The End of the Day Wrap provides a summary of the most interesting articles published by Proactive Investors during the day, including all of the main stories and exclusive interviews with executives.
PROACTIVE NEWS SUMMARY: Specialist Energy Group, Randgold Resources, Providence Resources, Cove Energy, Anglesey Mining, Thomas Cook
Specialist Energy Group (LON:SEGR) was among the top performers in London markets this morning after revealing important new financing arrangements and a placing to raise £5 million at a significant premium to the market price.
The proposed measures mean closer ties with its largest shareholder MBE Mineral Technologies (MBE) and the potential for growth in India and Germany, along with the scope for improved profitability from 2013 onwards.
As at 10am, the firm's shares were up 18 per cent, to change hands at 29.50 pence.
MBE is the wholly-owned investment subsidiary of McNally Bharat Engineering - one of India's leading engineering and construction groups.
MBE will subscribe for 10 million new Specialist Energy shares at 50 pence each. This represents a significant 108 per cent premium to the closing share mid-price on April 4 of 24 pence.
Also sought by Specialist is the authority to issue four million new company shares so it can buy between 20 and 24 per cent of MBE Cologne Engineering GmbH - a wholly-owned subsidiary of MBE.
MBE Cologne manufactures machines and components for the specialist energy sector and the company believes the purchase will enhance the company's procurement and supply chain.
Other notable risers included blue chip gold miner Randgold Resources (LON:RRS), which got a boost from a political settlement to end the military coup in Mali.
The group’s share price rose 8 cent to 5,586 pence in early trade this morning, retracing most of the losses after news of the coup first emerged three weeks ago.
Randgold said its gold production in Mali had not materially affected but added the assessment on the impact of costs had not been completed.
Renegade soldiers seized power in March, toppling president Amadou Toumani Toure’s government.
Over the weekend, the military junta reinstated the constitution, in which the president of the national assembly will act as head of state and oversee the appointment of an interim prime minister.
In the deal brokered by Mali’s neighbours, president Amadou Toumani Toure resigned and Mali’s ECOWAS neighbours lifted sanctions they had imposed on the West African, landlocked country.
Randgold owns and runs operations at Loulo and Gounkoto and also operates Morila, a joint venture with AngloGold Ashanti.
Oil and gas group Providence Resources (LON:PVR) also garnered attention today after Liberum Capital raised its target price by a massive 400 pence from the previous level to 1,250 pence.
The broker reiterated its ‘buy’ stance on the stock.
This comes after the Irish oil and gas firm’s stock has trebled in value in the past six months.
Liberum says decision to raise the target came after the highly successful appraisal well on the Barryroe field offshore Ireland in March and the news, announced last week, of an oversubscribed placing at a premium that gives the company US$100 million.
The funds will be used to repay the outstanding convertible bond of approximately US$40 million and meet the costs of the 2012-13 drilling programme.
Only in January, Liberum had raised the target by 200 pence in reaction to Providence increasing its stake in the Celtic Sea project to 80 per cent.
The broker is now awaiting the important X12 development well at Singleton which should complete next month and noted that an exploration well on the Dalkey Island oil prospect and an appraisal well on the Dragon gas discovery are scheduled for the second half of this year.
Further out, in 2013, it expects exploration wells on Dunquin and Rathlin and an appraisal well on Spanish Point. “Success with any of the Irish wells will have a material impact on valuations,” said analyst Andrew Whittock.
Following the well results, he now assumes Barryroe contains 100 million barrels of oil, double the previous estimate, and that Providence farms down to 40 per cent in return for a development carry.
Whittock now values Barryroe and Singleton at 1,045 pence per share and puts a 400 pence risked valuation on the appraisal drilling programme alone, with huge potential upside from exploration drilling.
Staying with oil and gas companies, Cove Energy (LON:COV) today told investors that Mozambique’s government has clarified that a 12.8 per cent tax will apply to the capital gains arising from any future sale of the company.
This, analysts say, will clear the way for a takeover. As such, investors will be keenly watching to see if the previous bidding war will be re-ignited.
In February, PTTEP, part of Thailand’s state oil company, made a £1.2 billion approach to buy the company which trumped an earlier £1 billion bid from Shell.
At that time, it was also reported that an Indian consortium was also considering a move for the oil and gas explorer.
Merchant Securities analyst Brendan Long says Cove has avoided the worst case scenario.
Meanwhile, Braden Purkis, analyst at Canaccord Genuity, said the 12.8 per cent rate was better than expected and says the tax could equate to around 30p a share based on the £1.2 billion, 220p a share, offer from PTTEP.
Proactive Investors also covered today’s update from Anglesey Mining (LON:AYM), which said that mining operations have begun for the 2012 season at the James Mine in Labrador
The AIM-quoted firm has a 26 per cent stake in Labrador Iron Mines, which operates the James Mine and a number of associated operations in the Schefferville area of western Labrador and north-eastern Quebec.
The James mine is the first of 20 direct shipping projects to be developed by LIM. Last year was the first year the mine was in operation and after the Canadian winter mining is now restarting.
The first train carrying ore from the Silver yards processing plant to the Port of Sept-Iles left on Wednesday April 4.
In 2012, LIM is expecting to mine between 2.5 and 3 million tonnes of ore, together with 3.5 million tonnes of waste.
It expects to be mining at a rate of 15,000 tonnes per day. The produced ore will be split in two parts, direct rail ore and plant feed, with the latter being processing at Silver Yards.
Silver Yards will restart in May. And it will remain in operation for seven months until November, subject to weather conditions.
Meanwhile LIM will also continue to expand the plant, with a phase 3 work programme designed to increase production capacity to 2 million tonnes per year. The project is expected to be completed by mid-2012.
In other news, troubled tour operator Thomas Cook (LON:TCG) confirmed it was close to agreeing a £1.2 billion refinancing package with its lenders.
The share price rose 15 per cent to 23.5 pence from 20.6 pence.
The company said it was in “advanced discussions” with its banking group, which includes 17 lenders, as part of a strategic review of the group.
In November, Barclays, HSBC, RBS and UniCredit agreed to provide a short-term £200 million facility until 30 April 2013.
The company added it is also exploring the possibility of selling some of its aircraft and renting it back, to help pay off its debt. The sale of Thomas Cook India was also announced earlier this year.
During 2011, 170 year-old Thomas Cook issued three profit warnings and lost its chief executive Manny Fontenla-Novoa in August. Over the past 12 months, the share price has plunged 86 per cent.
It was estimated the tour operator had debts of £1.25 billion at the end of September.
The tour operator’s sales suffered in 2011 due to the Arab Spring and families cutting back on non-essentials like holidays abroad.
In its last trading update in March. the company said it continues to expect 2011/2012 to be a challenging year given the difficult trading environment.
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