Arc Minerals kicks off maiden Botswana exploration programme

Natasha Doris
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Arc Minerals kicks off maiden Botswana exploration programme

Arc Minerals announced the commencement of its maiden exploration programme at its Virgo project in Botswana, and reported that a soil geochemistry survey was currently underway with an exploratory drill programme to follow.

The mining firm said reinterpretation of the geology in licence PL 135/2017 suggested the existence of a fold crest, presenting an opportunity to extend the previous soil sampling grid along the fold limb to the crest.

Arc Minerals noted that both the PL 135/2017 and PL 162/2017 licence areas hosted the contact between Ngwako Pan and D’Kar formations, which are favourable for hosting copper-silver mineralisation.

The group commented that the historically sampled areas within the two licences indicated DKF-NPF contact, with further sampling set to assist efforts to zone in on this contact.

Arc Minerals said its exploration drilling would follow further sampling to test DKF-NPF contact zone areas and interpreted fold crest targeting the identified and new anomalies that may be produced by the soil geochemistry survey.

“Following the acquisition of Alvis-Crest (Propriety) Limited late last year the team has reviewed the previous work carried out in the respective license areas and put forward our maiden exploration programme to further refine our geological understanding before commencing with an exploratory drill programme,” said Arc Minerals executive chairman Nick von Schirnding.

“These licenses lie within and adjacent to the highly prospective Central Structural Corridor of the Kalahari Copper Belt (“KCB”) and within 10km and 50km of Khomecau’s Zone 5 and Banana Zone copper projects respectively, known as the two largest copper projects on the KCB.”

“Further these licenses already host two known copper-nickel anomalies, both 2-3km in length overlying the favourable interpreted DKF-NPF contact that have yet to be drill tested and now potentially may have further targets. This is an extremely exciting time for the Company and these license areas.”

Tatton Asset Management revenue increases 25.7% to £29.3m

Natasha Doris
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Tatton Asset Management revenue increases 25.7% to £29.3m

Tatton Asset Management shares were up 0.4% to 421p in early afternoon trading on Wednesday, after a reported 25.7% increase in group revenue to £29.3 million in FY 2022 against £23.3 million in FY 2021.

The company announced an adjusted operating profit climb of 27.4% to £14.5 million compared to £11.4 million the last year, alongside an adjusted operating profit margin of 49.5% from £48.8%.

Tatton Asset Management noted an increase in Assets Under Management (AUM) of 26% to £11.3 billion from £8.9 billion, with an organic net inflow growth to £1.2 billion compared to £755 million, representing a rise of 14.2% of opening AUM with an average run rate of £106 million per month.

The firm also accomplished several acquisitions, with the £650 million purchase of Verbatim funds in September 2021 and a five-year partnership with Fintel, which is set to provide Tatton with access to 3,800 firms and over 6,000 users.

The company also acquired 8AM Global Limited, which is primed to add an additional £800 million in assets.

Tatton Asset Management further boosted its ethical portfolios by 84.1% to £812 AUM compared to £441 AUM.

The group confirmed a strong financial liquidity position, with net cash at £21.7 million compared to £16.9 million and a balance sheet including a net assets growth of 27.3% to £31 million from £24.4 million in the previous year.

“I am delighted to report on yet another successful year for the Group, as we continue to execute our stated strategy and deliver strong organic and acquisitive growth for FY22,” said Tatton Asset Management CEO Paul Hogarth.

“The geo-political and financial market volatility of the past year has highlighted that both our divisions are resilient and robust businesses with an attractive outlook as they continue to benefit from a consistent and sustainable business platform.”

Tatton Asset Management added that despite market headwinds, the company was in a strong position to grow and make progress in FY2023, and highlighted a minimum goal of £1.7 billion in growth.

“As we look forward to FY23, our strategic emphasis will be to consolidate and build on the gains we have made to date whilst further developing the business to drive growth and long-term value creation,” said Hogarth.

“We continue to focus on and take a disciplined approach to executing our strategy and I remain excited about the opportunities that exist for the Group.”

“While we remain conscious that these are uncertain times, both from an economic and geo-political standpoint, we are well positioned to make further progress in the year ahead and better equipped than most to deal with any prevailing market headwinds.”

The group announced an adjusted fully-diluted EPS rise of 26.3% to 18.6p against 14.7p and a dividend uptick of 13.3% to 8.5p from 7.5p for the financial year.

AIM movers: Dillistone, Redx Pharma, Saietta, AssetCo, SpaceandPeople

Andrew Hore
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AIM movers: Dillistone, Redx Pharma, Saietta, AssetCo, SpaceandPeople

Recruitment software developer Dillistone Group (LON: DSG) says that executive search software product Talentis is gaining momentum with first quarter recurring revenues double the level in the fourth quarter of 2021. It should double again in this quarter. This is from a low base because it is a new product. Dillistone is still expected to make a small loss this year. The share price recovered 1.5p to 22.5p.

Redx Pharma (LON: REDX) and Nasdaq-listed Jazz Pharmaceuticals say that the Pan-RAF inhibitor JZP815 has been cleared to enter clinical development. Redx will receive a milestone payment of $5m, taking the total received to $11.5m. Difficult to treat solid tumours will be the focus of the clinical development of JZP815. A Pan-RAF inhibitor can offset developing resistance to the drugs used to treat tumours. This milestone sparked a 3.2p increase in the Redx share price to 64p.

Electric powertrain developer Saietta Group (LON: SED) says it is developing a fully integrated e-drive system, including its own Axial Flux Technology motor with power electronics, gearbox and axle. This will increase the potential revenues and margins and the share price rose 10p to 150p. Mass production of the integrated system will be prioritised at the new Sunderland facility. It will require additional capital investment, so cash is being reallocated from the motor durability test centre, which will only be for internal testing.

Investment management company AssetCo (LON: ASTO) has completed the acquisition of River & Mercantile Group. This takes the enlarged group’s assets under management to £12.2bn. There are plans to sub-divide the shares, but the exact proportion has not been decided. The share price has risen from its 2022 low of 700p to 760p.

Retail and promotions business SpaceandPeople (LON: SAL) continues to decline following Monday’s share consolidation. The post-consolidation share price was 140p and it has fallen to 127.5p – after a further 5.6% decline today. This can tend to happen to share prices post-consolidation, especially when a company is losing money. SpaceandPeople made an underlying profit of £70,000, so there is little to underpin the share price.

FTSE 100 rallies ahead of US Fed interest rates decision

Natasha Doris
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FTSE 100 rallies ahead of US Fed interest rates decision

The FTSE 100 was up 1.2% to 7,276 in midday trading ahead of the US Federal Reserve’s interest rates decision today, with the market expecting a 0.75% hike in light of the latest US inflation data after CPI hit a 40-year record high of 8.6% in May.

“Investors seem to have anticipated the US Federal Reserve will deliver a 0.75 percentage point increase in rates tonight so the focus is likely to be on whether it goes even further, amid some fairly wild talk of a full percentage point hike,” said AJ Bell investment director Russ Mould.

International markets all had their eye on the upcoming rates hike, with the NASDAQ up 0.1% to 10,828.3, the NYSE down 0.5% to 14,444.6, the German DAX climbing 1.1% to 13,456.6, the French CAC rising 1% to 6,009.6 and the Italian FTSE MIB gaining 2.6% to 22,426.7.

The prospect of higher interest rate hikes by the Fed served to throw a damp cloth on oil prices as they started to heat up again earlier in the week.

The price of brenchmark Brent Crude dropped from $123 per barrel on Tuesday to $119 per barrel today, dragging Shell shares down 0.9% to 2,285p and BP shares by 0.5% to 432.4p.

UK investors will be looking to the Fed for estimations of how the Bank of England will move on Thursday, with analysts predicting a 0.25% hike to 1.25%.

“Where the Fed leads, other central banks are likely to follow, and attention will switch almost immediately to tomorrow’s decision from the Bank of England,” said Mould.

“Recent weak economic data in the UK may affect the thinking of policy makers at the Bank of England. However, they can’t afford to be in any way complacent about the threat posed by rising prices.”

Banks had a strong trading session as their shares took flight, with Barclays gaining 3.8% to 162.8p, HSBC climbing 3% to 536.3p, Lloyds rising 3% to 4,467p and NatWest increasing 3.6% to 229.4p in anticipation of the Bank of England’s interest rates hike.

Whitebread shares surged 5% to 2,696p after the hospitality group confirmed a 303.8% year-on-year total sales growth in Q1 2023.

The Premier Inn owner warned of £20 million to £30 million in costs for its labour, IT and refurbishments in a bid to maintain its market position, however the company said it expected to beat market expectations in the coming quarter.

“News the company will invest £30 million in labour, refurbishments and IT in 2023 may have created a frisson of concern for shareholders,” said Mould.

“However, this looks a sensible decision for the long-term health of the business and the value-based Premier Inn proposition could prove attractive when household budgets are tight but people still want to get away.”

“Fine-tuning the product and paying a decent wage in a tight labour market to ensure it is supported by good staff are choices which could pay off down the line.”

Equities outlook, Whitbread, and Kavango Resources with Alan Green

UK Investor Magazine
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Equities outlook, Whitbread, and Kavango Resources with Alan Green

Alan Green joins the UK Investor Magazine as we delve into the recent market volatility and explore the outlook for equity markets.

We start by looking at upcoming central bank action with the Federal Reserve and Bank of England poised to hike rates in the coming hours and days. Market expectations point to a 75 bps jump in US rates as the Federal Reserve meets this evening. Our focus shifts to the market perceptions of the tightening cycle and whether investors will take confidence from a ‘managed’ recession caused by rising rates, but allows for plenty of future easing with rates around 2%.

Whitbread have been a major beneficiary of the economic reopening and enjoyed a 300% year-on-year increase in sales, helping shares rise 5% on the day.

Kavango Resources is developing a series of projects in Botswana including the Kalahari Copper Belt and Ditau Camp project. We look at their recent updates and relationship with Power Metal Resources who are set to present at the UK Investor Magazine Summer Investor Evening 30th June.

Register for the UK Investor Magazine Summer Investor Evening here

Sovereign Metals are preparing to release an updated scoping study and we recap the key milestones to date and the significance of their Kasiya Titanium Rutile & Graphite project in Malawi.

Rio Tino delivers first shipment of Gudai-Darri iron ore

Natasha Doris
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Rio Tino delivers first shipment of Gudai-Darri iron ore

Rio Tinto announced the delivery of its first ore at the Gudai-Darri mine as the mining firm brought its first greenfield mine in Pilbara, Western Australia in over a decade online.

The company commented that Gudai-Darri would help underpin the future of its flagship Pilbara Blend product.

Rio Tinto said the first autonomous AutoHaul trains transporting iron ore from the mine’s process plant travelled its new 166 kilometre rail line connecting its existing rail and port infrastructure, with production set to continue to ramp up over FY 2022 and expected to hit full capacity in FY 2023.

“The commissioning of Gudai-Darri represents the successful delivery of our first greenfield mine in over a decade, helping to support increased output of Pilbara Blend, our flagship product,” said Rio Tinto CEO Simon Trott.

“It sets a new standard for Rio Tinto mine developments through its deployment of technology and innovation to enhance productivity and improve safety.”

“I’d like to acknowledge the support of the Traditional Owners, the Banjima People, on whose country Gudai-Darri is situated. We have worked closely with the Banjima People to progress this project and we look forward to continuing to actively partner with them into the future.”

The development of Gudai-Darri supported more than 3,000 jobs over the construction and design term, with the opened mine intended to support 600 ongoing permanent roles.

Rio Tinto added that the mine life was estimated at over 40 years, with an annual capacity of 43 million tonnes. The group mentioned a feasibility study was in progress to support an expansion of its hub.

The company said the project’s commissioning and ramp-up was expected to raise Rio Tinto’s ore production volumes and improve product mix from Pilbara in HY2 2022.

“The safe and successful delivery of Gudai-Darri, in the midst of a global pandemic, is testament to the resilience and hard work of thousands of Rio Tinto employees and contractors, including a range of local Western Australian suppliers, as well as Pilbara Aboriginal businesses,” said Rio Tinto chief technical officer Mark Davies.

“In building this new hub we have brought together the best of our innovations, including autonomous trucks, trains and drills, as well as the world’s first autonomous water trucks, to make Gudai-Darri our most technologically advanced iron ore mine.”

“This suite of autonomous assets complements the planned deployment of other leading-edge technologies including a robotic ore sampling laboratory, field mobility devices for all personnel and a digital asset of the fixed plant, which, together with data analytics, will make Gudai Darri safer and more productive.”

According to the mining group, FY 2022 shipments guidance remained at 320 million to 335 million tonnes.

Rio Tinto announced that the capital cost for the mine was currently projected at $3.1 billion, with company capital expenditure guidance unaltered at $8 billion.

WH Smith shares rise as company returns to pre-pandemic revenues

Natasha Doris
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WH Smith shares rise as company returns to pre-pandemic revenues

WH Smith shares were up 5.8% to 1,438p in early morning trading after the company announced that it achieved group revenue ahead of 2019 levels for the first time at 107% for the 15 weeks to 11 June 2022.

The company reported strong performance in its travel sector, with a 123% boost ahead of 2019 rates for the same period.

UK travel was at 104% of 2019 levels, with North American travel at 111% and the rest of the world at 88% of pre-pandemic levels.

WH Smith mentioned that UK channels saw 114% growth in air travel, a 102% climb in hospitals and an 87% volume in rail against 2019 levels.

“This is a solid and promising trading update from WHSmith, with the retailer trading ahead of 2019 revenue with a particularly strong performance from its travel division, reflective of the lifting of COVID-19 restrictions,” said Edison Group director of research Neil Shah.

“Group revenue in the 15 weeks to 11 June 2022 was up on 2019 levels for the first time at 107%, with sales across key travel markets recovering as passengers return to the skies and airports benefit from heavier footfall.” 

The firm commented that its UK business grew as a result of its enhancement of ranges and development of its categories, including health and beauty and technology.

The company confirmed its recently launched InMotion stores across UK airports were performing well.

WH Smith announced a high street revenue at 79% of pre-Covid-19 rates, including the cyber incident on Funky Pigeon. However, the Platinum Jubilee drove customers to outlets, with the group’s front-of-store mega deals securing strong results.

“The high street division performed down on 2019, at 79%, with its Funky Pigeon business suffering from a cyber attack in April which resulted in the suspension of trading and order cancellations,” said Shah.

“Nevertheless, the retailer continues to capitalise on key diary events, with its Platinum Jubilee ranges delivering good sales.”

The firm mentioned that the broader macroeconomic outlooked remained uncertain, however it was well-positioned to take advantage of the wider market recovery in 2022.

WH Smith confirmed 125 stores in its pipeline, with new store formats and category development across multiple territories.

The company currently expects travel to continue strongly moving towards summer into the peak trading period, with an anticipated FY 2022 to beat analyst expectations.

“Looking ahead, WHSmith is optimistic and well positioned to capitalise on the ongoing recovery across key markets. With 125 new stores won but not yet open, the retailer will look to capitalise on the opportunities this growth presents, while a strong performance across travel during the peak summer months should result in high sales,” said Shah.

“The strong financial performance leaves the Group well placed to continue to drive progress despite the ongoing macro-economic uncertainty.”

Whitbread beats market expectations with 303.8% YoY total sales growth

Natasha Doris
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Whitbread beats market expectations with 303.8% YoY total sales growth

Whitbread shares were up 3.3% to 2,651.7p in early morning trading on Wednesday following a total sales growth of 303.8% in Q1 2023 compared to Q1 2022.

The company reported a total growth in accommodation across the UK and Germany of 244.9% year-on-year, with a 588.9% surge in food and beverage in both regions over the financial term.

Whitbread highlighted a like-for-like total sales growth of 286% compared to the previous year, with a like-for-like rise of 227.4% in accommodation and 569.2% climb in food and beverage from the UK and German markets.

The firm mentioned continued market outperformance in the UK, with Premier Inn total accommodation sales at 27.2% beyond the market.

The group attributed its strong results to the strength of its commercial and operational initiatives, combined with the success of its brand, scale and direct distribution.

“The strength of Premier Inn’s recovery in the UK continues to be ahead of expectations with a particularly strong Q1 performance that is well ahead of pre-pandemic levels and we continue to significantly outperform the market,” said Whitbread CEO Alison Brittain.

“This outperformance is driven by a number of factors, including our commercial and operational focus as well as the strength of our brand and operating model, our direct distribution, national coverage and accelerated independent supply contraction.”

The property firm said the German hotel market recovered at a faster rate than expected, and boosted Premier Inn occupancy levels to 64.7% in the last four weeks of the quarter, with its estate standing at 40 hotels and an additional 38 in the works.

“In Germany, our open hotel estate now stands at 40 hotels, with a further 38 hotels in the pipeline,” said Brittain.

“The quality and prime location of our hotels are proving highly attractive and are driving high customer scores. The trading performance of our more mature hotels in the two months post the lifting of COVID restrictions only reinforces our positive view of the significant opportunity in Germany.”

Higher Costs

Whitbread confirmed that it would invest an extra £20 million to £30 million in labour, refurbishments and IT to stay on top of the tight labour market, and to maintain its market-leading position, however it said it expected high occupancy levels and continued sales outperformance to drive continued margin recovery across the UK.

“Tight labour supply across the hospitality sector is throwing some mud in the mix, Whitbread’s expecting a £20-£30m rise in costs as servicing the higher demand means attracting and retaining staff that have the bargaining power to push for better pay,” said Hargreaves Lansdown equity analyst Matt Britzman.

“Still, margins in the UK are expected to rise throughout the year as the group’s ongoing cost saving program and higher sales should help to ease some of the pressures coming from cost inflation.”

Credit Facility

The group also mentioned it was set to replace its existing debt facility with a new £775 million five-year revolving credit facility, with two one-year extension options.

The facility has been provided by a selection of seven banks led by Banco Santander, NatWest and Bank of China, and includes variable interest rates with GBP reportedly linked to SONIA and EUR linked to EURIBOR.

FY 2023 Guidance

Whitbread commented that its outlook was positive based on strong trading over the first three months of FY 2023, with the company currently 40% booked.

The firm said it was increasingly confident of delivering a positive HY1 2023 performance, and highlighted that it expected to remain ahead of the market for the rest of the financial year.

“This impressive Q1 performance together with improved visibility into Q2, gives us increased confidence in delivering a strong first half and remaining ahead of the market for the rest of the year,” said Brittain.

Altus Strategies agrees merger with Canadian rival

Andrew Hore
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Altus Strategies agrees merger with Canadian rival

AIM and TSX-V quoted Altus Strategies (LON: ALS) is recommending an all-share merger with fellow TSX-V company Elemental Royalties Corp and it will be renamed Elemental Altus Royalties Corp. The group will not be quoted on AIM.
Elemental Royalties Corp is offering 0.594 of one share for each Altus Strategies share. Altus shareholders will end up with 47.1% of the enlarged group, which could be valued at around $148m.
La Mancha and Condire own nearly 45% of Altus Strategies between them and they are in favour of the deal, which could be completed in the third quarter of 2022. La Manch will own ...

Driver stems Middle East losses

Andrew Hore
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Driver stems Middle East losses

Construction disputes and property services provider Driver Group (LON:DRV) has slimmed down its Middle East business and that should reduce annual costs by at least £3m. That should help profitability to recover sharply over the next couple of years.

Another business has taken on 25 former employees, leaving AIM-quoted Driver with nine fee earners in the region. This means that there were no redundancy costs. The other business will help to collect £3.5m of money owed for work and £2m has been paid to Driver in advance.

In the six months to March 2022, revenues edged lower from £25m to £24.4m, while underlying pre-tax profit fell from £1.01m to £402,000. An interim dividend of 0.75p a share has been announced, even though it is not covered by earnings.

Net cash is £3.68m and payments relating to the shedding of the Middle East activities have further boosted the cash figure.

European trading remains strong, but this is masked by the losses in the Middle East and Asia. Just stemming those losses will boost the group profit. There is still uncertainty, and which is why there is no guidance for 2021-22 as yet.

The Europe and Americas division provides a strong base for the business and additional fee earners have been taken on. There are also prospects in Africa.

Shares

Last December, AB Traction has increased its stake from 19.56% to 20.56%. The share price has fallen since then and at one point it was the lowest it has been since 2011, although it has recovered to 33p. The yield is 4.5%.

The £500,000 share buyback proposed by Driver could edge up the percentage stake owned by AB Traction. At the current share price nearly 3% of the share capital could be acquired for that amount of cash.

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