Tekcapital’s Innovative Eyewear expands into the Middle East

UK Investor Magazine
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Tekcapital’s Innovative Eyewear expands into the Middle East

After announcing a listing on US supermarket giant Target’s website last week, Tekcapital portfolio company Innovative Eyewear is now setting its sights on the lucrative Middle Eastern market for the next stage of its global expansion.

Innovative Eyewear, a leading developer and retailer of ChatGPT-enabled smart eyewear, has announced its expansion into the region market through an exclusive distribution agreement with Ecom Gulf FZCO.

The agreement encompasses the Gulf Cooperation Council (GCC) countries, including the United Arab Emirates, Saudi Arabia, Kuwait, Qatar, Bahrain, and Oman.

This strategic move aims to introduce Innovative Eyewear’s smart glasses to a region experiencing rapid growth in demand for technology products and wearables. Innovative Eyewear’s revenue has grown substantially over the past year, and the launch of Eddie Bauer and Nautica-branded smart eyewear has been a precursor for a global expansion drive.

According to research compiled by Tekcapital and Innovative Eyewear, market projections for the GCC region are present a significant growth opportunity.

Statista data forecasts that the traditional eyewear market is expected to generate revenue of US$1.8 billion in 2024, with a compound annual growth rate of 3% between 2024 and 2029. By 2029, the market volume is anticipated to reach approximately 170 million frames.

The companies note an increasing demand for luxury eyewear brands in the GCC, with consumers demonstrating a willingness to pay premium prices for high-quality, stylish frames.

To launch this partnership, Ecom Gulf FZCO will participate in the Dubai AI & Web3 Festival, scheduled for 11-12 September 2024 at Madinat Jumeirah, Dubai. This event provides a significant platform for showcasing Innovative Eyewear’s cutting-edge ChatGPT smart eyewear. The festival, which focuses on enabling digital economies, brings together global leaders in artificial intelligence and Web3 technologies.

“I am excited to announce our partnership with Innovative Eyewear, Inc. as the exclusive distributor of their pioneering smart glasses in the Middle East,” said Hisham Elhusseini, CEO of Ecom Gulf FZCO.

“This collaboration marks a key milestone in our commitment to driving the future of smart living through GenAI technology, and we look forward to introducing these innovative products to our customers across the region.”

Falcon Oil & Gas – Major Change Of Focus Will Drive Investor’s Interest Ahead Of A US Listing, Broker Expecting Six-Fold Increase In Value 

Mark Watson-Mitchell
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Falcon Oil & Gas – Major Change Of Focus Will Drive Investor’s Interest Ahead Of A US Listing, Broker Expecting Six-Fold Increase In Value 

For every 250 shares held in Falcon Oil & Gas (LON:FOG) investors will shortly receive just 1 new share in the re-named Beetaloo Resources Corp. 

This share consolidation move could prove to mark a turning point in the fortunes of this British Columbia, Canada-incorporated business, which is headquartered in Dublin, Ireland, while its technical team is based in Budapest, Hungary. 

That international structure is stretched even further when it is realised that Beetaloo is situated in a Sub-basin in the Northern Territory of Australia. 

The Business 

Not only is the current FOG listed on AIM, but it has a Toronto Venture Exchange quote as well. 

And in the early part of next year, the revitalised group will also be seeking a US stock exchange listing. 

The tidying up of its share structure through the 250-for-1 consolidation is, obviously, a forerunner of the US quote process. 

That new listing is expected to excite US investors into providing additional sources of capital in due course. 

Falcon describes itself as an international oil and gas company, engaged in the exploration and development of unconventional oil and gas assets, with its current portfolio focused in Australia, South Africa and Hungary. 

Its principal interests are located in two major under-explored basins in Australia and South Africa and further interests in Hungary, covering approximately 12.3m gross acres in total.  

Those interests are in countries with a high regional demand for energy and, for Australia and Hungary, are close to existing infrastructure allowing for rapid delivery of oil and gas to market. 

Its corporate strategy is to: explore unconventional oil and gas basins; then following successful exploration, to continue with appraisal programmes determining commercialisation options; leading on to monetising its assets prior to production. 

The Beetaloo Sub-basin 

At the end of August, the group announced the commencement of the 2024 drilling programme with the spudding of the Shenandoah South 2H horizontal well in exploration permit 98 in the Beetaloo Sub-basin, Northern Territory, with Falcon Oil & Gas Australia Limited’s joint venture partner, Tamboran (B2) Pty Limited. 

The SS1H flow test indicated that future development wells with lateral lengths of 10,000 feet may be capable of delivering average rates of 17.8MMcf/d over the first 90 days of production.  

The SS1H well has demonstrated steady gas flows and decline profiles in line with some of the most prolific regions of the Marcellus Shale in the US. 

According to Falcon, the two-well programme will be the largest single campaign in the Beetaloo Sub-basin to date. 

Following the drilling of the SS2H well, Tamboran B2 will immediately move to the Shenandoah South 3H well off the same well pad location ahead of the stimulation program. 

Both wells will be drilled by H&P super rigs and will include a horizontal section of some 3,000m and will target the Amungee Member B-shale at an estimated target depth of 3,020m.  

Each well is expected to be drilled in 30 days. 

Initial flow test results from each well are expected in Q1/25. 

The wells will be stimulated with up to 60 stages utilising the Liberty Energy modern frac fleet currently being mobilised from the US to Australia.  

The increased efficiency and performance of the Liberty fleet is expected to result in a material increase in the completed stages per day and optimised gas flows. 

An additional four-well programme is planned for 2025, which will complete the drilling for the proposed Shenandoah South Pilot Project that will supply 40m cubic feet per day to the Northern Territory Government. 

CEO Philip O’Quigley stated that: 

“The spudding of the SS2H horizontal well, which is the first of the planned two horizontal wells to be drilled in 2024, is an exciting next step in the development of the Beetaloo Sub-basin.  

Following on from the success of the Shenandoah South 1H well announced earlier this year, and using the same drilling company, H&P, together with the arrival of the Liberty frac fleet, capable of materially increasing the stimulation intensity, we are really excited about being able to demonstrate the deliverability of the Amungee Member B-shale over 3,000-metre horizonal sections.” 

Analyst View 

James McCormack at Cavendish Capital Markets currently has a 32p Price Objective on the group’s shares. 

He notes that: 

“Falcon and its JV partners have commenced operations at the Shenandoah South (SS) Pilot Project with the spudding of the SS-2H well, the first of two 3,000m horizontal wells to be drilled, fracked and flow tested as part of the current drilling campaign.  

The drilling programme will benefit from significant US shale expertise through the utilisation of the H&P super-spec FlexRig Flex 3 rig and the Liberty Energy modern frac fleet. Initial flow test results are expected in Q1/25.  

Four further 3,000m wells will be drilled and fracked before the end of 2025, as Falcon embarks on a work programme which will see a continuous stream of activity over the next 18 months.” 

In My View 

This £59m-capitalised company is debt-free and boasted some $11.5m of cash in the bank at the end of June this year. 

Its change of emphasis is sure to gradually dawn upon UK private investors, enough to help to reinvigorate the share price. 

It was up to 13.44p in February this year and is now dragging at around the 5.20p level. 

I believe there will be a flow of corporate news from the group over the next few months that will certainly engender investor interest – in my view the shares are heading a lot higher. 

Majestic Corporation shares: another top AQUIS stock to watch

Charles Archer
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Majestic Corporation shares: another top AQUIS stock to watch

The AQSE index holds many attractive early-stage opportunities. After Adsure Services, here’s a second to watch in Q4:

Majestic Corporation is a fast-growing metals recycling company which recycles metals from obsolete mechanical and industrial material, including car catalysts, printed circuit boards, legacy electrical and electronic equipment and industrial metal residues left over from manufacturing and always sources directly from the producer.  

It boasts affiliate procurement warehouse locations in the USA and now a wholly-owned subsidiary the UK, alongside long-term suppliers in Italy, Lithuania, Mexico and Australia. In addition, Majestic has affiliate facilities in Malaysia capable of handling thousands of tons a year — and can deliver directly to refineries for reconstitution and resupply into the global supply chain.

Overall, it processes over 30,000 metric tonnes a year and is helping to contribute to the circular economy: decarbonising the supply chain by reducing the need for new metals to be mined. For context, as the world is electrified and EVs go mainstream, ever more metals will be needed — but the environmental impact can be greatly reduced the more metal is recycled.

While Majestic is only a small player at present, it should be able to scale quickly. It boasts a global presence — and was formed back in 2018 when the US, EU, and China imposed tariffs of metal imports — with China implementing its ‘National Sword Policy’ which banned imports on metals for scrap recovery.

The company has a particular focus on the UK market, specifically because the UK has historically been one of the most resource nationalist countries with respect to critical minerals, launching its critical minerals strategy in 2022 and updating it in 2023.

Business segments

Majestic operates recycling within three segments:

E-waste —This segment includes recycling from devices like printed circuit boards, domestic appliances, IT and telecommunication equipment. Leaving e-waste in landfill is usually more toxic to the environment than other types of waste left, because e-waste tends to have chemicals and hazardous materials that can be resealed into the environment when not properly disposed.

European e-waste is expected to double by 2050 if nothing is done, and the EU is working hard to reduce it (for example, with USB standard legislation). By recycling the metals present in waste, they are prevented from ending up in landfill and the metals can also be reused in novel applications.

Catalytic Converters — This segment processes steel and ceramic catalytic converters. For those out of the loop, these are emission-controlling devices built into cars that convert harmful pollutants before they leave the car’s exhaust system to prevent air pollution.

They are one of the most important sources of precious metals such as Platinum, Palladium and Rhodium, and Majestic has developed its own platform specifically to process them.

Base metals — This segment recycles base metals such as copper. The most common source is wires and cables, and is important to the bottom line given copper’s high conductivity, resistance to corrosion and consequently premium selling price in a world desperate for new sources of the red metal.

Corporate advantages

  1. Niche Focus — Majestic, as a smaller operator, focuses on niche markets that larger competitors may ignore. Not only does this mean less competition, but it’s also a win-win because customers would otherwise have no e-waste recycling options. Further, Majestic can respond to changing customer needs more nimbly than larger companies can, and with better cost efficiency due to its small overheads.
  • Sustainability – the sustainability commitments can help Majestic attract customers with high ESG standards. And while the model is to operate as a third party between smelters and companies requiring its recycled metal, it can negotiate better margins by dealing with smelters directly.
  • Decarbonisation— recycling used metals is a key part of global decarbonisation efforts as there will be less need for carbon intensive mining. For context, an electric vehicle uses three times as much copper as internal combustion engine vehicles — and more of the world is demanding more metal as electrification develops.
  • E-waste —54 million metric tonnes of e-waste are produced annually, on average 7kg for every person on Earth, and the amount of waste has been projected to double by 2050 if nothing changes. As of April 2024, Majestic is part of the United Nations Global Compact, a voluntary initiative connecting thousands of companies globally that aims to promote sustainable and socially responsible business practices.
  • Resource Nationalism — countries are taking a more nationalistic approach to secure metal supply, rather than relying on other countries and running the risk of supply chain breakdown. Consider China’s export bans on Germanium, Gallium, Graphite and most recently Antimony. In particular, Majestic has benefitted from the desire to develop stronger palladium supply chains as Russian supply (circa 30-40% of the global total) was shut off by Ukraine War sanctions.
  • Specialist Operator — the EU imposes formal regulations on recycling in the form of set collection, recycling and recovery targets for all types of electrical goods. Producers have a responsibility to provide information on re-use and treatment for recycling of their products. Majestic clearly benefits from this legal mandate for obvious reasons.

Financial Results

Full-year results to 31 December 2023 were released on 12 June (blame the new auditory requirements for the length of time).

Revenue increased by some 25% year-over-year to $29.4 million — on a gross margin of 6.9%. Profit before tax rose by a whopping 149% to $1 million, with basic EPS rising from $c1.44 to $c4.17.

Inventory increased by 81% to $15.1 million, and the company held $600,000 in cash at the end of the year. Further, Majestic noted it was expanding recycling capabilities into solar and battery materials; two expanding segments which are key to corporate growth.

Chairman and CEO Peter Lai enthused ‘Today I am delighted to announce the financial results for Majestic to 31 December 2023. Despite challenging market conditions, Majestic has delivered an exceptional performance enabling the Company to grow and expand its offering to existing customers. We are excited for the opportunities ahead as Majestic strengthens its position in the sustainable circular economy technology sector.’

Acquistion

On 3 September, Majestic announced it had entered into a Conditional Share Purchase Agreement to acquire Telecycle Europe, the specialist recycling business located in Deeside, upon delivery of a large number of containers of recyclable materials by 31 December 2024.

The total consideration for the acquisition is up to £2 million, to be satisfied in cash — and is a worthy investment, with the company significantly beefing up its operational firepower within the UK.

For context, the UK generated 1.6 million tonnes of e-waste in 2021 — and Telecycle is already profitable, acting as a tolling agent for Majestic. Currently, Majestic sources recyclable material on ‘an arm’s length’ basis with Telecycle — but now, it will gain a steady supply and also eradicate a potential conflict of interest.

There are significant advantages to the deal: Majestic gets a fully licensed and ISO-certified facility which also provides a wholly owned UK subsidiary for the Company’s e-waste and collection, sorting, processing, and shipping.

The revenue is immediately recognised for this financial year on a consolidated income statement basis — Telecycle’s unaudited 2023 accounts saw the company generate profit after tax of £175,000 with gross assets of £236,000.

And there should be some decent operating efficiencies that will enhance the margins at both sides. Further, this closer relationship should see the company better positioned for growth, both in terms of political support and recycling volumes.

The bottom line

Majestic has seen significant revenue and profitability growth over the past few years and is working in a niche space where it solves an e-waste problem for customers and turns their rubbish into cash.

Watch this space.

An introduction to the Temple Bar Investment Trust

UK Investor Magazine
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An introduction to the Temple Bar Investment Trust

Temple Bar’s investment objective is to provide investors with a growing income combined with growth in capital. It aims to meet this objective by investing primarily in UK equities, across different sectors, maintaining a balance of larger and smaller/medium-sized companies. The Trust has a bias towards FTSE 350 companies.

Four potential FTSE 100 takeover targets, according to AJ Bell

UK Investor Magazine
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Four potential FTSE 100 takeover targets, according to AJ Bell

Following the approach by Rupert Murdoch’s REA for Rightmove, analysts at AJ Bell have highlighted four FTSE 100 companies could that also be potential takeover targets. 

London’s equity market is being picked apart by overseas buyers who see underlying value in UK-listed companies that London’s public markets are unable or unwilling to offer.

AJ Bell analysts have shortlisted companies with similar attributes to Rightmove that may attract the interest of potential bidders. The characteristics observed in these companies include share price underperformance and a spell of bad news that has weighed on sentiment.

The potential FTSE 100 takeover targets highlighted by AJ Bell are:

  • Burberry
  • Entain
  • Diageo
  • Whitbread

In his own words, Dan Coatsworth, investment analyst at AJ Bell, explains the reasoning behind each company being classified as a potential takeover target:

Burberry

“Burberry’s shares have fallen by 70% in value over the past 12 months. The stock is trading at a 14-year low, making Burberry vulnerable to a takeover approach.

“Any potential bidders would have to see through near-term problems and be confident in the company’s ability to get back on track.

“The decision to take Burberry more upmarket and then heavily discount products to shift unsold stock was a bad move. While shoppers love a bargain, discounting can tarnish a luxury brand as it is perceived to be less desirable.

“Making matters worse was a lacklustre economic rebound from China post-pandemic, given the country has historically been a rich source of earnings. A new management team has been appointed to steady the ship.

“What makes Burberry appealing to a potential buyer is the enduring appeal of its products. There is instant brand association with its chequered patterns. While styles go in and out of fashion, Burberry’s products have stood the test of time and a potential buyer will be focused on the long-term prize.”

Entain

“The Ladbrokes owner has previously been subject to takeover interest from MGM and DraftKings, but neither suitor managed to place a winning bid. Since then, Entain’s share price has lagged many of its peers and left it a sitting duck for a third party to swoop on the business. Buying Entain would be an easy way for a rival company to greatly increase scale, something that really matters in the gambling sector.

“The stock is down 45% over the past 12 months, partially dragged down by a bribery investigation and losing share in the lucrative US market. The company has also faced accusations that it overpaid for acquisitions.

“A new CEO joins this week, which raises the prospect of a sweeping review of the business and potentially some strategic changes. The pressure is already on, given activist investors on the shareholder register.

“One might ask why any potential bidders haven’t already shown their cards this year given the share price weakness. It might be that they want to see a repair job at Entain before swooping in.

“While that might result in a bidder paying a higher price than now, certain suitors might view this strategy as sensible, given it arguably means an offer is only made once risks have been lowered.”

Diageo

“Shares in Diageo are down 23% over the past 12 months thanks to disappointment around performance in Latin America and questions over the company’s leadership qualities. In July, it reported an operating profit decline in four out of its five operating regions, two of them in substantial double-digit territory.

“Management seems to have taken its eyes off the ball when it comes to monitoring inventory levels and working out ways to keep consumers spending.

“The most recent results didn’t include a new share buyback programme, which troubled investors. That’s not a surprise given the balance sheet is close to getting out of the company’s comfort zone. Diageo targets 2.5 to 3 times net debt to adjusted earnings and the leverage ratio is now sitting at the top end.

“While the current news flow is fairly gloomy, Diageo could be a takeover candidate for a bidder looking to own a portfolio of well-known drinks brands and wanting to pick up an industry giant at a big discount to where it has historically traded. The key sticking point is the fact such a takeover deal would require a significant cash outlay, even if the bidder got a bargain price.

“Diageo is currently worth £55 billion. Apply a potential 30% bid premium and a suitor would need to stump up a very large amount of money. One route might involve breaking up Diageo, with a beer company taking on Guinness and another company taking on the spirits brands.”

Whitbread

“It’s not been the best time for the Premier Inn owner, with its share price down 17% over the past 12 months. The market has been worried about a lack of organic growth in its UK operations and that we won’t see a major improvement any time soon. German operations are performing better but they only account for small part of the group.

“While some investors will be disappointed at the company’s situation, there is the potential for Whitbread to be on the radar of private equity or an overseas-based operator looking to get ahead in the UK through buying one of the country’s best-known hoteliers.

“The shares are trading on a low rating of 12.2 times consensus earnings for the year to February 2026. That bargain-basement rating, together with weak market sentiment towards the stock, could be enough to draw out a bid. Premier Inn is front of mind for consumers looking for affordable accommodation and scores well with tourists seeking decent, reliable hotels when visiting the UK.”

FTSE 100 tumbles after US tech sell-off on growth tensions

UK Investor Magazine
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FTSE 100 tumbles after US tech sell-off on growth tensions

The FTSE 100 tracked the US lower on Wednesday after poor US manufacturing data revived growth concerns ahead of Friday’s Non-farm payrolls.

Some investors are clearly petrified that a soft jobs report on Friday could see a rerun of the volatility in early August and want no part in it.

Slowing new manufacturing orders and rising inventories in the US yesterday spooked markets overnight and spurred investors to book profits in US technology shares, sending the S&P 500 down 2%.

“A near-10% one-day decline in Nvidia’s shares and a 3.3% drop in the Nasdaq index illustrate the fragility of the market. It goes to show that everything was not back to normal after markets quickly rebounded from their summer wobble, even thought it might have looked fine on the surface,” said Russ Mould, investment director at AJ Bell.

“Investors panicked over the summer about a potential US recession, causing markets to go through a rocky period which was compounded by the unwinding of the Yen carry trade where certain investors had borrowed in the low-interest Japanese currency to invest in higher-yielding assets elsewhere, including US tech shares.”

Such was the weight of concern: the FTSE 100 opened sharply lower and was trading down 0.5% at 8,252 at the time of writing after recovering from the worst levels.

With the US Non-Farm Payrolls just two days away, markets will be laser-focused on any global economic data that could be a precursor for the heightened volatility.

“Hirings, in the non-farm payrolls report, are expected to come in around 162,000 jobs for August, but if they are significantly lower than expected, it will do little to calm fears that a recession could be looming,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“Up to one percentage point of cuts from the Fed by the end of the year are currently being priced in by financial markets, and if further weak data comes through, a big bazooka cut of 50 basis points looks more likely.”

The selling of FTSE 100 shares on Wednesday was broad with 85% of the index in the red at the time of writing.

The selling was also fairly indiscriminate, with Airtel Africa sitting at the bottom of the leaderboard, followed closely by Convatec and Burberry.

With a 1% gain, Rolls Royce was the top gainer.

AIM movers: 500% increase in resource for Rockfire Resources and Eqtec raises cash

Andrew Hore
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AIM movers: 500% increase in resource for Rockfire Resources and Eqtec raises cash

Rockfire Resources (LON: ROCK) has increased the size of the resource at the Molaoi zinc lead silver germanium deposit in Greece by 500%. The JORC 2012 compliant mineral resource estimate is 15 million tonnes at an average grade of 9.96% zinc equivalent. Allenby estimates that it is one of the top 20 undeveloped zinc prospects. There is also 4.8mt of germanium. There are high recovery rates. Only 2.1km of the 7km potential strike has been tested so far. Allenby estimates a fair value of 2.6p/share. The share price is one-quarter higher at 0.225p.

Battery storage technology developer Gelion (LON: GELN) has developed a lithium-sulfur pouch cell that achieved 4012Wh/kg, which is more than 60% better than existing lithium-ion batteries. The technology is designed to be low weight and low cost, and commercial partners will be sought. The share price rose 6.38% to 25p.

Mosman Oil and Gas (LON: MSMN) says the completion date for the sale of its US production asset has been extended until 9 September. The cash raised will fund the acquisition of 10% of a US helium project in Las Animas County. The share price improved 4.85% to 0.054p.

Magnetic resonance imaging developer Polarean Imaging (LON: POLX) has increased interim revenues from $100,000 to $1.1m and the full year outcome is expected to be between $2.5m to $3m. Lower operating expenses have reduced the cash outflow. The share price increased 4.55% to 1.725p.

FALLERS

Eqtec (LON: EQT) has received £2m from the sale of land for the former project at Deeside. The waste-to-energy technology company is raising £1.1m from a placing at 1p/share with up to £200,000 more coming from a retail offer. There will also be £522,000 of debt converted to equity. The share price slipped 20.4% to 0.975p.

Helium One Global (LON: HE1) has completed the extended well test at Itumbula West-1. The fractured basement interval flowed at a sustained average of 5.5% helium and a maximum of 6.7% helium. There was also hydrogen. The faulted Karoo Group interval flowed at a sustained average of 5.2% helium and a maximum of 7.9% helium. The preliminary model demonstrates positive project economics. The share price slumped 21.9% to 1.055p.

Andrew Carter has resigned as chief executive of wines producer Chapel Down Group (LON: CDGP) and will become the boss of Timothy Taylor next year. Interim revenues fell 11% to £7.12m due to a slump in off-trade sales. There was not the expected restocking by retailers. Pre-tax profit slumped to £40,000. Net debt was £5.8m at the end of June 2024 after investment in further planting at the Buckwell vineyard. The share price declined 15.8% to 58.5p.

Shield Therapeutics (LON: STX) had $8.1m in gross cash at the end of June 2024 with a milestone payment of $5.7m expected in the second half. The first half cash outflow was $5.8m. Management believes that the business should be monthly cash flow positive during the second half of 2025. Iron deficiency treatment ACCRUFeR generated revenues of $11m in the US in the first half and total group revenues were $12.1m.  Full year US revenues could be $27m. The share price is 10.4% lower at 4.75p.

Barratt Developments shares fall as revenue and completions sink

UK Investor Magazine
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Barratt Developments shares fall as revenue and completions sink

Barratt Development’s shareholders should hope the boost in housebuilding promised by the Labour government will kick in soon.

Shares in the housebuilder were down around 2% on Wednesday after the group reported an 18% drop in completions and 21% drop in revenue for the full year period ended 30 June. Adjusted profit before tax was down by 56%.

“Barratt Developments has struggled to build momentum and full-year numbers were a painful read for investors. The group completed around 14,000 new homes last year, which was towards the top end of group guidance,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“But that still marks a big drop off from the 17,206 seen in the prior year as mortgage and affordability pressures are still weighing on potential buyers. Momentum did improve slightly as the year progressed, but further easing of mortgage rates will be necessary for activity to pick up significantly. With fewer homes being sold and at lower prices, less cash has come through the front door. Alongside elevated levels of incentives, used to convince buyers to sign on the dotted line, underlying pre-tax profits have taken a big hit and more than halved year-on-year.”

The acquisition of Redrow featured heavily in Barratt Development’s full-year results and investors will hope the combination can help turn the tide for the enlarged group.

The deal is in the hands of the CMA and both parties await competition clearance before the combination can finalised. Due to regulatory constraints, guidance for FY25 couldn’t include Redrow’s numbers, so Barratt provided guidance for themselves only.

The forecast of only 13,000 to 13,500 completed homes in FY25, lower than FY24’s 14,000, will certainly raise some eyebrows.

Pan African Resources – Gold Produced At $1,350 An Ounce, Achieved $2,021 Average Last Year, Expecting More This Year 

Mark Watson-Mitchell
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Pan African Resources – Gold Produced At $1,350 An Ounce, Achieved $2,021 Average Last Year, Expecting More This Year 

Next Wednesday, 11th September, Pan African Resources (LON:PAR) will be declaring its 2024 Final Results for the year to end-June, they should be very good, showing at least a 50% increase in pre-tax profits. 

It has helped that the price of gold has been on the rise over the last few years – the recent strong push will show through forcefully in the current year to end-June 2025. 

A year ago, the £541m capitalised group’s shares were trading at around 12.50p, they are now 29p and looking capable of an even further rise in due course. 

The Business 

The group is a mid-tier African-focused gold producer, with a production capacity in excess of 200,000oz of gold per annum.  

The company is a unique combination of underground and surface mining, owning and operating a portfolio of high-quality, low-cost operations and projects. 

From new retreatment and infrastructure plants to underground expansions, the group boasts of a proven record of bringing new operations online on-time and in-budget. 

It has four major producing precious metals assets in South Africa: Barberton (target output 95koz Au pa), the Barberton Tailings Retreatment Project, or BTRP (20koz), Elikhulu (55koz) and Evander underground, incorporating Egoli (currently 30koz, rising to >100koz). 

With over 12m oz of Gold Reserves and 40m oz of Gold Resources, Pan African’s unique portfolio mix presents significant upside potential for many years to come.  

Its Mining rights in Barberton are valid until May 2051 and at Evander until April 2038. 

It also has interests North-West of Port Sudan, where it is assessing five exciting prospects that have yielded promising samples. 

The group has succeeded in maintaining its gold production levels while simultaneously lowering all-in-sustaining costs for improved operating margins.  

For investors, that means a capital-efficient, optimally run portfolio of African mines geared for exceptional investment returns. 

Latest Operational Update (29th July) 

For the year to end-June 2024, the group’s production of 186,039oz (175,209oz) was within guidance and increased by 6.2% year-on-year.  

The average achieved gold price for the year was $2,021/oz, which will be noted as the highest on record for the group.  

The group’s all-in sustaining costs for the year was around $1,350/oz. 

CEO Cobus Loots stated that: 

“We are pleased that the Group has again delivered into its production guidance, while further improving safety rates and maintaining its industry leading safety performance during the 2024 financial year. 

The surface tailings retreatment operations at Elikhulu and the BTRP performed exceptionally well, with some of the lowest all-in sustaining production costs in Southern Africa.  

The Group is poised to deliver another world class tailings retreatment operation ahead of schedule and below budget in the coming months with the MTR Project. 

Barberton Mines has seen a steady improvement in gold production, with planned optimisation initiatives to increase ore tonnages expected to further bolster gold production in the next financial year.  

Commissioning of the ventilation shaft hoisting system at Evander underground during the start of the 2025 financial year, will substantially improve efficiencies and reduce reliance on the cumbersome conveyor system currently in use, vastly improving this operation’s production profile and facilitate the 25-26 Level project’s development. 

We look forward to presenting our 2024 year-end financial results in September, and to provide further details on developments at our operations and exciting pipeline of growth projects that will significantly increase the Group’s total annual gold production in FY2025.” 

Analyst Views 

After next week’s results announcement, it will be interesting to see the latest analyst opinions as to the group’s value and their Price Objectives. 

Following the recent Update, Charles Gibson at Edison Investment Research, increased his estimates for the current year, reflecting the higher gold price. 

He now has a 52.31p valuation out on the group’s shares. 

His estimates for the year to end-June 2024 are for revenues of $390.7m ($321.6m), lifting pre-tax profits to $142.0m ($92.9m), earnings of 5.72c (3.54c) and a slightly higher dividend of 0.98c (0.95c) per share. 

For the current year, he looks for $473.9m revenues, $211.4m profits, 8.02c earnings and a maintained 0.98c dividend per share. 

In My View 

With the Finals due on Wednesday next week, there should be some positive reaction to the figures. 

Sentiment remains strong aligned with the price of gold – and look at those estimates of $2021 per ounce achieved, against a production cost of just $1,350 per ounce – the sums look extremely attractive. 

Gold continues to edge higher, as does the group’s production. 

At 29p the shares offer attractive upside prospects. 

Helium One secures sustained helium flow in Tanzania, economic evaluation awaited

UK Investor Magazine
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Helium One secures sustained helium flow in Tanzania, economic evaluation awaited

Helium One has provided an update on its Tanzanian helium operations and the completion of extended well tests at Itumbula. The company said the well tests were a major milestone and that it was looking forward to the next stage of development. 

Investors will be pleased to see strong shows of helium during the tests.

The fractured Basement interval yielded a sustained average of 5.5% helium (air corrected), with peaks reaching 6.7%. Equally promising results were observed in the faulted Karoo Group, which produced a sustained average of 5.2% helium (air corrected), achieving a maximum concentration of 7.9%.

In terms of flow rates, the well demonstrated robust natural performance. Under current conditions, using a 36/64ths of an inch choke setting, the well achieved a maximum flow rate of 2,701 barrels per day (bpd) of fluid. This translates to approximately 834 standard cubic feet per day (scf/d) of helium.

The major constraint for new Helium projects is the cost to bring to production. Finding Helium is one thing; commercialisation is something completely different.

Although today’s announcement was broadly positive, the company has yet to confirm the commercial viability of the Itumbula West-1 project. The mixed nature of today’s update was reflected in mixed trading for Helium One shares, which started the day positively but were quickly sold into.

The company suggested they would have to employ a form of artificial lift to make the project economically viable. However, the company didn’t share the type of artificial lift being considered, leaving questions about how expensive the next phase of testing may be and how the artificial lift will impact the economics of the project.

The company also said financial modelling demonstrated positive ‘project economics with artificial lift and additional development wells’. The statement suggests that economic viability is conditional and requires an expanded work programme.

Investors won’t have to wait too much longer for formal evaluations with the feasibility study underway that will form Helium One’s mining application.

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