W Resources confirm Funding Package

Great news for W Resources shareholders. It’s been a longtime coming but at last Mr Masterman has delivered. It’s quite a feat to discuss a $35m funding package (nevermind secure one) when your company market cap is less than $30m. It could have been another painful dilutive ‘AIM’ story for investors. Hence today’s confirmation should not be underestimated. The terms look a little hefty in interest rate terms and the 5% warrants have not been disclosed as yet but my guess is that BlackRock will have wanted these sub 0.5p which might explain the small drop pre initial funding news RNS in January 2018. That all said, I would take this deal over equity dilution everytime. Today… the market cap is almost double the pre-funding discussion level at $57m. Roll on production in 2019!

W Resources is currently the best performer across TheShareHub top ten picks with a near 70% increase in just 6 weeks. It looks odds to be the first multibagger of the hotlist picks and needs a test of 0.77p to get a mutibagger trophy.

Current Share Price 0.64p

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RNS Number : 0734F
16 February 2018
W Resources Plc

US$35m Loan Facility Finalised with BlackRock to Fund La Parrilla

W Resources Plc (AIM:WRES), the tungsten, copper and gold exploration and development company with assets in Spain and Portugal, is delighted to announce that the Company has signed a Credit and Guaranty Agreement (the “Agreement”) with the lenders thereunder (the “Lenders”), including one or more funds managed by BlackRock Financial Management Inc. (“BlackRock”) to provide a US$35 million secured term loan facility to W Resources to fund the La Parrilla mine development (the “Loan”).

The first US$13.125 million is expected to be drawn this week after satisfaction of the conditions precedent applicable to such funding, with the balance of US$21.875 million expected to be committed and funded in Q2 2018, after the satisfaction of a number of conditions precedent, including those typical for this type of term loan.

The key terms of the Loan are as follows:

— The Loan is for a scheduled term of five years, with a two year non call period. The Company has the right to repay the Loan after two years for a premium of 5%, after three years for a premium of 3%, and after four years for no premium;

— Subject to any early repayment permitted or required under the Agreement, repayment will made by way of a cash flow sweep, utilising free cash to repay the loan;

— The Loan is subject to an average 5 year interest rate of 12.6%, being 14% in the first year, 13% in the second year and 12% thereafter;

— First year interest is Payable in Kind (“PIK”) and added to the principal, while 50% of the second year interest is PIK and 50% is payable in cash;

— Lenders will receive a non-refundable upfront fee of 3% of the face value of each of the respective Loan disbursements;

— Lenders will receive warrants totalling 5% of W’s fully diluted equity.

Michael Masterman, Chairman of W Resources commented: “We are delighted to have partnered with BlackRock to obtain this US$35 million secured term loan facility. The Loan provides full funding for La Parrilla and now it is full steam ahead.

“Engineering and planning at La Parrilla is advanced and the three primary construction contracts have been awarded. As outlined, the timetable to deliver the project is 12 months from the close of financing which moves the Company into production in Q1 2019.”

David Trucano, Portfolio Manager, BlackRock Global Credit team commented: “We are pleased to provide funding on behalf of our clients to restart operations at La Parrilla, one of the most efficient mines in Europe. We believe the current dynamics of the tungsten market present a unique opportunity for W and our clients.”

Short Term Loans

In order to provide interim funding, each of, Beronia Investments Pty Ltd ATF Duke Trust, of which Dr Byron Pirola (a director of the Company) is both a beneficiary and trustee and Symmall Pty Limited, of which Mr Michael Masterman (a director of the Company) is both a beneficiary and trustee, have lent the Company short term loans of EUR100,000 each. The loans are unsecured and carry an interest rate of 10% per annum. Each of the loans will be repaid using the first draw down of US$13.125 million under the Agreement.

By virtue of their size, the loans constitute related party transactions under Rule 13 of the AIM Rules for Companies. The independent director of W, having consulted with the Company’s nominated adviser, considers that the terms of the transactions are fair and reasonable insofar as the Company’s shareholders are concerned.

Hummingbird is buzzin

Friday morning RNS’s (or late afternoon) are normally deployed by companies to tuck away ugly news in hope the weekend’s activities and 2 days away from market will cleanse the mind. Equally, there is an argument to say that a ‘good news’ story can travel further when there is an entire weekend to discuss and absorb it.

Hummingbird have decided on the latter and delivered a very bullish RNS this morning. Often after a period of excitement and anticipation as development projects finally hit commercial phase, investors are hit with a period of news voids as companies get their heads down and deliver on Sales. Well, Hummingbird are not content with just knocking out Gold Sales… they want more. Exploration has kicked off already and any success should be seen in the share price swiftly. Unlike other small Gold explorers, Hummingbird already have a fully operational mine which to date has a 6 to 7 year mine life. The key objective now is to discover more resources to feed the mine for more years to come – extending to 10 years or 12 years in effect extends the p/e ratios potential. If Hummingbird can get Yanfolila to 10 year mine life minimum, then a p/e of 8 to 9 is more than fair. At that level and based on circa $70m net cash flow to the business per year, a market cap of circa $500m should be doable with ease assuming Gold is above $1300oz.

That’s not far off £1 a share. At current price of 34.5p, that’s almost 3 bagger territory.

Long way to go of course and no guarantees, but Hummingbird are buzzing and thus far they haven’t put a wing wrong.

Hummingbird Resources is part of TheShareHub’s top ten picks for 2018.

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RNS: 16/02/2018

Hummingbird Resources plc (“Hummingbird” or “the Company”) 

Ramp-up On Track and Exploration Programme Commenced At
Yanfolila Gold Mine, Mali

Hummingbird Resources (AIM: HUM) is pleased to announce an update on operations at the Yanfolila Gold Mine in Mali (“Yanfolila”), which commenced gold production in December 2017.

Production Update

Since first gold was poured on 19 December 2017, Yanfolila has steadily been ramping up towards full production in line with the Company’s planned schedule.  Over the past ten days the plant has been operating at an average of ~90% of design throughput capacity.  The plant has been achieving ~96% gold recoveries1, higher than design specification, consistently since the start of operations.

Total gold recovered to date is 10,737 ounces of which 5,483 ounces has been shipped to refiners.

In this first period of operations the plant was processing ore from the lower-grade stockpiles, in order to ensure plant performance and gold recovery were satisfactory before increasing the head grade.  Now that the plant is running close to name-plate capacity and recoveries remain consistently high; higher-grade ore is increasingly being introduced to the plant.

Exploration Update

The 2018 exploration programme at Yanfolila has commenced with the focus being on the conversion of indicated and inferred resources to mineable reserves.  The Company has over 1 million ounces of resources outside the mine plan which the Company is targeting for conversion into reserves.  It is the Company’s intention to spend in the region of US$8-10 million on exploration this year, but not more than 15% of Hummingbird’s operating cashflows from Yanfolila.  The Company aims to pursue an aggressive exploration strategy to extend the mine life, which will be controlled by strict financial discipline.

His Excellency Mr. Ibrahim Boubacar Keita, the President of the Republic of Mali, has postponed his visit to Yanfolila due to other business, however, the official opening ceremony is expected to take place with the President in attendance at a later date in 2018.

Dan Betts, CEO of Hummingbird, commented:

“I am pleased that activity on site is steadily progressing as per the ramp-up schedule and we are on track to achieve name plate capacity from the plant by the end of Q1 2018.

“I am particularly happy to report on the technical performance of the plant, with recoveries over 95% already and a solid performance of the milling circuit. This stands us in good stead as we continue to ramp up the performance of the operation.”

**ENDS** 

Commodities Escape Worst of Market Rout on Robust Demand Outlook – Bloomberg

As per article below, the recent sell off in the major indices is affecting all equities but some are faring better than others. You can learn quite a bit from watching the sectors (individally) when a rout of this kind is underway. There were signs yesterday of some ‘selective’ selling when 29 of the DOW 30 got hammered leaving one stock with just a few scratches on the day. That stock was Apple. Not commodity focused by any means but clearly a stock that ‘many’ are not willing to dump regardless of the sentiment. This is interesting and could suggest that the market rout is a ‘corrective phase’ rather than a heavy broad brush sell everything approach.

In early trading on the FTSE100 today, BP took a hit faling to 452p before miraculously bouncing back to end up a few pennies at 483p. The stock has slipped back again but the trend of buying the ‘dips’ on selective stocks is clear to see if you keep an eye on sectors.

Near term, it will take some time to see the dust settle and as I suggested yesterday, a trip back to 23500 or 21800 (Sept month low) might help set the year up for a range bound level of 21500 to 24500. My hunch thus far is that 26500 on the DOW will not be seen again anytime soon. Write that one down to some post festive cheer and focus on the Q3 2017 levels as being a better metric of the markets genuine health. With Trumps Tax benefis to follow, the US economy should be doing fine and interest rate worries look overdone based on that mix.

For the moment, equities will bob about in ways that you may not understand. There may be no fundamental reason for one equity taking a harder hit than another and the reason may have more to do with margin traders and the over leveraged. If there are forced sellers due to excitable CFD’s or spread bets, then they will effect the price. That said, this usually sorts itself out pretty quickly.

Gold has yet to make a ‘nonsense’ move. We’ve had Crypto’s trading nonsense. We’ve had the broader Indices in la la land too. But Gold has yet to dazzle and thus it might not be too long before that go-to safety metal is trading in the 1400’s. The only ‘nonsense’ trading at the moment is that it’s still in the 1300’s.

Please follow the link below to give Bloomberg the hits they deserve.

https://www.bloomberg.com/news/articles/2018-02-06/commodities-tumble-as-oil-to-copper-dragged-into-global-sell-off

Updated on
By Jake Lloyd-Smith and Heesu Lee

  • Bloomberg Commodity Index pares losses by end of Asian day
  • Banks say bullish case for raw materials remains intact

Commodities are escaping the worst of the global market rout as losses in raw materials are capped by speculation that the bullish outlook for demand remains intact.

The Bloomberg Commodity Index pared its decline to only 0.1 percent by the end of the Asian day as gains in precious metals and U.S. natural gas helped offset lower oil and industrial metals. While some raw materials were dragged lower as investors eschew risk, the reaction was muted compared with other assets. Stock markets from Hong Kong to Tokyo tumbled more than 4 percent following Monday’s collapse in U.S. equities and bond yields.

 

Commodities surged in January to the highest level since 2015 amid projections for the strongest global growth since 2011. Goldman Sachs Group Inc. last week said it’s the most bullish on raw materials since the end of the supercycle in 2008 as growing demand eats into stockpiles. The global equity rout doesn’t change the market fundamentals, according to banks including Australia & New Zealand Banking Group.

 “Clearly there is a risk off tone in the markets that will weigh on the sector,” said Daniel Hynes, a senior commodities strategist at ANZ. “But there is no fundamental reason for this selloff to change our view of commodity markets.”
The Bloomberg Commodity Index, which measures returns on 22 basic resources from crude to copper, was little changed as of 5:50 p.m. in Singapore after earlier falling 0.4 percent. The gauge was buoyed by natural gas and agricultural commodities as well as a jump in gold futures as investors sought havens from the global stock rout. By contrast, the MSCI All Country World Index of stocks lost 1.2 percent.

Oil Slips

Brent crude was 0.8 percent lower after earlier dropping as much as 1.2 percent. On the London Metal Exchange, copper sank 0.8 percent as aluminum, zinc, lead and nickel all declined.

Miners and energy companies were pulled lower by the broader selloff in equities. In Sydney, BHP Billiton Ltd., the world’s largest mining company, dropped 2.7 percent as Rio Tinto Group slid 1.4 percent. Oil producer PetroChina Co. lost as much as 7.3 percent in Hong Kong.

For Citigroup Inc., the collapse in stock markets represents a buying opportunity.

“We recommend asset managers raise their exposure to industrial metals over the coming month, particularly at the expense of bonds and other fixed income,” the bank said in a Feb. 5 report. Citi’s case for metals rested on its analysis they do better than other assets during periods of solid growth when inflation is picking up.

The view that the broader outlook for commodities remains positive echoes remarks from billionaire bond manager Jeffrey Gundlach in January that raw materials may be one of this year’s best investments as they surge during the late phase of the economic cycle.

“The drop in U.S. equities market is currently dragging prices of commodities down,” said Will Yun, a Seoul-based commodities analyst at Hyundai Futures Corp. “However, it’d be too early to say commodities have joined the global selloff because the fundamental picture is still looking positive.”

— With assistance by Tsuyoshi Inajima, Jasmine Ng, Javier Blas, and Manus Cranny

W Resources updates on finance package

A bit of a holding RNS rather than full confirmation on funding but nonetheless, this news is the first real solid piece of evidence that La Parrilla is indeed heading for full mine development. Management have made promises before but today’s news confirms the first tranche of $13m will be drawn imminently and then followed up with a further $22m tranche in Q2. A staggered approach makes perfect sense from the lenders stand point and will require smooth operational and development performance from all involved. Delays will not be welcome and thus it is key that timelines are adhered to.
Contract news is likely pending funding hence today’s RNS should clear the way for the LOI’s to be converted into full scale sales contracts. Again, these commitments will require ‘delivery’ dates and as such place sensitivities upon the overall development. Nothing worse than keeping your key customers waiting. All in all, W Resources looks like it is delivering on the promises made in late 2017. 2018 will be a busy year and if all goes well, the share price should reflect the enlarged mine potential and sales growth that comes from that.
It’s been a long wait and whilst caution is still required, W Resources looks properly up and running at last.
W Resources is part of The ShareHub top ten for 2018.
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RNS Number : 5680D
W Resources PLC
01 February 2018

La Parrilla funding increased to US$35m with first funding expected in February

W Resources Plc (AIM:WRES), the tungsten, copper and gold exploration and development company with assets in Spain and Portugal, is pleased to provide an update on the funding of the La Parrilla mine development.

As the Company announced on 12 December 2017, W had received preliminary approval from a US Special Situations Fund to provide a US$30 million term loan to W Resources to fund La Parrilla, that the term loan had received preliminary approval from the investment committee and that it was subject to final due diligence and legal documentation. Financial close was expected by the end of January 2018.

W is pleased to announce that W now plans to borrow an increased amount of US$35 million with the first US$13 million expected to be drawn in early February following execution of the credit agreement and the balance of US$22 million in the second quarter of the year after satisfaction of a number conditions precedent typical for this type of term loan.

A further announcement with more details of the loan will be made on execution of the credit agreement in the coming weeks.

Schroders buy more Columbus Energy Resources

Schroders are not in the habit of buying up small cap AIM listed E&P’s but have made an exception with CERP.L. The large institutional investors buying pattern is interesting. In October, Schroders approached CERP with an offer to invest several million into the business at 5p a share. It’s unclear how much Schroders initially offered or how much the CEO of CERP was willing to dish out. What is clear is that £3m was agreed and 60m shares duly placed at 5p on Oct 12th 2017. Job done? Apparently not. On Dec 21st 2017, Schroders added a further 5.5m shares bringing their total up to 65.5m. Bit of christmas shopping? Not done yet. 3 weeks later, Schroders stocked up in the January sales buying a further 7.45m shares on Jan 12th 2018. After all the seasonal excesses surely that’s enough? Nope. Today, Schroders piled on a further 5.8m shares (approx) which leaves the mighty Schroders weighing in with a whopping 12% stake in CERP.

Whilst II’s often get it wrong, and their trading activity should not be followed blindly, Schroders appetite for CERP shares is highly encouraging for all invested. With an average holding price of circa 5.25p (approx) a share, Schroders will have much higher share price ambitions for their holdings. What’s odd about the recent acquisitions in stock is the fact that CERP is not a hugely liquid stock. Volumes tend to be small during non news periods. Volumes only tend to pick up when ‘traders’ enter the fray based on technical insights or momentum news flows. So where is all this stock coming from? Who’s the seller? As there are no corresponding holdings RNS’s – the assumption is that stock is coming from Lind but that’s unclear and recent news releases suggest Lind have not drawn on the Convertible Security Funding Agreement since 8th November 2017. A puzzle indeed.

Schroders are hungry but how hungry? When will they get their full fill? 15%, 18% or 20%? If they like round numbers I would hedge a guess it might be 20%. Certainly bodes well for CERP in 2018 providing they deliver the production progress as forecasted.

CERP is part of the sharehub top ten for 2018.

Bank of China Sees Commodities in Full Bloom Amid 2018 Rotation

An interesting perspective on Commodities in 2018 via Bloomberg. Please use the Bloomberg link to access the article in full and give Mr Burton the click traffic he deserves. The video report is worth a watch.

https://www.bloomberg.com/news/articles/2018-01-10/bank-of-china-sees-commodities-in-full-bloom-amid-2018-rotation

  • Analysts see gold at $1,400 and copper hitting $8,000
  • Weak dollar, stretched stocks, falling bonds spell gains
 The stage may be set for commodities to extend their stellar gains, according to Bank of China International analysts.
By the fourth quarter copper will average $7,500 a ton and gold $1,400 per ounce, they wrote in a note this week, as financial drivers potentially outweigh fundamentals in 2018. In other words, the stars may continue to align for raw materials.

 

“In a world of upbeat economic growth, USD weakness, falling bond prices and elevated equity valuations, the commodities revival should come into full bloom,” said analysts led by London-based Xiao Fu, the commercial bank’s head of commodity market strategy.

The prediction could prove well-timed. China’s wariness about Treasuries would appear to be giving new fuel to dollar bears and driving down bonds, while gold hit the highest in about four months earlier on Wednesday. The global stock rally seems to be taking a pause as investors assess recent moves following six days of gains for the MSCI All World Index.

Copper was at $7,153 per ton as of 6:04 p.m. in London, while gold rose 0.4 percent to $1,318.67.