Bank of Scotland receives most complaints – again

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Today’s edition features:

  • Jangada Mines (JAN.L)
  • Ariana Resources (AAU.L)
  • Harvest Minerals (HMI.L)
  • Legendary Investments (LEG.L)

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Markets

Europe
The FTSE-100 finished yesterday’s session 0.36% lower at 7,411.47 whilst the FTSE AIM All-Share index was down 0.50% at 1,010.39. In continental Europe, the CAC-40 finished 0.38% lower at 5,103.97 whilst the DAX was down 0.33% at 12,102.21.

Wall Street
US markets were closed yesterday for the Labor Day [sic] holiday.

Asia
In Asian markets this morning, the Nikkei 225 was down 0.54% at 19,403.15, while the Hang Seng was 0.23% higher at 27,804.94.

Oil
In early trade today, WTI crude oil was 0.25% higher at $47.41 per barrel, while Brent was down by 0.36% at $52.15 per barrel.


Headlines

Bank of Scotland receives most complaints – again
The Bank of Scotland remains the most complained about financial business in the UK, according to the complaints watchdog. In the first six months of 2017 the Financial Ombudsman said it dealt with 20,541 complaints about the firm – part of the Lloyds Banking Group. However only 22% of those complaints were upheld. The vast majority of the complaints about the Bank of Scotland – 83%- concerned its sales of PPI insurance. Meanwhile PPI complaints once again topped the table of consumer concerns, with a 14% rise in complaints to the Financial Ombudsman compared in the first half of the year, compared to the same period in 2016. In total the Financial Ombudsman Service received 89,513 PPI complaints, up from 78,375 in the previous period.

Source: BBC News


Company news

Jangada Mines (JAN.L, 4.62p) – Speculative Buy
Jangada Mines, the recently listed exploration and development company, announced an update regarding its Pedra Branca project in Brazil. Pedra Branca is the largest and most advanced PGM project in South America. As such, Jangada announced that a Scoping Study followed by a Pre-Feasibility Study (PFS) is currently underway with completion expected mid-Q4 2017 and late-Q4 2017, respectively. Pedra Branca comprises four main deposits that, on aggregate, have a combined JORC-compliant mineral resource estimate of 23.1Mt grading 1.28g/t 2PGE + Au, containing 952koz of platinum, palladium and gold. On top of this, Pedra Branca offers an attractive suite of potential by-product credits including Ni, Cu, Co and Cr that could significantly lower the cost of PGM production. Management is focused on initial trail mining in early 2018 given the high-grade, at-surface oxide mineralisation that defines Pedra Branca. We see the Scoping Study and PFS results in Q4 2017 as well as initial trial mining in early 2018 as important catalysts in the short term. In the meantime, we maintain our Speculative Buy recommendation with a 9.6p target price.
Click here to see our latest full note on the company, published yesterday.

Beaufort Securities acts as corporate broker to Jangada Mines plc

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Ariana Resources (AAU.L, 1.40p) – Speculative Buy
Ariana Resources, the gold-silver exploration and development company operating in Turkey, announced today results from its initial programme across the Hot Gold Corridor and within its wholly owned Salinbas gold project in north-east Turkey. The Hot Gold Corridor contains the 3.87Moz Au eq. Hot Maden deposit and Ariana’s Salinbas (and the adjacent Ardala deposits) are located approximately 16km from Hot Maden. The Company has just completed a 65km2 soil geochemical sampling programme across the Salinbas licence with a portable XRF (X-ray Fluorescence) that analysed 3,552 samples. Several geochemical anomalies were identified which demonstrate the potential for additional epithermal mineralisation as identified at Salinbas, which has a current JORC-complaint (Indicated and Inferred) resource of 10Mt with an average grade of 2g/t Au and 10.2g/t Ag. Geochemical anomalies of copper, lead, and zinc were also identified north of the Ardala deposit covering an area of 1.5km x 0.5km and have been prioritised for immediate further exploration work. Anomalous geochemical results were also obtained from the Hizarliyayla area (located c 7.5km north of Hot Maden). This area has been upgraded to a priority exploration target due to the multi-element anomalies which are representative of high-level epithermal type mineralisation. Ariana also announced that a project-scale geological mapping programme and Phase Two XRF sampling programme has recently commenced.

Our View: The above results are positive and demonstrate the potential for the Hot Gold Corridor to contain significant gold and base-metal dominant mineralised systems. We note that anomalies associated with the Hizarliyayla area are, in part, hosted within the same stratigraphic horizon as the Hot Maden deposit. We look forward to continued developments at the Kiziltepe mine as well as further exploration results on Salinbas and surrounding area on the back of the Phase Two XRF sampling programme and geological mapping results. In the meantime, we maintain a Speculative Buy rating on the stock.

Beaufort Securities acts as corporate broker to Ariana Resources plc

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Harvest Minerals (HMI.L, 10.38p) – Speculative Buy
Harvest has announced good results from agronomic test work on KPferil at one of Veloso’s coffee plantations. These results are part of ongoing crop trial and agronomic studies that have been producing positive results for several months. This mornings results relate to juvenile and mature coffee plants and show that KPfertil is as effective as traditional potash and phosphate fertilisers. Santinato & Santinato Cafés Ltda, a well known agronomic consulting company specialising in coffee, conducted the tests.

Our View: We have been waiting for the Veloso results with a little more apprehension given the importance of Veloso (one of Brazil’s largest coffee producers), and the coffee market in general. Harvest’s Arapua deposit which produces KPfertil is in the heart of a agricultural region where coffee dominates. These are excellent results and Harvest can now focus on getting KPfertil registered with the ministry of agriculture and first sales. We reiterate our Speculative Buy recommendation.

Beaufort Securities acts as corporate broker to Harvest Minerals plc

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Legendary Investments (LEG.L, 0.12p) – Speculative Buy
The proactive investment company that focuses on making investments in and assisting companies which exhibit the potential to generate returns of many multiples through capital appreciation, yesterday published its audited results for the year-ended 31 March 2017. The year under review has been one in which progress has been made with key investments. In particular, Virtual Stock (7.2%-held) was cited by Lord Carter in his government review as “exemplary”, after which the strategically important Shelford Group of NHS Trusts agreed to utilise The Edge software, followed shortly after that by the NHS Shared Business Services (‘NHS SBS’). This development put Virtual Stock into a nationally if not globally recognised position in the health sector, and the landmark contract with John Lewis Partnership did likewise for Virtual Stock in the retail sector. Good progress was also made at Manas Resources, with the results from both the sampling programme and the geophysical studies proving positive; the next stage is test drilling and all options for this are being considered. Beyond this, an important new development occurred post year end with the acquisition for a nominal sum of a 12% stake in IBS Corporation. For some time, Legendary has been exploring options to enable it to widen its reach and provide it with access to additional resources to be able to make follow on investments in current investee companies and additional investments in new companies, in short to “increase its fire power”; the stake in IBS together with cooperation from Legendary should provide such a platform to be able to do this. During the year, Legendary made a net gain on fair value of investments of £45,000 (2016: net gain of £2,391,000). This was primarily due to gains on Medgold and Amedeo (2016: gain on Virtual Stock). As discussed above, Sula and Oracle were disposed of during the year end, leaving Amedeo and Medgold as the Company’s only listed investments. Overall, operating loss for the year was £281,000 (2016: profit of £2,132,000) while, at the year end, Legendary’s investments (fixed asset investments and current asset investments) were £4,293,000 (2016: £4,275,000).

Our View: 2016/17 was a year of progress. Virtual Stock in particular continues its upwards trajectory and initial results from Manas have been positive. Importantly, the stake in IBS and the cooperation that it will entail, presents a strategic move with the potential to deliver significant value to Legendary and, in due course, offers potential to add further value to Beaufort’s valuation model for legendary. As a ‘challenger’ financial services platform, initially focussing on an underserviced sector in New Zealand and with ambitions to expand further into the most dynamic regions in the world, while offering the ability to provide funding across a range of activities, IBS may find itself in the right place at the right time. This also demonstrates Legendary’s willingness to pro-actively seek out and nurture asymmetric opportunity. Prudently, Beaufort will not attribute specific value to IBS until its structure is more developed and target opportunities identified but, in the meantime, yesterday’s results provides another chance to highlight the fact that Legendary continues to trade at a deep discount to its perceived sum-of-parts. Simply valuing its 7.2% Virtual Stock participation on the basis of Notion’s recent funding injection, provides a 15% or so premium to LEG’s current market capitalisation. In expectation of Legendary’s participation in VS becoming more realistically valued within LEG’s wider portfolio, Beaufort retains its Speculative Buy recommendation on the shares along with its 0.7p price target.

Beaufort Securities acts as corporate broker to Legendary Investments plc

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To read Beaufort’s full research archive click here

Compiled by:
Barry Gibb, Kazunaga Senga, Sheldon Modeland, Charles Long & Ben Maitland
(t) +44 (0) 207 382 8384
(e) info@beaufortsecurities.com


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Recommendations
During the three months to end-August 2017, the number of stocks on which Beaufort Securities published recommendations was 203, and the recommendations were as follows: Buy – 65; Speculative Buy – 117; Hold – 20; Sell – 1.

Full definitions of the recommendations used by Beaufort Securities in its publications and their respective meanings can be found on our website here.

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