On Tuesday morning, the Anglo-Russian miner, Polymetal released a statement addressing possible restructures focused on improving shareholder sentiment as the company has faced serious consequences of the Russia-Ukraine war such as heavily imposed sanctions and being booted off the FTSE 100 last Monday.

Russian companies saw investors withdraw from their shares as the tensions grew between Russia and Ukraine and Polymetal was at one pint down over 90% YTD.

Polymetal shares faced serious scrutiny from investors as Russian sanctions were imposed by the West. However, shares have since rebounded and investors will be asking; ‘can Polymetal shares return to 1,000p’?

A Polymetal share price of 1,000p will by no means represent a complete reversal, but it is a significant psychological level for investors.

When the markets started dropping Polymetal shares with the g invasion of Ukraine, the company released a press statement addressing the sanctions and how Polymetal was shielded from the impact.

The company informed investors that Russian sanctions will not disrupt Polymetal’s operations in Russia and Kazakhstan. Apart from the sale of gold bullions being hurt by Russian sanctions, the company’s production guidance is unhindered.

Polymetal assured the markets that they are equipped to handle all liquidity issues that may arise and have stockpiled resources to ensure no disruption is caused to operational activities, at least for the next three months.

The Russian miner’s shares have nosedived 70% to 375p YTD despite their attempts to reassure investors at every stage of the war. Polymetal shares had peaked at 1,729p early June 2021.

Currently, the company has a market cap of £1.1bn with a forward P/E ratio of 1.5, the lowest amongst all LSE listed peers. This alone suggests an inherent value to the shares, despite a heavy discount attributed to Polymetal by the market.

However, Polymetal does have a dividend cover of 30x and a ROCE of 28x, representing the company’s capabilities are in place to handle returns to investors despite times of uncertainty.

On March 2 2022, the miner did announce a proposed final dividend payment of $0.52 will be paid to shareholders in May 2022. The final dividend reduced from $0.89 in 2020 as geopolitical tensions beat up Polymetal’s fiscal position.

Not too long ago, six directors, including chair Ian Cockerill, resigned from the board in an attempt to abandon a potentially sinking ship.

Polymetal have since hired Riccardo Orcel as an independent non-executive chair and installed some stability to the company after a turbulent month. The board now consists of 8 members as Polymetal replace 4 non-executive directors.

Kazakhstan

Polymetal has been analysing the possible divestment of its operations in Kazakhstan as per the request of a group of investors on Monday.

Polymetal produced 1.7 million troy ounces of gold equivalent in 2021, of which 558,000 ounces were produced by its two mines in Kazakhstan.

On Tuesday, the mining group addressed ongoing media speculation regarding a possible change in the company’s corporate structure. The group said they are “evaluating various options that could maximise shareholder value.” The statement was meant to relieve investors of their worry and ask them to hang tight while Polymetal figures it out.

Polymetal shares on Wednesday gained 10% as the company presented a fresh outlook for the rest of 2022, before falling back to finish negative.

On Wednesday, Polymetal reported an increase in net debt from $1.6bn to $1.8bn which it will use towards its seasonal working capital and resource procurement.

Currently the miners have short-term capital financing from Russian banks and is waiting for additional liquidity in Q2 2022. 

The company has $0.4bn cash held by institutions which are not subject to Russian sanctions along with a $0.5bn undrawn line of credit.

The company reinterated in the statement that Russian and Kazakhstanian operations are unhindered, and projects in the advance stages of development are back on schedule.

Logistical challeneges having impacted Polymetal’s POX-2 project causing a 3-6 month slippage and early stage projects are delayed by a year.

Pacific POX project is suspended indefinitely while the company look for re-site alternatives for the venture in Kazakhstan.

Junior JVs of the company will suffer due to 50% cuts in the budget of Greenfield exploration.

Polymetal said that its Brownfield explorations schedule and volumes will remain unaffected.

Riccardo Orcel said, “It is my opinion that investors, private and institutional, that collectively control over 75% of this company deserve a Board that will lead the company through this turbulent time, preserving and hopefully rebuilding the value of their investment as well as protecting the livelihood of thousands of employees, contractors, suppliers and other stakeholders.”

The Polymetal share price was up 11% at the time of writing on Thursday.

Sovereign Metals presented its low carbon footprint Kasiya graphite at the UK House of Parliament Roundtable on behalf of the Critical Minerals Parliamentary Group, with the Critical Minerals Association.

The mining group predominantly highlighted the Kasiya graphite’s potential for applications in lithium-ion batteries, which is currently the main market for coarse flake graphite, and traditional industrial applications.

The company noted that the product from its Kasiya mine in Malawi was a quality resource as a result of its high purity and high crystallinity, which is crucial for the material to be upgraded to the minimum 99.95% TGC for lithium-ion battery anodes.

Sovereign Metals estimated that the battery sector is set to be the greatest driver for graphite demand by 2028, with the commodity making up as much as 50% of the average lithium-ion battery composition.

#SVML RNS out!
Thanks to @CMA_Minerals for organising the #graphite roundtable at @UKParliament. $SVM outlined how its low-carbon potential graphite could supply the UK’s needs for #lithium ion #batteries #ESG #Sustainability #CO2 #BatteryMetals https://t.co/0UfA4gzQAB pic.twitter.com/feeYSn68wm

— Sovereign Metals (@sovereignmetals) March 31, 2022

The mining firm said it was capable of producing high-quality coarse flake graphite with a substantially lower carbon footprint than China, where over 75% of the global supply for natural graphite is currently sourced.

The company noted that the graphite from its Kasiya project held an 80% lower greenhouse gas emissions trail than graphite produced in the Heilongjiang Province in China, adding that each tonne of product would produce only approximately 0.2 tonnes of carbon emissions.

“The importance of sustainable supply chains for clean-tech solutions such as lithium-ion battery powered electric vehicles cannot be underestimated,” said Sovereign Metals Chairman Ben Stoikovich.

“As such, Kasiya could become globally strategically important as it has the potential to supply not one, but two, critical raw materials to world economies looking at building a sustainable future and tackling climate change.”

Sovereign Metals shares rose 5.4% to 33.7p in early morning trading on Thursday following the announcement.

Global provider of food and beverage ingredients, Tate & Lyle, has agreed to purchase ChemPartner Pharmatech’s leading prebiotic dietary fibre business, Quantum Hi-Tech Biological (Quantum) in China, for $237m.

Tate & Lyle’s position as a major player in dietary fibres has been greatly strengthened by the takeover of Quantum, which brings a high-quality portfolio of specialty fibres, strong R&D capabilities, and proprietary manufacturing processes and technologies.

Tate & Lyle’s ability to supply added-fibre solutions for its clients across a range of sectors, including dairy, beverages, bakery, and nutrition has improved as a result of the acquisition.

The acquistion of Quantum also strengthens Tate & Lyle’s footprint in China and Asia is strengthened, as well as its ability to develop food and beverage solutions using its leading speciality ingredient portfolio.

Quantum’s fructo-oligosaccharides (FOS) and galacto-oligosaccharides (GOS) fibres are manufactured in the Guangdong Province of Souuthern China. When the acquisition is completed, Quantum’s management team will join Tate & Lyle.

The deal is expected to close in the Q2 2022, however is subject to the approval of the shareholders of ChemPartner.

At the end of the transaction, consideration of £237m will be paid in cash for all of Quantum’s equity shares.

Quantum had sales of $46m and EBITDA of $14m in the 11 months ended November 30, 2021. Tate & Lyle forecasts the acquisition to boost sales growth and EBITDA margin in the first year under its operation.

Mr. Zeng Xianwei, Chairman, ChemPartner, said, “Tate & Lyle, with its global customer reach, strong focus on R&D, and strong fibre portfolio, is the ideal company to take Quantum on the next stage of its development.”  

QUANTUM

Quantum specialises in FOS and GOS research, development, production, and sale.

FOS from sucrose and GOS from milk sugar or lactose, together account for around 25% of the total dietary fibres market, which is expected to rise at a rate of 6% per year.

The FOS and GOS market in China, which accounts for the majority of Quantum’s revenues, is expected to increase at a rate of roughly 10% per year.

Tate & Lyle shares rose 3.6% to 745p after the company announced its takeover of Quantum.

“We are delighted to announce the agreement to acquire Quantum, a leader in prebiotic dietary fibres and a business recognised for its high-quality ingredients and solutions,” stated Nick Hampton, Chief Executive Officer, Tate & Lyle.

“FOS and GOS are highly complementary to our existing fibre portfolio and will enable us to offer a broader range of solutions to our customers.”  

“This acquisition significantly strengthens our fortification capabilities and expands our customer offering in key food and drink categories.”

BBGI shares remained flat at 175.1p in early morning trading on Thursday following a moderate 9.4% Investment Basis NAV growth to £1 billion against £916 million in 2020.

BBGI reported a NAV per share increase of 2.1% to 140.7pps compared to 137.8pps in 2020, alongside a 171% total shareholder return since its Initial Public Offering (IPO).

The infrastructure investments company announced a 7.3p dividend per share and added that it was aiming for a 7.4p dividend in 2022.

BBGI attributed its NAV increase to its active management activities, and highlighted its £79.2 million of accretive cash investments in 2021.

The investment group further noted its £51 million acquisition agreement for an interest in a Canadian healthcare asset in 2021 and its £24 million investment in a Canadian green energy investment in February 2022.

BBGI currently holds no assets in Russia or Ukraine, with its portfolio split in 36% Canadian holdings, 33% in the UK, 11% in Australia, 11% in the US and 9% in Continental European investments.

The firm said that its global infrastructure investment remains strong going forward in 2022, and has projected strong potential for expanding its portfolio as a result of growing urbanisation, flexible working models and the desire to reduce emissions.

“The Management Board continues to use its industry relationships to source attractive investment opportunities for the Company’s pipeline, and our internal management structure creates the proper incentives for the Management Board to focus on preserving the value of the Company’s portfolio and growing the Company in a thoughtful and disciplined manner, and not be an asset gatherer focused solely on assets under management,” said BBGI Chair Sarah Whitney.

“This structure has supported much of the Company’s successes in the past ten years, and as a result I have full confidence in our continued ability to create attractive and sustainable long-term value and benefits for all our stakeholders.”

Self-storage company Safestore Holdings announced that it has acquired the remaining 80% of its Benelux joint venture from Carlyle Europe Realty for €67m.

On Thursday morning, Safestore stated it has bought the remaining 80% of the ownership from its partner in the joint venture, where Carlyle received a total of €67m in compensation.

The Joint Venture was purchased for an enterprise value €146m.

The overall initial cash outflow is €139m, which includes a €67m share purchase, a €67m refinancing of existing borrowings, and a €5m transfer tax and other deal charges, were paid for using the Safestore’s existing loan facilities.

“Combining Safestore’s highly scalable operating platform and development experience with Carlyle’s investment expertise proved to be a successful partnership. We are now exploring further opportunities to work together,” said, Safestore CEO, Frederic Vecchioli.

Benelux Joint Venture was formed in 2019 between Safestore and Carlyle Europe Realty with the goal of using Safestore’s operational platform outside of its main regions by acquiring and developing assets in the Netherlands and Belgium.

Safestore has managed the properties since acquisition by Benelux.

Since the start of the joint venture, it has evolved to a 592,000 sqft MLA portfolio that is currently 74% occupied.

The MLA portfolio consists of 15 high-end buildings with 12 freehold properties, 2 ground leases and 1 leasehold property.

In the Netherlands, there are 9 locations, 6 of which are focused in the Haarlem-Amsterdam area, with other locations in The Hague, Het Gooi, and the recently established Nijmegen location.

In Belgium, there are 2 stores in the Brussels area, 2 in Liege, and more locations in Nivelles and Charleroi.

The investment is estimated to be slightly lucrative for the group profits per share in FY2021/22 and will help the Safestore maintain its dividend cover in the future.

Based on total enterprise value, the estimated initial yield is 3.9%, which is expected to reach Safestore’s normal returns threshold as the portfolio matures. Safestore’s LTV will climb to 31% following the deal.

Following the transaction, the company’s financing potential under Safestore’s RCF and Shelf facilities, along with its cash reserves, is projected to be around £219m.

Safestore shares have gained 0.45% to 1,341p following news of the acquistion.

Marc-Antoine Bouyer, Managing Director, Carlyle Europe Realty advisory team, stated, “This transaction marks the culmination of a major acquisition and asset management effort through our joint venture with Safestore to assemble an institutional-quality self-storage portfolio of scale with exposure to prime cities in the Netherlands and Belgium.”

“We believe that the market fundamentals for European self-storage remain highly attractive and look forward to working alongside Safestore in identifying further opportunities on the continent.”

Strix delivered strong financials with 25% increase in revenues however, a challenging operating environment due to increases in commodity prices, freight cost inflation, supply chain and fluctuating foreign exchange rates hurt investor sentiment.

The hydro product and service company, Strix shares dropped 9% to 217p on late afternoon trade on Wednesday.

Strix saw 25% rise in revenue as it grew from £95m to £119m in 2021. The strong growth in the group’s revenue came from the acquisition of LAICA producing strong results and the kettle controls contributing £85m of the total amount.

Kettle controls increased revenue by 6.6% to £85.1m. Strix has expanded both geographically and in terms of the number of features it offers.

The regulated segment grew in the first half of 2021, thanks to significant contributions from the United Kingdom, Mainland Europe, and North America.

Water category generated revenues of £21m, almost £10m higher than 2020 due to LAICA and HaloPure technology expanding the product base for the company.

The water catergory also noted significant development in APAC, Europe, and North America, owing to new distribution and private label agreements with prominent distributors, retailers, and brands in those countries.

The appliance division saw revenues increase from £3.7m to £12.8m as Strix launched Aurora and Dual Flo in October 2021.

The launch of these products provided an extension to Strix’s domestic appliance category, with ‘strong energy saving and sustainability benefits’ progressing the company’s aim for its customers to live a greener and safer life.

The company saw pre-tax profits increase by 4.2% from £30.9m to £32.2m in 2021.

The group’s net debt rose 37.6% to £51.2m from £37.2m in 2020 in order to fund the acquistion of LAICA, further invest in new manufacturing operations in China and seeking growth opportunities.

New manufacturing operations in Guangzhou’s Zengcheng district are now up and running, after being completed on time within budget, and during a global pandemic.

Net cash generated from operating activities declined 28.5% to £22.3 from £31.2 in 2021 however, the search for growth opportunities remains unhindered as Strix has significant liquidity and financial flexibility.

Adjusted EPS increased from 14.9p in 2020 to 15.2p.

The board proposed total dividend to increase from 7.85p to 8.35p as final dividend changes to 5.6p from 5.25p in 2021.

Mark Bartlett, Chief Executive Officer, Strix Group, said, “Strix has a robust business model and disciplined execution of our strategies have underpinned the resilience of our performance throughout economic cycles, so we remain confident in our ability to navigate the growing uncertainties ahead and delivering on the medium-term strategic plan and delivering against its targets.”

The FTSE 100 was trading up 0.18% at 7,555 going into the close on Wednesday in defiance of recession worries following an inverted US government bond yield curve.

European stocks slumped with the signalling of recession from the bond markets on Wednesday, followed by the DAX down 0.8%, CAC slipped 0.6% and Ibex 35 fell 0.5%.

FTSE 100 was the outlier with its gains of 0.2% on Wednesday thanks to ‘”strength in miners and oil producers,” stated Russ Mould, Investment Director, AJ Bell.

Commodities prices boosted the FTSE 100 on Wednesday, as doubts around peace talks between Russia and Ukraine helped lift commodity prices.

Oil prices have gained 3% to $114 a barrel, climbing back from the losses suffered earlier this week.

Shell and BP topped the FTSE 100 with shares rising 3.1% and 1.9% respectively.

Amongst commodity stocks, miners reaped the gains as metal prices rebounded, with Anglo American seeing a 2.8% increase to 2,086p.

Glencore, Rio Tinto, Fresnillo and Endeavour Mining all saw shares strengthen 2.5%, 2.3%, 1.5% and 1%, respectively.

FTSE 100 Fallers

Experian, the world’s largest credit data provider, saw its shares fall 2.7% after Citigroup downgraded the stock from ‘buy’ to ‘neutral’.

Pearson shares dropped 11.5% to 695p after Apollo announced it will not be placing any new bids for the education publishers.

IAG shares lost 2.3% to 145p as Europes travel-related shares declined as oil prices gained.

RBC downgraded Lloyds Banking Group from ‘buy’ to ‘underperform’ on the basis of the growth drives not seeming to be ‘game changing’, leaving the shares to spiral down 2% to 49p.

The FTSE 250 was down 1.1% at 21,235.9 and the AIM was down 0.1% at 1,045.2 on Wednesday.

The market was led by energy companies as the price of oil remained steady at $112 per barrel and the approaching energy price cap rise leading to investors seeking energy stocks.

Travel companies suffered a hit as Trainline and Trustpilot joined the list of FTSE 250 fallers.

FTSE 250 Risers

The FTSE 250 risers included Energean with a 2.8% rise to 11,370p in the lead up to the rising energy price cap on 1 April 2022. Morgan Stanley also quoted the stock to be ‘overweight’.

Capricorn Energy was up 1.9% at 220.8p and Tullow Oil increased 1.8% to 52.1p as the price of Brent Crude remained steady at $112 per barrel.

Greencoat UK Wind shares rose after Jefferies upgraded the stock to a buy from hold.

FTSE 250 Fallers

The FTSE 250 fallers were led by Vesuvius with a 6.3% loss to 334.1p as Barclays cut the stock to ‘underweight’.

The Trustpilot Group fell 6% to 146.3p as the stock continued to sink following a poor update last week.

Travel related shares were down on Wednesday with Trainline giving up 5.6% to 202.4p and Easyjet dipping 2%.

Petropavlovsk shares dropped 6.8% to 4.6p as the company said its in the initial phase of restructuring due to its significant exposure to Gazprombank, a Russian bank facing asset freezes due to sanctions imposed by the West.

AIM Risers

The AIM risers were topped by Keras with an 81.2% rise to 0.07p after it secured control of the US Diamond Creek phosphate mine.

Empire Metals soared 48.7% to 1.4p after the company reported high-grade intercepts at its Gindalbie gold project.

88 Energy enjoyed an increase of 32.1% to 0.9p, despite disappointing results from its Merlin-2 well reported yesterday.

AIM Fallers

The fallers were led by BowLeven with a 9.7% decline to 3.25p after a $1.2 million loss in its half-year results, and its Cameroon joint-venture partner Lukoil’s inclusion in sanctions against Russia.

Malvern International continued its decline with a fall of 9.5% to 0.09p as the academic services provider announced a debt restructure of £2.6m earlier this month.

The LoopUp Ground decreased 9.4% to 6p may be due to the company issuing more options to PDMR of the group.

Eurasia Mining is a Russian-focused company dedicated to mining gold and platinum metal groups, including palladium, rhodium and iridium and platinum.

The firm is focused on environmentally-friendly metals for green energy applications, including battery metals such as nickel, copper and cobalt for electric vehicles (EVs) and PGMs for utilisation in catalysts and green hydrogen production.

The company operates in Russia and is focused on several projects including its Kola Battery Metals and PGM site, its West Kytlim Platinum Group Minerals (PGM) and gold mine, and its Nittis-Kumuzhya-Travyanaya nickel deposit.

Eurasia’s Kola Peninsula site covers nine projects in a legally binding agreement with Rosgeo and the Mochetundra mine complex, making the project one of the major global sites for combined resources.

The group confirmed that it had trebled its production capacity at its West Kytlim mine in its 2021 interim report.

The interim report also noted a nine-fold rise in revenue from the mine compared to the same period in 2020.

Where are the prices of gold and PGMs going?

The price of gold has risen 13.8% to £1,466.39 per ounce and the price of platinum has risen 5.4% to £755.87 per Troy ounce in the last six months, increasing the company’s potential for revenue.

The price of palladium rose 18.4% to £259 per ounce, and has been a steady contributor to Eurasia’s revenue stream, with the company’s revenue continuing to rise on the precious metals’ prices alongside the rising cost of rhodium and iridium.

How Has Eurasia Mining Been Impacted By Anti-Russian Sanctions?

Eurasia Mining is focused on Russia, however the company has issued several statements assuring investors that it holds no ties to Russian banks and the sanctions have not prevented the group from executing its strategy.

The mining group also said that the weakening of the rouble will only serve to benefit its bottom line.

There is no guarantee that Eurasia Mining will remain secure from sanctions indefinitely, so its current lack of interruptions should not be taken as absolute certainty for the company’s production going forward in 2022.

What were its latest financial results?

Sale of platinum and other metals accounted for £425,965 in six months to June 2021 for its revenue, against the sale of platinum and other metals hitting £937,962 in the 12 months to December 2020.

The mining group reported a profit for the six months to June 2020 of £1,465,922 compared to a profit of £3,693,308 in the 12 months to December 2020.

The company did not report a dividend in its half-year results for 2021.

Eurasia mining has seen its share price fall 43.2% year-to-date, however the stock has made a comeback in the last month with a spike of 89% to 13.5p.

Is Eurasia Mining a buy?

Eurasia Mining has a historically strong revenue and its focus on metals with applications for EVs and green energy projects will see the value of its product climb as the international markets seek out its PGMs for renewable energy production.

The price of gold has also remained a reliable safe haven for investments, and looks set to continue its upward trajectory into 2022.

However, purchasers should exercise caution in light of Russia’s war in Ukraine. Eurasia Mining might continue to remain unaffected by sanctions against the Russia, but it is not necessarily a guarantee that the shares will stay safe over the long run if the war continues over the coming months.