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.

Vianet set to return to profit

Andrew Hore
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Vianet set to return to profit

Although Vianet (LON: VNET) did not quite return to profit in the year to March 2022, it was highly cash generative and nearly covered the capital investment in the business. Vianet is on course for a substantial profit in the current year.

During the second half, the Smart Zones division, which provides data and stock management information for pubs and bars, went back to full billing of clients. They had been paying a percentage of normal fees during the Covid restrictions.

That helped Smart Zones improve its revenues in the second half. The US business is still making a small loss, although there are new opportunities being investigated that could move it into profit. If they do not, then the business will be reassessed.

The Smart Machines division continues to win new business and secure 3-5 year renewals from existing customers. It provides remote data and contactless payments services for vending machines operators and other clients.

The reduced usage of vending machines because of Covid restrictions and the continued reduction in working in offices has not hampered the business. The data provided to clients means that they can assess when a vending machine requires to be refilled or maintained, thereby reducing the number of visits and saving money.

Additional services are being launched are margins are expected to be higher than previously.

Results

In the year to March 2022, group revenues improved from £8.37m to £13.2m, although that is still lower than in 2019-20. Recurring revenues were 88% of the total. The loss was reduced to £170,000. Net operational cash inflow was £2.4m.

There is no dividend this year. An improved balance sheet with reduced net debt of £3m and a return to previous trading levels should enable a dividend to be paid.

That may not happen this year when revenues are expected to grow to £15.7m and a pre-tax profit of £1.1m is estimated. Next year, forecast revenues of £17.8m and pre-tax profit of £2.5m are both higher than the levels in 2019-20.

Open Orphan secures £7.2m RSV human challenge contract

Natasha Doris
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Open Orphan secures £7.2m RSV human challenge contract

Open Orphan shares rose 4.4% to 12.8p in late afternoon trading on Tuesday after its subsidiary thathVIVO secured a £7.2 million contract with an unnamed top five global pharmaceutical company to test its orally administered antiviral product.

The testing process will use hVIVIO’s respiratory syncytial virus Human Challenge Study Model as it carries out a Phase 2a double-blinded placebo-controlled human challenge study, which will take place at the group’s specialist quarantine facilities in Whitechapel and is set to evaluate the safety and efficacy profile of the antiviral against RSV.

The study is scheduled to kick off this month, with revenue recognised in FY 2022 and FY 2023.

Open Orphan confirmed that hVIVO would be recruiting healthy volunteers through the firm’s FluCamp volunteer recruitment arm.

The company said its client’s antiviral is currently in Phase three clinical trials for another infectious disease indication, and will be using the human challenge to assess the efficacy of its antiviral drug candidate against RSV at great speed, with the intent of highlighting the value of human challenge studies within the process of drug development.

“We’re delighted to be working with this top 5 global pharmaceutical client again to test their antiviral candidate using the hVIVO RSV Human Challenge Study Model,” said Open Orphan CEO Yamin ‘Mo’ Khan.

“I am especially proud that our world-class offering and customer service has secured repeat business from another Big Pharma client, and that we are seen as the ‘go-to’ partner for an increasing number of global drug developers. The client’s drug has already been shown to be an effective antiviral in certain disease indications, and we’re pleased to now test its efficacy against RSV infection.”

“RSV continues to be a serious global health threat causing an estimated 100,000 annual deaths in children under the age of five.”

Frontier Developments shares surge on record £114m annual revenue

Natasha Doris
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Frontier Developments shares surge on record £114m annual revenue

Frontier Developments shares surged 19.2% to 1,286p in early afternoon trading on Tuesday after the group reported a record annual revenue climb of 26% to £114 million in FY 2022.

The company’s adjusted EBITDA is estimated to hit management expectations at approximately £7 million to £8 million against £12 million in FY 2021.

Frontier Developments attributed the drop in EBITDA to higher levels of investment in significant game developments for release in the coming years, including F1 Manager 2022 for the summer this year and Warhammer Age of Sigmar scheduled for FY 2024.

The group highlighted that it had chosen to cancel the console development of its Elite Dangerous: Odyssey PC game due to a lack of engagement, and the board confirmed the capitalised intangible asset would be fully amortised from 31 May 2022, with a resulting additional charge of £7 million.

The company reported that its operating profit was projected to hit £1 million to £2 million following the deduction of the one-off £7 million amortisation cost for Elite Dangerous: Odyssey.

Meanwhile, Frontier Developments added that its balance sheet had £39 million against £42 million in the previous year, with the decrease linked to greater investment in future game offerings and a £5 million purchase of shares by the Employee Benefit Trust executed in April 2022 to satisfy future exercises of share options by employees.

The company said it expected its revenue to climb around 20% on average per year, with FY 2023 trading off to a strong start.

Frontier Developments mentioned its portfolio remained in a positive position, with Elite Dangerous, Jurassic World Evolution 2 and Planet Zoo set to benefit from new DLC over FY 2023 and its major release in F1 Manager 2022 receiving a positive response in advance of its launch later in the year.

The firm’s Frontier Foundry business has also benefited from the reception to its Warhammer 40,000: Chaos Gate – Daemonhunter release in May 2022.

“We’ve had another year of solid growth. Following its launch in November 2021, our player base for Jurassic World Evolution 2 has continued to expand, as expected,” said Frontier Developments CEO David Braben.

“We are now very well set up for the future, with the Dominion expansion and bundles launching today for Jurassic World Evolution 2, and F1 Manager 2022 due later this summer. The team has done a great job this year, overcoming many challenges and working tirelessly to support our games and our players.”

“Our games label, Frontier Foundry, has performed well too, with Warhammer 40,000: Chaos Gate – Daemonhunters launching right at the end of the financial year and looking good for FY23 too, with further exciting Foundry releases to come.”

AIM movers: Revolution Bars, Verici Dx, Condor Gold, Tekmar, Devlover Digital

Andrew Hore
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AIM movers: Revolution Bars, Verici Dx, Condor Gold, Tekmar, Devlover Digital

Revolution Bars Group (LON: RBG) trading remains strong and today’s trading statement has sparked a forecast upgrade by finnCap for the vodka bars operator. Refurbished bars have done particularly well, and two new bars should open by the end of June. They are the first new openings for four years. Cost control is helping to maintain margins despite inflation. Forecast pre-tax profit for 2021-22 has been raised from £500,000 to £2.7m. The share price has risen 1.1p to 16.25p.

The Verici Dx (LON: VRCI) share price fell 17% to 22p after the presentation of data for the post-transplant test Tuteva. Even so, house broker Singer Capital Markets is positive about the results and believes that the performance of the test should improve over time as more data becomes available for the AI technology. The positive predictive value of 60% in high-risk patients is already better than the current tests. Tuteva could be launched later this year. In the next few weeks, there will be news concerning the data from the trial of the Claranva test that generates a risk score for early acute rejection for potential kidney transplant patients.  

Condor Gold (LON: CNR) has raised £3.25m at 28p per unit so that it can complete the feasibility study on the La India god project in Nicaragua. Once that is done Condor can try to secure project finance to construct a mine. Each unit is one share and 0.5 of a warrant exercisable at 35p a share over a three-year period. The share price declined by 3.75p to 26.75p.

The two worst AIM performers yesterday continue to fall. Subsea cable protection services provider Tekmar Group (LON: TGP) has taken over from video games publisher Devolver Digital (LON: DEVO) as the worst performer of the day. Tekmar shares fell from 39p to 24.2p on Monday as it sought a strategic partner or buyer. They have fallen further to 13.25p, which is less than 10% of the flotation price five years ago. Yesterday, Devolver Digital slumped from 136.5p to 67.5p and have continued to decline to 58.5p. A relatively small decline in forecast revenues had a much bigger impact on profit.

Clontarf Energy plugs Sasanof-1 well, eyes alternative WA-519-P prospect leads

Natasha Doris
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0
Clontarf Energy plugs Sasanof-1 well, eyes alternative WA-519-P prospect leads

Clontarf Energy shares declined 1.4% to 0.08p in early afternoon trading on Tuesday, after the oil and gas firm announced the completion of its Sasanof-1 exploration well located 207 kilometres north-west of Onslow, Western Australia.

The well had been operated by Western Gas, who reported that the well was drilled by the Balaris MS-1 semi-submersible without incident and the rig had de-mobilised from the well and departed the exploration permit, listed as WA-519-P, on 12 June 2022.

Clontarf Energy confirmed that the well had been plugged and permanently abandoned, with wellhead infrastructure removed from the site.

The well had been drilled to a total depth of 2,390 metres on 5 June 2022, and intersected the Lower Barrow Group target sands at a depth of 2252.9 metres, 3.9 metres below the pre-drill prediction.

The oil and gas exploration firm said a preliminary evaluation indicated that 40 metres of net sand was encountered, however logs confirmed that the sands contained water, with no commercial hydrocarbons detected in the area.

Clontarf Energy highlighted that initial technical analysis indicated that the expected western seal of the targeted stratigraphic trap was breached, and allowed migration of gas out of the prospect.

The company confirmed that the total operation cost less than $25 million with a timeline of 25 days overall.

Contarf Energy commented that the WA-519-P block remained highly prospective, with reported material leads identified in the proven Lower Barrow Group and Triassic Mungaroo plays, along with play opening leads in the Jurassic ‘Perseus’ Syn-rift.

The group said it intended to review and assess the leads alongside its joint-venture partners with the aim of progressing them to prospects, using data taken from the Sasanof-1 well to support exploration and targeted farm-out discussions in the company’s future.

“Clontarf will retain its 10% interest in the WA-519-P Block and will work with its JV partners in further evaluating the remaining exploration targets within the field, with a view to commence targeted farm-out discussions,” said Clontarf Energy chairman David Horgan.

“While Sasanof-1 did not intersect commercial hydrocarbons, we did show that a consortium of juniors can identify, work-up, fund and drill a high potential gas well in over a kilometre of water depth.”

“The partners will review deeper targets on this Block, utilising the Sasanof-1 well data, to progress new prospects through targeted farm-out discussions.”

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