Fund Raising across the Boards

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THE FUND RAISER: Some renewed vigour provided a bit of spark to the Fund Raising front this week.

Share Placement to raise $800,000

Spectrum Rare Earths (ASX: SPX) has received commitments to subscribe for 20 million shares at an issue price of 4 cents per share to raise $800,000.

The company said the raising has enabled it to fast track a planned deep three hole drilling program at the Skyfall magnetic end use and heavy REE project.


Placement and Rights Issue to raise over $5 million

Metals of Africa (ASX: MTA) has announced a placement and rights issue to raise $5.063 million.

The placement will be made via the issue of approximately 12.2 million fully paid ordinary shares at 15 cents per share to professional and sophisticated investors to raise $1.83 million.

A non-renounceable, fully underwritten rights issue of up to approximately 21.55 million shares at an issue price of 15 cents each, on the basis of one share for every five shares held on the record date, to raise approximately $3.23 million will complete the capital raising.

Funds raised will be put toward on-going exploration work at the company’s current projects, including upcoming drilling programs at the Rio Mazoe base metal and Montepuez graphite projects, in addition to providing general working capital.

$2.6 million for high-impact drill programs

Buxton Resources (ASX: BUX) has resolved to raise up to $1.6 million in a placement to sophisticated and professional investors through the issue of up to 8 million new shares at 20 cents per share.

In addition to the Placement, Buxton has resolved to offer eligible shareholders the opportunity to participate in a Share Purchase Plan (SPP) to raise a maximum of $1 million.

Funds raised by the Placement and SPP will be used to fund:

Drilling at the company’s Oaktree North prospect, further RC and aircore drilling of nickel-copper targets and further EM surveys at the Zanthus nickel-copper project in the Fraser Range; and

Further drilling, resource estimation and metallurgy work at the company’s Yalbra graphite project in WA, and for working capital purposes.

“We are very pleased by the overwhelming interest received for the Placement and we are pleased to offer eligible shareholders the opportunity to participate in the SPP,” Buxton Resources chairman Seamus Cornelius said.

“The strong signal of support from existing and new shareholders is a strong validation of Buxton’s assets and strategy.

“We look forward to embarking on high impact nickel-copper exploration in the Fraser Range soon and significantly advancing the very high grade Yalbra graphite project.”


Share placement raises $1.2 million

Hammer Metals (ASX: HMX) has finalised a share placement for the issue of new shares to raise $1.2 million.

The placement of approximately 8.8 million shares at 13.5 cents per share is being made to sophisticated investors.

The company will be using the proceeds (net of offer expenses) from this Placement to fund planned exploration programs and specifically for targeted drilling on its Queensland projects at Mount Isa and Mount Morgan.


Share Placement

Image Resources (ASX: IMA) has raised $1.2 million (before costs) through a placement of 10.43 million shares at 11.5 cents each, primarily to a number of sophisticated and institutional investors.

The company indicated the funds raised will strengthen its financial position allowing it to:

Kick off its fully-funded resource extension drilling program at the North Perth Basin project;

Finalise the review and representation of a base case feasibility study;

Undertake additional studies indicated as required or prudent by the review; and

Support the delivery of increased JORC compliant resource at the Boonanarring project.

Laconia’s Peruvian exploration continues to deliver

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THE INSIDE STORY: Anybody suggesting a decline in mineral exploration activities by junior companies should be careful not to do so near the offices of Laconia Resources (ASX: LCR).

Recent data from the Australian Bureau of Statistics has shown a decline in the exploration efforts of the junior sector.

However the ABS also said, “The largest contributor to the fall in the trend estimate this quarter was Western Australia.”

Laconia’s major focus is its Kimsa Orcco project in Peru, which is the amalgamation of Laconia’s 100 per cent-owned Rasuhuilca project and the Huaco Cucho project, over which it has an option to earn an 80 per cent indirect interest.

The project consists of two large areas of alteration zones, which Laconia has identified as the Northern Kimsa Orcco prospects and the Southern Kimsa Orcco prospects.

 

All of Laconia’s Patacancha permits plus the 80 per cent Earn In Option Huaco Cucho permits No 1, No 2 encompass the Southern Kimsa Orcco prospects.

The balance of the 80 per cent Earn In Option Huaco Cucho permits surround the Northern Kimsa Orcco prospects.

The project currently has an Inferred Mineral Resource estimate of 360,000 tonne at 1.97 grams per tonne gold and 179g/t silver at a 2.5g/t gold-equivalent cut-off.

Laconia has recently announced a non-renounceable entitlement rights issue to raise approximately $1.7 million.

The company indicated it intends to do what the ABS claims its WA-focused peers are reluctant to do, which is to use the proceeds of the raising for exploration drilling and on-going exploration of the Kimsa Orcco copper-gold-silver project.

“We are not exploring in the Fraser Range of WA, which at present does make us reasonably unfashionable, however we are sitting on top of a highly-mineralised system,” Laconia Resources managing director Ian Stuart told The Resources Roadhouse.

“We know we are because of the consistently high-grade results we are generating from the review work we are conducting.

“To put that fashion into context, it is only unfashionable to those who aren’t interested in investing beyond local sentiment.

“The only exploration ground BHP Billiton currently has left is in the Central Andes, and Laconia is pleased to be as unfashionable as one of the world’s largest mining houses. That’s why we are in Peru.

“The country has a history for producing large copper-gold-silver systems, and we believe we could possibly looking at the next one.”

Laconia has been busy all over the Kimsa Orcco project this year producing a steady flow of news from all corners of the tenements.

The company collected surface channel samples at the Española 1 and Fortuna prospects, located within the southern portion of the project, in April this year, which confirmed historic high-grade copper-gold-silver mineralisation hosted by enargite-quartz-pyrite veins and breccias.

 

The channel sampling followed the compilation of a database of results from surface and adit sampling by previous companies, such as Cominco Peru SA and Buenaventura Ingenieros SAC.

The historic results highlighted the prospectivity throughout the Southern Kimsa Orcco prospects for copper-gold-silver mineralisation.

Channel sampling of surface outcrops by Laconia at the Española 1 and Fortuna prospects returned grades that validated those in the existing dataset.

Surface sample results at Española 1 prospect include:

0.87 metres at 8.12% copper, 4.96 grams per tonne gold, and 142g/t silver;

0.83m at 7.07% copper, 7.12g/t gold, and 80g/t silver;

0.85m at 2.38% copper, 2.43 g/t gold, and 63 g/t silver; and

0.52 m at 1.88% copper, 7.02g/t gold, and 94g/t silver.

Surface sample results at Fortuna prospect include:

1m at 8.19% copper, 4.43g/t gold, and 338g/t silver; and

1m at 3.63% copper, 0.98g/t gold, and 257g/t silver.

Further review of historic surface channel sampling of mineralised breccias and additional gold-silver vein systems east of Española 1 prospect concentrated on three different mineralised structures sampled during previous explorer, Buenaventura’s 1999 field campaign.

These included:

The Pebble Dyke, a breccia zone that can be traced for 500m from the Española adit with minimal sampling.

The Pebble Vein, a 700m system of gold-silver veining along the ridge line above the Española 1 prospect; and

Breccia 18, a poly-metallic, hydrothermal breccia at the intersection of the Pebble Vein and the Pebble Dyke.

The Breccia 18 samples are notable for the high content of base metal mineralisation (in particular lead hosted in the mineral galena) and outstanding gold and silver values.

There are additional breccias nearby that require priority sampling based on these results.

The Pebble Dyke, Breccia 18 and Pebble Vein prospects lie within Laconia’s 100%-owned tenement, Patacancha 3.

“The identification of this intensely mineralised gold-silver-copper-lead-tellurium breccia is very exciting,” Stuart said.

“Hydrothermal breccias are often associated with the intrusive process of porphyry copper bodies, and are typically situated on the margins of porphyry systems.

“The presence of these breccias further support Laconia’s view a large porphyry system exists at the Kimsa Orcco project.”

Laconia identified parallel vein sets at Barita, which it incorporated with new sampling results from Fortuna and Española 1 into a near-surface model of mineralisation at the Favi Vent Zone.

So far this has identified over 850m strike of high-grade copper-gold-silver veining, which Laconia considers to open many possibilities for future development of the project, including open cut potential.

“Being able to identify the presence of such high-grade copper and precious metals is particularly pleasing,” Stuart said.

“The scale and high-grade near surface mineralisation within the expanding Favi Zone bodes well for a stand-alone deposit in its own right.”


Laconia Resources Limited (ASX: LCR)
…The Short Story

HEAD OFFICE
Suite 2, Level 1, 47 Havelock Street
West Perth WA 6005

Ph:  +61 8 9486 1599
Fax: +61 8 9486 7899

Email: info@laconia.com.au
Web: www.laconia.com.au

DIRECTORS
Matthew Howison – Chairman
Ian Stuart – Managing Director
Matthew Edmondson – Non-Executive Director

MAJOR SHAREHOLDERS
Josephine Patoir             4.3%
Slade Technologies Pty Ltd    4.3%
Ian Stuart                            2.9%

SHARES ON ISSUE
483.7 million

MARKET CAPITALISATION
$2.9 million (at 4/9/14)

Planet Gas commences PEL 514 drilling

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THE ROADHOUSE BOWSER: Planet Gas (ASX: PGS) has commenced a two well drilling program within PEL 514 in the South Australian Cooper Basin.

Subject to final approvals, the program includes the drilling of two wells Hathi-1 and Bagheera East-1 back to back, with Hathi-1 scheduled for spudding on or about 9 September 2014.

The Hathi-1 vertical exploration well is located in the northwest of PEL 514 situated approximately 19 kilometres northeast of the Tarragon Oil Field.

 

Location of Hathi and Bagheera East Fields. Source: Company announcement

 

Planet Gas explained the Hathi prospect has been mapped as a four-way closure at multiple horizons using data from the recently recorded Dundinna 3D seismic survey.

The exploration well will be drilled to a total depth of approximately 2,530 metres to test the oil potential of the Tinchoo Formation with the Poolowanna and Birkhead Formations and the Hutton Sandstone as secondary targets.

The Bagheera East-1 vertical exploration well is also located in the northwest of PEL 514 situated approximately 10 kilometres northeast of Hathi-1.

The Telopea Field and the Keleary Field are located 13 kilometres and 10 kilometres respectively southeast of Bagheera East.

“From the Dundinna 3D seismic survey analysis, the Bagheera East prospect is a structural trap mapped as a four-way dip closure,” Planet Gas said in its ASX announcement.

The exploration well will be drilled to a total depth of approximately 2,510 metres to test the oil potential of the Tinchoo Formation with the Poolowanna and Birkhead Formations and the Hutton Sandstone as secondary targets.

The drilling program forms part of a second farm-in agreement with Senex Energy.

Planet Gas holds a 20 per cent project interest in PEL 514 while Senex holds an 80 per cent interest and is the operator.

The Planet Gas project interest, including the drilling and completion of Hathi-1 and Bagheera East-1, is free carried by Senex.

Website: www.planetgas.com

SphygmoCor selected for French Alzheimer’s trial

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THE ROADHOUSE PHARMACY: AtCor Medical (ASX: ACG), the developer and marketer of the SphygmoCor® system, has been awarded a competitive tender to provide SphygmoCor XCEL systems for a multi-centre trial in France.

The SphygmoCor system measures central aortic blood pressures and arterial stiffness noninvasively.

The study is being coordinated by the Universitaire (CHU) de Bordeaux.

AtCor said the study is to determine the relationship between arterial stiffness, as measured by Pulse Wave Velocity (PWV), and the progression of Alzheimer’s disease.

Pulse wave velocity is a measure of how fast pressure waves move through blood vessels.

The study will also measure cardiovascular events such as strokes and heart attacks, and also examine if high levels of pulse wave velocity – known to increase cardiovascular risk – also influence the progression of Alzheimer’s disease.
 
AtCor claimed the selection of SphygmoCor XCEL was attributed to its ease of use, extensive capability and its reputation as the gold standard for measuring arterial stiffness and central aortic pressures.

The company explained Universitaire’s trial is also a part of a larger trial: A Cohort of Outpatients from French Research Memory Centers in Order to Improve Knowledge on Alzheimer’s Disease and Related Disorders.

More than 36 million people suffer from dementia worldwide and this is expected to triple by 2050.

Alzheimer’s disease represents 60 per cent to 80 per cent of dementia cases.

In the US, AtCor’s largest market, an estimated 5.3 million Americans have been diagnosed with the disease which is the sixth leading cause of death.

“This new contract extends SphygmoCor’s clinical trial use to brain illnesses,” AtCor Medical CEO and president Duncan Ross said in the company’s announcement to the Australian Securities Exchange.

“Alzheimer’s treatment is at the forefront of biomedical research and much of what is known has been discovered in the last 15 years.

“Our experience will establish a footprint for AtCor in this important growing market.”

Alzheimer’s disease is understood to be connected to the accumulation of beta amyloid plaques in the brain, which come from a larger protein in the surrounding nerve cells.

“While knowledge of what causes death and tissue loss in Alzheimer’s is not definitive, the accumulation of plaques is directly related to large artery stiffness,” Ross continued.

“This can be accurately measured by carotid-femoral pulse wave velocity and pulse wave reflection.

“We believe that increased understanding of Alzheimer’s could lead to more timely intervention and treatment, slowing disease progression.

“As the SphygmoCor is the market leader in measuring carotid femoral pulse wave velocity, dementia is an area where we expect SphygmoCor will be able to provide substantial benefit to both patients and payers.”

Website: www.atcormedical.com

Phylogica receives research grant

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THE ROADHOUSE PHARMACY: Phylogica Ltd (ASX: PYC), in conjunction with its partner, The University of Queensland’s Institute for Molecular Bioscience (IMB), has been awarded a $546,420 Linkage Grant from the Australian Research Council (ARC) to identify Phylomer peptides inhibiting tumour metastasis.

The grant will be administered by University of Queensland with Phylogica as a commercial partner.

“This grant strongly supports Phylogica strategic focus to develop Phylomer-based therapies against high-value cancer targets,” Phylogica CEO Dr Richard Hopkins said in the company’s announcement to the Australian Securities Exchange.

“The outcomes of this collaboration will enable us to accelerate our oncology programs, which are aimed at delivering potent Phylomer drugs inside cells.”

In this project, Phylogica explained it and IMB will exploit the unique structural diversity of Phylogica’s Phylomer libraries for screening against a critical protein complex involved in cancer metastasis.

It is centred on a key intracellular ‘master switch’ protein known as SOX18, which is involved in the spread of cancer throughout the body (metastasis) via the control of blood and lymphatic vessel outgrowth.

The company claims transcription factor SOX18 is a promising anti-metastatic drug target, acting as a molecular switch that triggers the development of the entire lymphatic vasculature.

In solid tumours such as melanoma, SOX18 is re-expressed in lymphatic endothelial cells helping the cancer to spread through the lymphatic system.

Encouragingly, genetic disruption of SOX18 function in this context has been shown to protect from tumour metastasis and tumour growth, so blocking its function with Phylomers is expected to reduce the potential for metastasis.

IMB and Phylogica aim to develop a new platform to validate networks of protein interactions using Phylomer peptides as probes to inhibit specific interactions and to identify therapeutically relevant epitopes on target proteins.

Using the endothelial specific transcription factor SOX18 as a target, the study will apply this concept to this family of proteins, which have so far largely eluded pharmacological intervention.

Website: www.phylogica.com

Flinders hits new bedded iron at Blackjack

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THE DRILL SERGEANT: Flinders Mines (ASX: FMS) has encountered new high-grade and near surface bedded iron (BID) mineralisation at the company’s wholly-owned Pilbara iron ore project (PIOP) in the Pilbara region of Western Australia.

Infill and near resource extensional drilling was carried out at the PIOP’s Blackjack deposit and assays have been received for a further 80, which Flinders said had highlighted intersections of high-grade BID mineralisation with considerably low levels of silica and alumina.

Highlights include:

HPRC1579
24m of 57.3 per cent iron, 4.0 per cent silicon dioxide, 3.7 per cent aluminium oxide, 0.10 per cent phosphorous and 9.7 per cent loss of ignition;

HPRC1580
18m of 58.4 per cent iron, 4.2 per cent silicon dioxide, 3.6 per cent aluminium oxide, 0.07 per cent phosphorous and 7.9 per cent loss of ignition;

HPRC1598
40m of 60.0 per cent iron, 2.5 per cent silicon dioxide, 1.7 per cent aluminium oxide, 0.11 per cent phosphorous and 9.3 per cent loss of ignition;

HPRC1602
16m of 58.4 per cent iron, 2.8 per cent silicon dioxide, 1.7 per cent aluminium oxide, 0.10 per cent phosphorous and 11.2 per cent loss of ignition;

HPRC1604
30m of 58.9 per cent iron, 2.3 per cent silicon dioxide, 2.3 per cent aluminium oxide, 0.15 per cent phosphorous and 10.4 per cent loss of ignition;

HPRC1605
16m of 55.2 per cent iron, 5.3 per cent silicon dioxide, 4.3 per cent aluminium oxide, 0.09 per cent phosphorous and 10.6 per cent loss of ignition; and

HPRC1610
30m of 58.8 per cent iron, 2.9 per cent silicon dioxide, 2.9 per cent aluminium oxide, 0.11 per cent phosphorous and 9.3 per cent loss of ignition.

Flinders explained all the above intersections were encountered outside of the current Inferred Resource boundary and outside existing pit designs defined during the project’s Pre-Feasibility Study.

 

Location of the Blackjack deposit within the broader Pilbara Iron Ore Project (PIOP). Source: Company announcement

 

“This mineralisation remains open to the south-east and west and is adjacent to targets previously identified for BID mineralisation in the hills surrounding the Blackjack deposit, providing support for the company’s exploration targets to the south of the Blackjack resource,” Flinders Mines said in its ASX announcement.

“Once infill drilling across the project has been completed a specialised track mounted RC drill rig will be utilised to undertake drilling in the hills over the next two months to test for further high-grade mineralisation adjoining the Blackjack Resource and other targets within the PIOP.”

Email: info@flindersmines.com

Website: www.flindersmines.com

Empire to buy out JV partner

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THE ROADHOUSE BOWSER: Empire Oil & Gas (ASX: EGO) has reached a deal with its major shareholder and Joint Venture partner ERM Power (ASX: EPW), which the company said is aimed at unlocking the full value of its exploration acreage in Western Australia’s Perth Basin.

Under the agreement, Empire will gain control of the largest acreage package in the Perth Basin.

It will own 100 per cent of ten of the 12 tenements in this particular package, including the Red Gully gas and condensate project, and approximately 80 per cent of the further two tenements.

The company claim this acreage package covers more than 12,000 square kilometres, representing more than 50 per cent of the Basin.

The transaction is subject to regulatory and contractual approvals and an Independent Expert deciding it is fair and reasonable to Empire’s shareholders.

Should said Independent Expert reach such an opinion, the transaction will then require the approval of Empire shareholders excluding ERM.

The agreement involves ERM selling its interests in EP389, including Red Gully, and seven other tenements to Empire for $16.34 million.

ERM will provide Empire an interest-free loan to fund the purchase of the assets, repayable by Empire on the earlier of a disposal of the Red Gully processing Facility or two years.

“This deal will deliver Empire 100 per cent ownership and revenue of our cornerstone production asset, Red Gully, and the largest prospective oil and gas acreage holding in the Perth Basin,” Empire Oil & Gas chief executive Ken Aitken said in the company’s announcement to the Australian Securities Exchange.

“This deal will mean that Empire will receive 100 per cent of all the cash from selling condensate and the additional cash from selling gas to Alcoa under Tranche 2 of the Gas Supply Agreement which we expect to commence in about a year’s time.

“Based on the current production rates of eight terajoules (8Tj) and 360 barrels of condensate per day, this is over $25 million a year.

“The simpler ownership structure will in turn maximise our ability to attract the highest quality exploration partners and investors to help fund what is expected to be an aggressive exploration drive over the next few years to unlock the value of our highly prospective holding.

“The deal also provides funding solutions via both the vendor finance arrangements and the share placement, which will give us the time and financial stability to commence our work programs and seek longer-term solutions to funding an aggressive exploration drive.”

Email: admin@empireoil.com.au

Website: www.empireoil.com.au

What the Researchers Say

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WHAT THE BROKERS SAY: Interesting news and views from across the Resource Analyst universe.

Website: www.breakawayresearch.com

Company: Forte Consolidated (ASX: FRC)

Forte Consolidated is implementing a diligent and scientific approach to exploration with great success, as evidenced by the highly prospective Sledgehammer and Szarbs prospects.

Both prospects exhibit co-incident geochemical and geophysical anomalies, consistent with the target epithermal system.

No drilling has yet been undertaken at these targets, proving ample opportunity for a company re-rating as the prospects are further advanced.

Forte Consolidated (ASX: FRC) has made steady progress at its Johnnycake project, located in close proximity to the recently commissioned Mt Carlton gold/silver/copper mine in north east Queensland, where the company has conducted a systematic exploration approach to identify two high priority exploration targets.

The Sledgehammer prospect is defined by co-incident geochemical and geophysical features which together display the hallmarks of a sizable epithermal system prospective for gold and silver mineralisation.

The nearby Szarbs prospect is also shaping up to be a significant exploration target, demonstrating similar geochemical and geophysical characteristics to Sledgehammer, leading to the view that a second epithermal system exists a relatively shallow depths.

An IP Survey is currently underway at both prospects, which should help to define subsurface alteration and sulphide accumulation ahead of an anticipated drill program.

With a cash balance of $1.4 million the company is likely to undertake a moderate capital raising to fund these drilling programs, however, the calibre of these targets should not be underestimated and with a current enterprise value of $2.5 million, Forte is significantly leveraged to any positive news flow.

Website: www.hartleys.com.au

Company: Canyon Resources Limited (ASX: CAY)

Birsok drilling strongest grades to date (+55% aluminium oxide)

Canyon has received further assays from its maiden drilling program at the Birsok bauxite project in central Cameroon, confirming more good thickness and high-grade bauxite mineralisation from surface.

The latest results are some of the strongest to date, with reported intersects over the Djombi plateau in particular containing in parts, very high-grade (>50% aluminium oxide) bauxite with low contaminants (<5% silicon dioxide) from surface.

A total of 19 plateaus over four main prospects were drilled in the maiden drill program with results now received for over two thirds of the samples submitted.

The remainder of the assays are expected in less than two weeks.

Program to test surface extent of bauxite for DSO potential

The aim of the drill program was to test the surface extent of the bauxite and to provide an understanding of the depth profile and continuity of the mineralisation.

The drill coverage in the first-pass program is considered sufficient for an initial exploration target over the plateaus tested, and could potentially provide some areas of Inferred resource.

Promising first-pass results continue to be received from the Djombi prospect with further high-grade aluminium oxide bauxite defined at or near surface over the DJ08 North, South and DJ17 targets.

These plateaus form a continuous 3.5 kilometre long and up to 400m wide mineralised zone, with defined bauxite thickness averaging approx. 4m thick with Aluminium oxide contents grading 40 to 45 per cent.

Some of the better results including:

6m at 54 per cent aluminium oxide (2.62% total silicon dioxide) from surface;

3m at 55.4 per cent aluminium oxide (4.3% total silicon dioxide) from surface;

4m at 49.1 per cent aluminium oxide (5.8% total silicon dioxide) from surface; and

4m at 54.7 per cent aluminium oxide (1.4% total silicon dioxide) from surface (A/S ratios up to 39, with generally observable low total silica contents).

Reactive silica contents are still yet to be determined but as a general rule of thumb would expect them to be approx. 60 per cent of the total silica contents.

The Fedal prospect, prior to drilling was considered to be a lower priority target due to the mapped surface expression of the bauxite.

Drilling completed to date over this prospect has highlighted a greater variability in both bauxite grade and thickness.

The prospect also contains some areas of high total silica (> 30% silicon dioxide) with alumina contents of <40% aluminium oxide, but with some better grade zones (>40% aluminium oxide), with silica levels around 10% silicon dioxide.

Existing infrastructure for a potential development

The Birsok bauxite continues to be confirmed as a good-quality product which has potential to be direct shipping ore.

A second phase of drilling (infill and extension) is planned to commence later in the year (likely in October) following the wet season.

Existing rail capable of carrying bulk commodities is located within 10km of the project area and has available capacity.

The rail network connects to the operating port of Douala (approx. 700km from Birsok), with a new deep-water port at Kribi (approx. 750km from Birsok) expected to be completed in 2014.


Disclaimer: The above is intended as a guide only. The Roadhouse accepts no responsibility for investments made from this advice, successful or otherwise.

The views, opinions or recommendations of this article do not in any way reflect the views, opinions, recommendations, of The Resources Roadhouse.

The Roadhouse makes no representation or warranty with respect to the accuracy, completeness or currency of the content. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian financial services licensee before making investment decisions.

Fund Raising across the Boards

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THE FUND RAISER: Some renewed vigour provided a bit of spark to the Fund Raising front this week.

Placement to raise $6 million

Anatolia Energy (ASX: AEK) has received commitments to raise $6 million through the issue of up to 75 million shares at 8 cents each, with 1 for 2 attaching options exercisable at 12 cents per share.

Funds raised by the Placement will be applied to complete a Pre-Feasibility Study and Environmental Impact Assessment in respect of the company’s Temrezli uranium project, undertake an extensive drilling program at its Sefaatli uranium project, and for general working capital purposes.

“We are delighted to introduce a number of new institutional investors to our share register with this placement, which demonstrates the increasing profile of Anatolia due to the high-grade, low cost nature of its Temrezli project, and potential for near-term development,” Anatolia Energy managing director Jim Graham said.

“We are also very grateful to our existing shareholders for their ongoing support.”


Share placement

Newfield Resources (ASX: NWF) has completed a capital raising of $2.5 million by the issue of approximately 8.3 million shares at an issue price of 30 cents each.

DJ Carmichael Pty Limited acted as Lead Manager to the Placement made to institutional and sophisticated investors, including existing shareholders and a range of new investors.

The capital raising provides additional funding to progress the company’s diamond project in Sierra Leone.


$8M funding package

Energia Minerals (ASX: EMX) has executed a mandate with Euroz Securities to undertake an $8 million funding package to enable it to fast-track the evaluation and development of the company’s 100 per cent-owned, high grade Gorno zinc project near Bergamo in northern Italy.

The proposed funding package comprises a $6 million share placement at 2.5c per share to sophisticated investor clients of Euroz and an underwritten $2 million non-renounceable entitlement issue to be undertaken at the same price and which is conditional on the placement receiving shareholder approval.

The mandate is subject to satisfactory completion of a due diligence review by Euroz by not later than 3 September 2014, identifying placees and Energia shareholder approval of the placement.


$2.3M R&D tax refund

Investigator Resources (ASX: IVR) has received $2.3 million as a tax refund under the Federal Government’s Research and Development (R&D) Tax Incentive program.

The refund is for expenditure in relation to experimental work conducted as part of the company’s studies of the nature of the geology and the mineral potential of the new Paris silver deposit in South Australia.

Following receipt of the refund, Investigator has approximately $7.1 million of cash on hand.

This strengthens the company’s balance sheet to drill multiple target opportunities for silver, copper and other metals across its tenements in the newly recognised Uno Province.


Placement to raise $3 million

Deep Yellow (ASX: DYL) has received firm commitments from sophisticated and institutional investors for approximately $3 million.

The placement will be for a total of approximately 179.4 million shares at 1.7 cents.

“The placement, completed with the support of the company’s advisors will place Deep Yellow in a sound position for the short to medium term, enabling us to maintain our momentum by utilising the funds to progress the flagship Omahola project and the Tubas Sand project,” Deep Yellow chairman Tim Netscher said.

“We will continue to carefully monitor all expenditure to ensure we extract the maximum value from these funds and to remove the need to return to the market in the foreseeable future.

“Deep Yellow remains highly leveraged to any positive movement in the spot price and we believe that the current level of unsustainable uranium prices should provide the impetus for a correction in the medium term.”

What Does an Analyst Do?

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GUEST CONTRIBUTOR: Breakaway Research analyst Mark Gordon continues his explanation of how his company analyses the market by telling us how they go about selecting, and then writing up a company.

This week we follow up from last week where we discussed bias (or lack of it) in commissioned research, and presented the case that the potential for bias in commissioned research is no different to that in research from other sources, including broking houses.

And you may ask again why all recommendations are ‘Speculative Buy’, and no ‘Sells’ recommendations are given?

This does come down to stock selection – Breakaway Research is not going to write up and make a positive recommendation on a company we do not like or think has the potential to create value for the investors (and of course a company is not going to commission research that will result in a sell recommendation)!

The key question for us when making a company selection is – Will we be happy in recommending it to potential investors?

The clear answer here is Yes – as mentioned in last week’s jottings the investor is the key stakeholder here, and analysts have a duty to put the potential investor’s interests first, before their own or those of the client company.

We also have to truly believe in our recommendations.

However, does this mean that we would happily buy all of the stocks we recommend?

The answer here is No – different investors have different risk profiles and investment time frames, and thus not all stocks suit all parties.

In buying stocks we are just another investor with our own investment requirements; in writing research our target audience has a wide range of investment criteria.

One key point is that will always be discussed in a note is what we consider to be the key risks in the company – this to us is vital, and needs to be taken into account by potential investors.

If necessary we will also qualify a recommendation by highlighting events that need to occur for value to be potentially added.

Key areas looked at in selecting companies we would like to research include:

The potential for value add – vital for potential investors – it is hard to recommend a company that is considered to be fully valued by the market, or has limited scope for value add;

This takes into account why a company may be undervalued by the market, and what is being, or has been done to address this, including, amongst others, the potential of good quality assets having value realised through a change to better management

Quality of the management and technical team;

Whether the balance sheet is being properly managed – this includes factors, in the case of exploration companies, such as what proportion of money is going into the ground, or is the company being used as a ‘lifestyle’ company by the principals; and

Whether the company has potentially viable and robust projects or prospective exploration ground. This point takes into a number of factors including commodities and jurisdictions the company is involved with.

So how do we go about analysing and writing up companies?

Following an initial hook up or meeting with management to get a broad overview of strategy, research then includes a lot of reading – this includes company releases, presentations and other research that has been done, as well as external data.

External research includes work on peers, the commodity the company is looking at and the jurisdiction they are operating in.

Technical issues include factors such as geology, metallurgy and mining methods.

An understanding of these factors is vital in understanding a company’s business and chances for success.

Talking to independent contacts who know the assets is also a valuable exercise in research – they will often give an unbiased view of the company and its assets and raise issues that otherwise may be overlooked.

A site visit is very valuable, but unfortunately not always possible.

Site visits can give important insights that cannot be gained from just talking and reading.

From the background research we then develop an idea of the strengths, weaknesses and risks inherent in the company, and develop the points we would like to stress in the write up (these are the points given on the first page, as well as the ‘Investment Thesis’ section – in effect the selling points of the company).

This background work also raises further questions, with which we can then go back to the company for clarification.

From this an initial draft will be prepared, which will be then be sent to the company for their comments. Hopefully there won’t be too many of these!

This can sometimes be a tricky part of the whole process – the company may want to say/stress something that the writer is not prepared to accept – such conflicts can take some negotiation to resolve, however we will stand firm where we believe our analysis is correct.

Issues may also arise where a valuation is concerned – a company may have a different view of a valuation than what comes out of our research (and valuations could be a subject for some future discussions).

Again negotiation, with a result acceptable to all will resolve this.

When all parties are happy after toing and froing we will then release the note.

Mark Gordon

Senior Resource Analyst

mgordon@breakawayresearch.com

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