05 June 2020

Weekly Brief 5th June

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As we continue into week number who’s-keeping-count-anymore of lockdown and try our best to get on with our new normal, it goes without saying that this is an historic period of time.

However, this week in particular is sure to be recorded and studied in history textbooks for future generations to come: not only are we living through a global pandemic, the first of its kind to this scale, but the largest civil rights movement in history is drawing global attention. With all 50 US states and over 18 countries around the world protesting for, and joining, the Black Lives Matter movement sparked by the murder of George Floyd, it was in fact originally founded in 2013 in response to the murder of Trayvon Martin; it is clear that this is the culmination of years of struggle against a backdrop of centuries of unjust treatment. A new generation of activists have breathed new life into a movement that is decades, if not centuries, old to fight against the long term failures of a system that is meant to protect its people. At this time it is important to remember that this is not new, nor is it surprising, and to honour those in the past who have helped shape our present and hope that we can do the same for our future by enacting real change during our lifetimes. Although he led the US Civil Rights Movement in 1955, Martin Luther King Jr.’s words remain prevalent as the fight for equality continues 52 years after his death: “Injustice anywhere is a threat to justice everywhere”.

 

Client News: 

Emmerson Plc (AIM: EML) released its Feasibility Study results from the for the Khemisset Potash Project, which is 100% owned. The results confirmed its potential to be a world class, low capital cost, high margin potash mine – a rare asset in the global fertiliser industry. Pre-production capital costs were brought down by $19 million from the scoping study despite the movement to higher levels of engineering, bringing it to $387 million which is less than half of the global peer average. The results found an average steady state post-tax cash margins of 47.1% placing it in the top quartile, a 19 year initial life of mine, and peak production of around 810,000 tonnes per annum of K60 MOP with an average post tax cashflow of $184 million per annum, bringing less than 2.6 years capital payback, based on a JORC resource of 537 mt at 9.24% K20. With an IRR of 38.5%, a post tax NPV of $1.4 billion, generating an average revenue of over $480 million and EBITDA margins of 61% and over $300 million for the life of the mine, it is placed in a highly competitive position.

Oracle Power Plc (AIM: ORCP) has settled in full the evaluation fee for the Letter of Intent application, submitted on behalf of the Consortium (comprising of Oracle, China Coal and HH Private Office). They have received the pro rata contribution of the costs to date associated with the application from HH Private Office, reinforcing its support for the development of Oracle’s development of Thar Block VI.  When issued, the Letter Of Intent will confirm the Government of Pakistan’s commitment to purchase power from the project and its support of their work.

Keras Resources Plc (AIM: KRS) announced their interim results for the six months ended 31 March 2020, detailing the completed demerger of their shares in Calidus Resources Limited. This resulted in substantial value being transferred to the shareholders, in particular those who retained shares in both Calidus and Keras as their value was doubled. Updates were provided on the progress of developing the Nayega Manganese Project in Togo: a decree permitting Societe Generale de Mines SA to undertake large scale mining was promulgated after a meeting of the Council of Ministers, and all documentation has bee completed. A processing capacity capable of producing 75,000 tonnes per annum has been installed at Nayega and, on receipt of the exploitation licence, will be able to expand to 300,000 tonnes per annum. Unfortunately, despite this considerable progress towards commencing commercial production at the site, the process has been delayed due to Covid-19. However, work towards final documentation for its exploitation permit is continuing and discussions with end-users and commodity traders are being held. Keras continues to focus on identifying near term, cashflow generative resource projects with low capital intensity and a clear path to production.

United Oil and Gas (AIM: UOG) received more good news from the Abu Sennan Concession in Egypt.  A second well, the El Salmiya-5, has come in ahead of pre-drill estimates after 8,700 barrels of oil equivalent per day were recovered during testing.  The well, which encountered 120m net pay, will be brought into production after further testing. Once online, United’s share of Abu Sennan’s production is expected to rise to over 2,500 boepd in the coming weeks, a threefold increase on the 800boepd when the Company agreed to acquire Rockhopper’s 22% interest in the field in January 2019. El Salmiya builds on the success of the ASH-2 well in January, which is currently producing at over 3,000 bopd. Importantly, with operating costs at around $6.5/bbl, production at Abu Sennan is highly profitable at today’s oil prices.

BlueRock Diamonds Plc (AIM: BRD) announced that production has started again at their Kareevlei Diamond Mine in South Africa after the lockdown period. No cases of Covid-19 have been reported at the site with its new safety measures and precautions in place. Production has been averaging at almost 2,000 tons a day, which is 65% higher than the monthly production in the record performance period of Q4 2019 of 110,000 tons. The amalgamation of KV1 and KV2 are almost completed and is progressing well, and the Company expects the pipes to be fully operational in Q3 2020. As of the end of May, BlueRock currently have around 2,400 carats diamonds in stock. During the amalgamation process, a higher percentage of lower grade, near surface material is being processed and as a consequence of this, the average grade for diamonds currently in their stock is 3.14 cpht. However, higher grade areas are expected to be mined at the end of June and BlueRock is confident that they will return in excess of 4 cpht.

Fast Forward (AIM: FFWD) provided an update on their investee company Juvenescence Limited, in which they have a c. 0.63% interest. Juvenescence announced a joint venture with G3 Therapeutics in order to form Juvenomics, a company founded on applying deep molecular profiling and deep learning to tackle aging. Together, they intend to focus on developing validated nutraceuticals and medicines to combat aging and aging-related diseases, built on the unique combination of G3 Therapeutic’s proprietary, multi-omic biological dataset consisting of trillions of proprietary datapoints collected in the GLOBAL Clinical Study of over 7,500 patients, and the unique machine learning platforms assembled by Juvenescence.

Armadale Capital Plc (AIM: ACP) announced its final results for the year ended 31 December 2019 this week. The company is targeting commerical production at its flagship Mahenge Liandu Graphite Project in Tanzania in 2021. Highlights from the period included a DFS confirming the project as a long-life low-cost graphite project with a c.US$358m NPV and IRR of 91% and results of a metallurgical test-work programme confirming that high-quality graphite flake of up to 97.1% purity can be produced. An updated mine schedule increased average annual output to 109ktpa of concentrate over life of mine, a 30% increase on the DFS, and the company also bolstered its board of directors to reflect and support Armadale’s progression to a production company. Following this, Armadale released results from an updated definitive feasibility study based on the updated mine schedule which further increased the NPV of the project to c.US$430m. As Armadale progresses towards becoming a production company, it is well positioned to take full advantage of the increase in demand for graphite as the Electric Vehicle market continues to expand. Armadale’s focus is now on finalising discussions with potential debt finance partners and project level development funding so that they can commence construction, whilst progressing their application for a full mining licence. With defined work programmes in place to deliver on these objectives and further advance the project, Armadale is committed to commencing commercial production in 2021 and realising the value of Mahenge Liandu for the benefit of all stakeholders.

 

Here are some educational resources to find out more about the movement:

And on how to be a better ally:

 

Some suggested reading:

Articles:

Books:

  • The End Of Policing by Alex S. Vitale (available as a free download via Verso)
  • Girl, Woman, Other by Bernardine Evaristo (Booker Prize winner 2019)
  • Beloved by Toni Morrison (Pulitzer Prize winner 1988)
  • Queenie by Candice Carty-Williams
  • Americanah by Chimamanda Ngozie Adichie
  • The New Jim Crow: Mass Incarceration In The Age Of Colourblindness by Michelle Alexander
  • Me And White Supremacy by Layla F. Saad
  • Why I’m No Longer Talking To White People About Race by Reni Eddo-Lodge
  • How To Be An Antiracist by Ibram X. Kendi
  • So You Want To Talk About Race by Ijeoma Oluo

Some movies and documentaries to watch:

  • Spike Lee debuted a short film entitled “3 Brothers – Radio Raheem, Eric Garner and George Floyd” on Twitter 
  • The 13th has been made available to watch for free on YouTube by Netflix
  • If Beale Street Could Talk – Amazon Prime
  • When They See Us – Netflix
  • Moonlight – BFI Player
  • BlackKklansman – Amazon Prime
  • The Watermelon Woman – BFI Player
  • Dear White People – Netflix
  • The Hate U Give – Netflix and Amazon
  • I Am Not Your Negro – Amazon Prime

Music to listen to:

  • Rolling Stones compiles a list of the new protest anthems for Black Lives Matter
  • Spotify have created a Black Lives Matter Playlist

A list of ways you can help through petitions and donations:

  • A master list of links to petitions and donation sites.
  • A Google Doc list of ways you can help.
  • If you’re unable to make a donation, YouTuber Zoe Amira is donating all advert revenue made from watching this video to various funds.
  • If you are able to partake in any protests, here is a list of dates and times of protests in the UK, and how to stay safe protesting.

Black Owned Businesses in the UK to support:

 

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