final repayment of the $187 million debt which we secured to acquire Sasa less than five years before. CAML ended 2022 with cash in the bank of $60.6 million”.
• Looking at expectations for 2023, the company’s guidance is for Kourad to produce between 13-14,000t of copper and for Sasa to produce 27-29,000t of zinc in concentrate.
• Capital expenditure during 2023 is expected to be “between $28 million and $30 million, of which between $11 million and $13 million is expected to be committed to sustaining capex. Total expected 2023 capex also includes approximately $5 million related to the Kounrad solar power plant. CAML expects Cut and Fill Project capital expenditure in the order of $12 million in 2023”.

Horizonte Minerals (HZM LN) 138.5p, Mkt Cap £374m – 2022 reports highlights progress towards early 2024 production at the Araguaia ferronickel project

• In its 2022 results Horizonte Minerals reports on the progress of its Araguaia ferronickel project in Brazil where, following the successful conclusion of US$633m of debt and equity financing, construction formally started in May 2022.
• In its accounts, the company reports a pre and post-tax loss of US$5.3m in 2022 (2021 – loss of US$13.4m) and a year end cash balance of US$154m.
• The company confirms that it has placed all of the “key material contracts at Araguaia, with first production on track for Q1 2024”.
• Commenting on the year, CEO, Jeremy Martin also highlighted the importance of the various contracts and said that “the most critical of these contracts, is the low-cost power contract. Electrical energy makes up approximately a third of our operating costs at Araguaia, so having a power contract with renewable sourcing, at the extremely competitive pricing that we were able to lock in, means that Araguaia will be operating in the lowest quartile of the cost curve for at least the ten-year duration of the initial contract life”.
• He confirmed that 2023’s “primary focus will be on delivering Araguaia on-time, on-budget and safely. We are targeting cold commissioning towards the end of 2023 with hot commissioning and subsequent first nickel in 1Q 2024”.
• Mr. Martin also commented on the company’s project at Vermelho, also in Brazil, which he described as “an excellent opportunity to develop a low-cost supply of nickel and cobalt to meet the fast-growing demand due to global efforts to transition to net zero emissions” and where a contract to deliver a feasibility study was awarded in October 2022 and which he described as “a major milestone in advancing the project through to a funding decision”.

Conclusion: Investors will no doubt welcome confirmation that the Araguaia project remains on course for cold commissioning later this year ahead of initial nickel production early in 2024.  We expect that there will be regular news as development progresses at Araguaia and the Vermelho feasibility study advances.

Shanta Gold (SHG LN) 12.4p, Mkt cap £130m – 2022 sales climb on a recovery in NLGM production with further growth expected following the Singida commissioning

• Revenue totalled $114m (2021: $104m), up 10% driven by higher gold sales of 63.7koz (2021: 57.5koz).
• Realised gold price averaged $1,791/oz (2021: $1,801/oz).
• Production was up 18%yoy at 65.2koz (2021: 55.3koz), slightly below the lower end of the guided 68-76koz range.
• Stronger production was driven by higher plant throughput and grades at the NLGM operation.
• Mining operations are reported to have been held back in H2/22 by equipment availability issues that were now rectified as the second contractor was engaged for surface NLGM operations as well as an extra Sandvik underground production drill rig was commissioned in Dec/22.
• AISC came down to $1,271/oz (2021: $1,439/oz) reflecting stronger production during the period.
• EBITDA and EBIT amounted to $23m and $6m, respectively (2021: $21m and $5m).
• FCF totalled -$26m (2021: -$14m) on the back of Singida Gold Project development spend and ongoing exploration at West Kenya.
• Closing cash balance stood at $3.8m with net debt at $23.6m 2021: $13.2m and $6.9m net cash).
• Final dividend is proposed at 0.1p, in line with 2021, equivalent to ~$1.3m payment or ~1.6% yield when 0.1p interim dividend is taken into account.
• 2023 NLGM guidance is for 66-72koz at $1,200-1,300/oz with Singida expected to contribute extra ounces on top of that.
• Singida development is almost complete with the team expecting commissioning announcement this month (Mar/23).
• Singida production guidance will be released following the start of commercial production (previously, the LOM plan guided for ~32kozpa).

Conclusion: Results reflect stronger gold production in 2022 with cash flow constrained reflecting capital intensive period with Singida nearing commissioning. 2023 is expected to improve with contribution from new output from Singida.

No.1 in Copper:  “The winner of the 2020 Fastmarkets Apex contest for copper was the team at SP Angel comprising John Meyer, Sergey Raevskiy and Simon Beardsmore, with an accuracy score of 93.8%”

No1. In Gold:  “SP Angel’s trio took the top spot for the gold price prediction throughout the year, with an accuracy score of 97.59%”

The SP Angel team also ranked 1st in Palladium, 3rd in Tin and 5th in Silver in the fourth quarter of 2020

Analysts

John Meyer – John.Meyer@spangel.co.uk – 0203 470 0490

Simon Beardsmore – Simon.Beardsmore@spangel.co.uk – 0203 470 0484

Sergey Raevskiy –Sergey.Raevskiy@spangel.co.uk – 0203 470 0474

Sales

Richard Parlons –Richard.Parlons@spangel.co.uk – 0203 470 0472

Abigail Wayne – Abigail.Wayne@spangel.co.uk – 0203 470 0534

Rob Rees – Rob.Rees@spangel.co.uk – 0203 470 0535

Grant Barker – Grant.Barker@spangel.co.uk – 0203 470 0471

SP Angel                                                            

Prince Frederick House

35-39 Maddox Street London

W1S 2PP

*SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded)

+SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.

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SPA research ratings – Based on a time horizon of 12 months: Buy = Expected return of more than 15%, Hold = Expected return between -15% and +15%, Sell = Expected return of less than 15%

Analysis of Chinese investing strategy in China, and its implications for a possible buyout of PREM.

By Charles Archer

I have covered Premier African Minerals (LON: PREM) more times than I can count, across a half-dozen publishers since mid-2019. Until recently, I have been looking solely at PREM’s progress and milestones, which have certainly been impressive.

It’s worth noting that the company has gone from undeveloped bush to pilot plant in the space of a year — by industry standards this is practically unheard of.

And to be clear, there are many more RNSs to potentially report on through 2023, though these do seem more like exercises in tick-boxing as production brings the rewards closer.

These include, but are not limited to, confirmation that the ‘pilot’ plant has commenced production, the first sale from Zulu, the first receipt from Zulu, further assay results, output increases, news on a second plant, pilot plant optimization, solar energy plans, approval of its mining licence application for the wider EPO…

Further catalysts are pretty much endless. Unlike other favourites such as #HARL, #AVCT, or #BOIL, production is set to begin shortly, so there is a huge amount of information to convey to shareholders in the near term.

The other three have now confirmed their potential, so in those cases, regardless of share price movement, it’s simply a case of sitting tight and waiting out the dips, no matter how hard that may be.

PREM shares are now riding high at 0.94p, having risen by a third in the past few days alone. The lithium explorer — soon to be producer — now has a market cap of over £200 million. And while profit-taking and the usual AIM nervousness means volatility may be inbound, further rises may be coming down the pipeline.

But why is this?

Yes, some of the recent spike can be attributed to expectations of profits from sales from Zulu. A maiden dividend may also be coming, though I would prefer all profits to be diverted to further development of Zulu or even to PREM’s other high-quality but often over-looked assets.

And arguably, there is an element of ramping. Despite being delighted with the recent spike, it’s also attracted the usual flies, who will quickly move onto the next AIM mover at the next available chance.

But the key underappreciated factor is that institutional investors — and indeed many retail investors — steer clear of explorers. I have lost count of the number of promising explorers who have gone nowhere, and many institutions ignore them altogether, much in the same way as a recruiter might ignore a candidate without a degree for some roles, even if they have exceptional experience.

But PREM is — or soon will be — a producer. This puts it in a different category.

My view is that strategic investor and offtake partner Canmax Technologies (formerly Suzhou) could choose to either buyout the entire company, or offer significant additional funding in exchange for more shares, or pay a premium for the rights to 100% of production rather than the 50% at present.

It’s hard to know which of these avenues could be more appealing. Canmax Chair and multi-billionaire Pei Zenzhue — who also owns a 5.8% stake in CATL — visited the site in early January and left with a strongly positive view. And Zenzhue already has multiple other investments in Zimbabwe.

But some clues for his potential approach can be found in the changes to Chinese investment strategy into Africa — with priority in the past given to security of supply over attempting to gain overall control.

Chinese investing strategy

Understanding whether PREM could be subject to a buyout requires a long-term professional view of Chinese mining industry interests in Africa. And Africa accounted for 12.3% of Chinese companies’ exploration and strategic investment budgets in 2021, up from 8.1% in 2011.

Partially, this is due to the CCP wanting to reduce dependence on Australia should they choose to invade Taiwan. But it’s also worth noting that Australia is far more expensive to invest in, with the former trade-off being increased confidence in Australia’s regulatory and judicial systems.

For example, mine costs at Chinese titan CITIC’s iron ore mine in Australia have been high since operations began, with all-in sustaining costs over $100/dmt in 2013 and 2014 alone. These costs have only risen with time, as the ore requires a four stage milling process compared to the usual standard of two, while labour costs are also high by international standards.

Importantly, high operating costs came from a lack of preliminary study of the project — and this rush to achieve dominance in the project came under harsh criticism from domestic Chinese investors and the Communist Party itself, who were less than impressed with the message of incompetence sent to the global markets.

Since this mistake, Chinese companies have been encouraged to take a different strategy.

Take copper. Of the 88 Chinese-owned copper assets abroad, 17 are owned by China Nonferrous Mining Corp — and all 17 are in the Central African Copper Belt.

One of the earliest mines it acquired was the Chambishi Project in Zambia — bought in 1998 — and the project was also subject to limited due diligence. Now it’s one of the highest-cost copper mines in the world. The Chinese learnt from their mistakes, instead preferring to become strategic investors in smaller mines such as Zambia’s Muliashi North in 2009, which is now one of the lowest-cost copper mines.

This approach — sometimes involving selling off higher-producing-cost stakes — leaves S&P Global data showing that African-sourced copper destined for China is now the lowest cost of all copper-producing regions. And the strategy that has worked is clear — making a strategic investment in return for security of supply and with the understanding that divestment could occur if feasibility studies come back with high-cost results.

But Africa is also becoming more attractive because to a large extent it’s cleared up its act with regards to regulation.

For example, when Blue Orca launched its short attack on Atlantic Lithium’s Ghanian operations, the accusations of bribery didn’t hold the same water as they may have in the past. And Vast Resources has been awarded those contested diamonds by the Zimbabwe High Court — partially as the country wants to project an image of investibility and judicial fairness.

Of course, Africa is a massive continent comprising 54 recognised countries, so this is something of a generalisation. But the trajectory of increased judicial confidence means that it is far more investible than in the past.

Now to specifics.

Chinese investment into African mining has been predominantly funded by state-owned enterprise, but private companies have also been hugely encouraged by Beijing’s 2014 simplified approval procedure for foreign investments in mining exploration — regulated by the China National Development and Reform Commission — for projects valued below $1 billion.

This little-known law — part of the Belt and Road Initiative — effectively highly encourages private companies to make small investments in dozens of African-based explorers — whether in iron, copper, lithium, or others — to reduce risk of failures and also prioritise security of supply. In the case of PREM, it’s worth noting that our offtake partner has rights to 50% of the lithium but only owns less than 13.38% of the company.

Now let’s look at a key case study.

Zijin Mining Group has the most foreign mining assets of any Chinese company — 47 at present (though I cannot verify this figure independently). It has completed eight deals in the past two years, and 21 acquisitions or strategic investments since 2010. The majority of these acquisitions has been in the gold sector, and overseas gold production is expected to constitute 52.7% of the company’s gold production by 2028.

But the key information is that Zijin initially prioritises security of supply by providing funding for pilot plants in exchange for some shares, and then seeks outright control once production is proven to be low-cost and economically feasible.

One advantage that Chinese companies — and state-owned enterprises — have is that they are less beholden to shareholders, and therefore can ignore the boom-and-bust mining supercycle when making investment decisions.

Indeed, western-listed miners are actually decreasing investment in maiden resources as the world goes into recession, as investors fret over the short-term depressive effect on commodity prices, even though the longer-term supply gap means prices are only heading one way over the longer term.

But Chinese companies play the long game. They know that supply is what matters most, as the lithium price will rise when the gap widens over the next decade. Arguably, CATL’s battery pricing strategy is designed to bring the lithium price down artificially — leaving a certain major shareholder able to buy shares in lithium companies cheaper than would otherwise be possible.

The Kodal Minerals deal has shown, unequivocally, that China is desperate to secure supply. The conditions of the deal are extremely favourable to the company — and PREM could be next to dictate terms.

China and Zimbabwean Lithium

Lithium reserves have been found all over Zimbabwe, Namibia, Ghana, the Democratic Republic of the Congo, and Mali. But while I could write a few dozen pages on how Chinese strategy works elsewhere in Africa, PREM is located in Zimbabwe, so I will focus here.

The country has been mining lithium since the 1960s, and the government thinks that thee Chinese-owned Bikita mine 300km south of the capital has circa 11 million metric tons of lithium resource. The World Trade Organisation considers that Zimbabwe will one day meet 20% of peak global lithium demand, and it is already the world’s sixth -largest producer of the silvery-alkali metal.

Of course, much has been made of December’s Base Mineral Export Control Act, which bans the export of raw lithium. Aimed at so-called ‘artisanal’ miners (which supports the livelihood of 1 million Zimbabweans), the government estimates it has already lost $2 billion in minerals smuggled across the border by artisanal mining leakage.

But the law is also aimed at getting companies to invest in Zimbabwean plant building and processing capacity, and therefore is no bad law by any means. The country should benefit from its natural resources — and Roach has made clear that this is a priority. Further, many artisanal miners are horrendously exploited, and while some may lose their means of work, others will be freed from what is effectively slave labour.

One key part of the law is that companies already in the process of developing mines — including giants like Zhejiang Huayou Cobalt, Sinomine Resource Group and Chengxin Lithium Group (which have collectively invested $678 million into lithium projects in the country) are exempt.

And last year alone, Chinese titans including Tsingshan, China Nonferrous, and Huayou Cobalt invested nearly $1.5 billion in Zimbabwe. Meanwhile, Sinomine Resource Group has announced its plans to expand production at Bikita mine by investing $200 million into building a new lithium plant.

But who else is excluded from this new law? Premier African Minerals. This makes the company one of the last potential full acquisitions that China can make into Zimbabwean lithium without being constrained by the law — both Zimbabwean law limiting the export of unrefined lithium, and Chinese law making it incredibly difficult to invest more than $1 billion in any one acquisition.

Consider this: Sinomine acquired Bikita for $180 million in 2022 and has created a JV with Chengxin Lithium Group’s Zimbabwe unit to increase lithium projects in the country. And Chengxin itself paid $76.5 million for 51% of the Star Lithium mine blocks in 2021. Zhejiang Huayou Cobalt, meanwhile, bought the Arcadia lithium project for $422 million deal in 2021 — and plans to invest a further $300 million into a processing plant at the site.

These huge investments into new lithium processing plants are leaving massive extra processing capacity. And the EPO of Zulu is huge.

This is why — in my view — the buyout is coming and coming fast.

Production is starting, so Chinese historical nervousness of investing too heavily in exploratory companies is no longer as relevant. China is already building huge amounts of infrastructure, which will significantly reduce capex costs. PREM is also not covered by restrictive new laws, so any buyer can ship out unrefined lithium — a privilege that will not be afforded to any future explorers.

And with a £208 million market cap, a buyout price of 3p — or circa £600 million — leaves PREM comfortably below the $1 billion maximum investment allowed under Chinese law.

But if PREM gets to 3p before an offer is made, then the Chinese will miss the buyout boat.

QED.

This article has been prepared for information purposes only by Charles Archer. It does not constitute advice, and no party accepts any liability for either accuracy or for investing decisions made using the information provided.

Further, it is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

GreenRoc Mining plc (AIM: GROC), a company focused on the development of critical mineral projects in Greenland, is pleased to announce that Chief Executive Officer Stefan Bernstein will be presenting at Benchmark Mineral Intelligence’s Battery Gigafactories Europe 2023 conference in Budapest, Hungary, today at 2.30 CET.

Mr Bernstein will take part in a panel discussion about the graphite market, its challenges and opportunities, and the role graphite will play in achieving net zero goals.

Battery Gigafactories Europe 2023 is hosted by Benchmark Mineral Intelligence, the world’s leading market intelligence publisher for the lithium-ion battery to electric vehicle (EV) supply chain. The two-day conference is exploring the rise of Europe’s lithium-ion battery gigafactory economy and the need to build secure, sustainable supply chains for lithium, nickel, graphite, cobalt, manganese, rare earths and other critical raw materials.

Speakers and attendees at the conference include representatives from major industry players across the battery to electric vehicle supply chain, finance, Governments and policymakers.

**ENDS**

For further information, please contact:

GreenRoc Mining plc

Stefan Bernstein, CEO

+44 20 3950 0724

According to a report by a motoring group, despite similar wholesale costs, diesel is being sold at an average of 17 pence more per litre than petrol.

The RAC found that diesel prices are currently around £1.64 per litre compared to petrol prices of £1.47 per litre, while the wholesale price for both fuels is about £1.15. The group called the difference “scandalous” and accused retailers of not passing on wholesale cost cuts to customers.

The RAC stated that diesel wholesale prices had fallen to the same level as petrol, but the price at the pump had not reflected this change. Although prices can take time to adjust due to restocking, the RAC criticized supermarkets for not reducing prices, given that they buy fuel more frequently than independent sellers.

Supermarkets, however, argued that they are doing everything they can to offer the best value for money across petrol forecourts and that the recent falls in diesel wholesale prices are still filtering through to consumers.

Following the invasion of Ukraine by Russia, fuel costs surged as global oil prices rose to over $130 a barrel. However, the prices of crude oil have now returned to pre-war levels. According to Nathan Piper, an oil and gas analyst, diesel prices in the UK have historically been higher due to the country’s need to import fuel, while petrol production is self-sufficient.

Prior to the conflict in Ukraine, the UK imported around 20% of its diesel from Russia, and the severing of ties with the country led to a global increase in demand and, in turn, higher prices.

However, there has been criticism from motoring groups, such as the RAC, that while petrol retailers raised prices quickly, they have been slow to reduce them as costs have fallen. An ongoing competition investigation is looking into whether retailers made larger profits through “rocket and feather” pricing, where fuel prices rise as wholesale costs increase, but fall more slowly than costs decrease.

The Competition and Markets Authority has reported evidence of this pricing practice, particularly with diesel prices in 2022.

This post was written by Zak Mir, a Technical Analyst, Events Host, Presenter, CEO Interviewer and established Market Commentator.

Author @ZaksTradersCafe

hVIVO (HVO), (formerly Open Orphan plc) a specialist contract research organisation, announced that Dr Andrew Catchpole, Chief Scientific Officer, will be delivering a presentation at the World Vaccine Congress, Washington D.C., United States. The company said it was delighted that Dr Catchpole will be presenting at the largest vaccine event of the year amongst many other notable speakers, discussing the significant value of human challenge trial data. As the global leader in conducting human challenge trials to test vaccines and antivirals for infectious and respiratory diseases, it is looking forward to participating in roundtable discussions and sharing insights into how human challenge trials can accelerate the drug development process.

African Pioneer (AFP) provided an update on exploration completed and planned over the Kalahari Copper Belt Licences, Botswana, which are subject to a two-year option agreement from 2 October 2021 with ASX-listed Sandfire Resources Limited. AFP said its partner Sandfire is busy collecting basin-wide data to create a regional scale model to better understand and interpret the structure and ore genesis of the Belt. The Sandfire option licences and the licences operated by African Pioneer are all located in ground with high potential. Sandfire is about to commence drilling on its’ option targets and it looks forward to the results.

Comment: Shares of African Pioneer are back at the main 2p support, despite clear progress being made in terms of the relationship with Sandfire.

Galileo Resources (GLR) provided an update on the Kalahari Copperbelt Project in western Botswana and work undertaken and planned on those licences sold pursuant to an agreement with Sandfire Resources Limited. The company said considerable amount of work has been completed on the Sandfire Licences and the results to date are very encouraging. In terms of the Kalahari Copperbelt type mineralisation, multiple targets have been identified for follow up and it looks forward to the next round of results generated by Sandfire.

Comment: Once again, the market has left GLR shares near key 1p support, despite the “encouraging” progress made by Sandfire.

Kendrick Resources (KEN), a mineral exploration and development company, provided shareholders with an update on a geochemical characterisation and targeting study recently completed on soil samples collected over its northern Airijoki licenses in Sweden. The company said technological advances are expected to positively influence the demand for vanadium. Principally used as an alloy in steel and aluminium production, its’ ability to make materials stronger and lighter offers important benefits particularly for weight-to-strength ratio, an important consideration particularly for EVs.

Comment: Kendrick’s four new exploration targets identified outside the main vanadium trend, underline the way that the Airijoki licences remain highly prospective for vanadium.

Aeorema Communications (AEO), a strategic communications group, announce its unaudited interim results for the six months ended 31 December 2022. The company reported record levels of revenue of £7,121,103 (H1 2021: £4,909,742) and profit before taxation of £326,021 (H1 2021: £255,677). The company said it was very confident about the outlook for the remainder of the 2023 financial year. It has more significant projects at Cannes this year than ever before. The investment it has made in strengthening its team and resources is a significant factor in the growth achieved.

Comment: It would appear that Aeorema is finally ready to come out into the light as far as getting on investors’ radar. One of course looks forward to an invite to Cannes.

AFC Energy (AFC), a provider of hydrogen power generation technologies, confirmed that following the successful validation of the company’s first high power density liquid cooled fuel cell announced earlier today, ABB E-mobility has elected to make a follow on equity investment of £2m into AFC Energy. The net proceeds will further support AFC Energy’s continued development and delivery of its S+ Series fuel cell system.

Comment: In current stock market conditions anyone writing a cheque for a company in the small cap space is significant, and indicates a disproportionate amount of confidence.

OKYO Pharma (OKYO), an ophthalmology-focused bio-pharmaceutical company, announced that it has been notified that Panetta Partners Limited, an entity in which Gabriele Cerrone, the Executive Chairman has a beneficial interest, purchased 12,500 of the Company’s ADSs on NASDAQ at a price of $1.32 per ADS,which would be equivalent to the purchase of 812,500 ordinary shares.

Comment: Gabriele Cerrone continues his extended stakebuilding in OKYO, as the company gets ever closer to getting the thumbs up for its pioneering dry eye treatment.

Kistos (KIST), the low carbon intensity oil and gas producer provided an update on its drilling activities in the Netherlands and the United Kingdom. The company said it is excited that the Benriach well is underway. It is an important milestone with the potential to add significant reserves. It looks forward to updating stakeholders with the results of the well in due course. The company also congratulated its team in the Netherlands on the safe completion under difficult weather conditions of the operational work programme. The process of fully evaluating the results of the campaign is ongoing, and will inform the planning of future work programmes, including the potential operational synergies with the Orion oil field development.

Comment: It should be the case that the market has absorbed the changes in energy prices in recent months, and can now reassess Kistos operationally. The rise in the stock ahead of today’s announcement may be the first indication of such a process being underway.

Horizonte Minerals (HZM), a nickel company developing two Tier 1 assets in Brazil, presented its final results for the year ended 31 December 2022. The company said its primary focus will be on delivering Araguaia on-time, on-budget and safely. It is targeting cold commissioning towards the end of 2023 with hot commissioning and subsequent first nickel in 1Q 2024. Alongside this work, it is planning to conduct a feasibility study on the second line at Araguaia, a relatively low capex project that will double production from 14,500 tonnes per annum to 29,000 tonnes per annum. Vermelho workflows will be centred around the Feasibility study and EIA permitting process, both expected to be finalized in 2024.

Comment: HZM has certainly impressed in share price terms since November, as well as operationally. One would assume that this improvement will accelerate for the rest of 2023.

Arrow Exploration (AXL) announced the results of its 2022 year-end reserves evaluation by Boury Global Energy Consultants Ltd. The company said Arrow delivered an increase in volumes and pre-tax values across 1P, 2P and 3P reserves in 2022. The company said that the BouryGEC 2022 report of course does not account for the current drilling campaign at Rio Cravo Este. Additionally, with the imminent drilling of the Carrizales Norte wells, it would expect to continue growing reserves in the near future.

Comment: Arrow is keen to underline the boost in reserves to start 2023, something which has so far not been factored into the share price, but should be soon.

First Class Metals (FCM), the UK metals exploration company, announced that it has received payment in full of the 2022/3 Ontario Junior Exploration Grant ‘OJEP’ for work carried out on the flagship North Hemlo property. The company said it would like to thank the Ministry of Northern Development for the approval and receipt of the full $200,000 relating to the 2022/3 OJEP Program. Following this success, FCM have applied for the 2023/4 intake of OJEP with a focus on funding the work programme at Sunbeam.

Comment: Newsflow such as today’s continues to underline the way that anywhere near the IPO price of FCM, as we are now, represents a decent opportunity, given how much progress the group has been making on the ground.

Futura Medical (FUM), a pharmaceutical company currently focused on sexual health and pain, provided an update on US regulatory activities for MED3000, Futura’s novel, topical gel formulation for the treatment of erectile dysfunction. The company said that based on the FDA’s published target review period guidelines which includes time to review the newly provided information, the Board continue to anticipate grant of the De Novo request in Q2 2023.

Comment: Shares of FUM perhaps needed a boost such as today’s RNS to provide comfort on the timelines for the rest of 2023.

Kromek Group (KMK), a developer of radiation and bio-detection technology solutions, announced that it has secured repeat orders for its CZT-based detectors from three medical imaging customers worth a total of $1.1m in the Group’s key target market of single photon emission computed tomography. The company said receiving these orders from long-term customers in the medical imaging market highlights the regular, repeat nature of business in the advanced imaging segment, which is a real strength for Kromek.

Comment: It feels that the contract wins are coming in thick and fast for Kromek, but with the share price not happy to acknowledge the progress made, so far.

Author @ZaksTradersCafe

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Zakmir.com is a purely journalistic website – Zak Mir is a member of the National Union of Journalists. There is no intention here of providing financial advice. It is recommended you seek an independent professional opinion before deciding whether or not to take any action with regard to anything written here.