Fears grow across the Atlantic over Brexit fallout

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Today’s edition features:

  • Ferrum Crescent (FCR.L)
  • Premier African Minerals (PREM.L)
  • Evgen Pharma (EVG.L)

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Markets

Europe
The FTSE-100 finished yesterday’s session 0.80% higher at 7,458.48, whilst the FTSE AIM All-Share index was up 0.38% at 1,017.20. In continental Europe, the CAC-40 finished 0.23% lower at 5,386.83 whilst the DAX was 0.23% down at 13,123.65.

Wall Street
Last night in New York, the Dow Jones closed 0.23% higher at 24,386.03, the S&P-500 added 0.32% to end the day at 2,659.99, and the Nasdaq finished 0.51% higher at 6,875.08.

Asia
In Asian markets this morning, the Nikkei 225 was down 0.39% at 22,850.03 and the Hang Seng was 0.38% lower at 28,855.58.

Oil
In early trade today, WTI crude was 0.74% higher at $58.42 per barrel and Brent was up 1.45% at $65.63 per barrel.


Headlines

Fears grow across the Atlantic over Brexit fallout
Nearly all the possible trading relationships between Britain and the European Union following Brexit would be less favourable than staying in the European Union, according to an influential US think tank. The Rand Corporation study said the worst option would be a “no deal”. That would leave the UK economy 4.9% poorer by 2029. “No deal” would also have a negative effect on the EU economy, but it would be “relatively minor”. The report said that even a “soft Brexit” involving staying in the free market would not be as positive economically as staying in the EU. Rand plays a significant role in America, with half of its funding coming from the US government. In Europe it has advised the UK government on policy issues such as mental health, as well as the European Parliament and the European Commission.

Source: BBC News


Company news

Ferrum Crescent (FCR.L, 0.07p) – Speculative Buy
FCR, the European lead-zinc explorer, announced an update on its Toral lead-zinc project in Spain. Mining consultants, Addison Mining Services of London, have been to site to verify and validate the project’s database for use in the JORC (2012) compliant resource estimate. Following a review of mineralised intersections, the presence of silver has been noted. Silver mineralisation is typical of carbonate hosted, structurally controlled Pb-Zn deposits such as Toral. The company is undertaking further verification and analysis to verify the silver grades within the mineralised system.

Our view: The above announcement is good news for FCR as it continues to develop the Toral lead-zinc (and potentially silver) project. The presence of silver could help with the overall economics of the project. We look forward to verification of the silver contents and an upgraded JORC (2012) compliant resource. In the meantime, we maintain our Speculative Buy on the stock.

Beaufort Securities acts as a corporate broker to Ferrum Crescent plc

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Premier African Minerals (PREM.L, 0.42p) – Speculative Buy
Premier African Minerals, the South and Western Africa focused mineral explorer and developer, announced today an update on its RHA tungsten mine and drill results from its Zulu lithium project, both are in Zimbabwe. PREM has completed the mining phase of a bulk sample containing 8,272t from the open pit to confirm the in-situ resource grade, stripping ratio and concentrate recovery. To date, 7,247t have been processed and results will be used to guide future open pit operations. Underground mining and development are progressing well with 3,700t of ore stockpiled and this is expected to reach 6,000t during December. Processing of stock piled ore commenced on 6th December 2017. Plant throughout is 700t per day and plant performance is primarily constrained by fine particles in the open pit ore. Blending of underground and open pit ore should help improve plant performance and recoveries of concentrate. PREM does not expect to provide any significant finance for future RHA operations after 31 December 2017. Additional working capital, if required, will only be provided to bridge time between concentrate availability and date of payment. PREM also announced that it has issued 59.8M new ordinary shares to African Mining and Exploration (Afmine), the principle mining contractor at RHA, for services related to the ongoing mining operations at RHA. PREM also announced further assay results from its Zulu lithium project. Hole ZDD-45 intersected 38.84m grading 1.55% Li2O including 0.95m grading 4.24% Li2O. Assay results are still pending for a further 30m of pegmatite. Zulu has a current resource estimate of 20.1Mt grading 1.06% Li2O with an exploration target of 60-80Mt. The purpose of the current drill programme is to expand and upgrade current resources from Main Zone.

Our view: Its good to see progress being made at the RHA mine. The bulk sample should provide important information for pit parameters such as resource grade, stripping ratio and concentrate recovery. Underground operations are projected to be 6,000t per month. We note that PREM does not intent to provide any further financing to RHA for normal operations or capital unless RHA is trading profitably. We continued to be encouraged with the recent improvement in tungsten prices. We also note the exceptional lithium grades, up to 4.24% Li2O from the Main Zone and look forward to further updates. In the meantime, we maintain a Speculative Buy rating on the stock.

Beaufort Securities acts as corporate broker to Premier African Minerals plc

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Evgen Pharma (EVG.L, 15.25p) – Speculative Buy
Evgen Pharma on Friday announced its interim results for the 6 months ended 30 September 2017 (‘H1 FY18’). During the period, total comprehensive loss was £1.7m (H1 FY17: loss £1.7m), net cash outflow (before short-term investment movements) was £1.7m (H1 FY17: £1.6m) and cash position (including short-term deposits) at the period-end amounted to £2.2m (H1 FY17: £5.5m). On the operational front, Evgen continue to progress its two Phase II clinical trials of SFX-01 for STEM (metastatic breast cancer) and SAS (subarachnoid haemorrhage stroke). STEM now has 7 sites opened for recruitment and commenced compassionate use programme for patients who have reached week 24 without disease progression so that they can continue to receive SFX-01. For SAS, it completed site initiation at Birmingham with a further three sites under consideration. On the separate announcement, the Group said it has conditionally raised £2.3m before expenses through placing of 19,166,667 new ordinary shares at a price of 12p. The proceeds will be used to progress clinical trials and for working capital purposes.

Our view: Evgen’s financial performance was in line with expectations, while made good progress on its two Phase II clinical trials. STEM is on course to release an interim data analysis in the first half of calendar year 2018, and the data read-out in the second half of calendar year 2018, while for SAS, the Group is on track for the data read-out before the end of calendar year 2018. With estimated monthly cash burn of c.£275k in FY18, the successful raise of £2.3m (subject to General Meeting) will support the Group’s operations towards the end of calendar year 2018. Considering its two Phase II assets targeting multi-billion dollar market opportunity each, the current valuation of just £10m, does not appear to have fully recognised the value Evgen might deliver over the coming 13 months or so. Beaufort reiterates its Speculative Buy rating on the shares.

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To read Beaufort’s full research archive click here

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


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