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Summary
- As per the Confederation of British Industry's data, the month order book for factory orders increased to -46 in July. The order book was -58 in June.
- Cambria Africa's NAV declined to USD 1.32 cents in H1 FY20 from USD 1.35 cents in H1 FY19.
- Cambria Africa's subsidiary Paynet Zimbabwe increased the shareholding in Radar Holdings Limited.
- Orosur Mining received payment of USD 500,000 from Newmont as part of the deal for Anza gold project.
- Orosur Mining attained creditor agreement for Loryser, the Company's subsidiary in Uruguay.
Given the above-market conditions, we would review two stocks. Cambria Africa PLC (LON:CMB) & Orosur Mining Inc (LON:OMI). Cambria PLC is a financials stock whereas Orosur Mining is basic materials stock. As on 23 July 2020 (before the market close at 11.40 AM GMT+1), CMB and OMI were up by 6.13 percent and 12.66 percent, respectively, against the previous day closing. Let's walk through their financial and operational updates.
Cambria Africa PLC (LON:CMB) – Plans to invest excess cash to buy marketable securities of blue-chip companies
Cambria Africa PLC is a UK based portfolio investment company that mainly has holdings in Zimbabwe. The Company invests across multiple sectors that are well-positioned in Zimbabwe's economy. The Company's wholly-owned subsidiary in Zimbabwe includes Payserv Africa and Millchem Zimbabwe. Cambria is listed on the AIM market of the London Stock Exchange.
Six months Interim results for (ended 29 February 2020) as reported on 29 May 2020
The Net Asset Value (NAV) declined by 2 percent to USD 7.17 million in H1 FY20 from USD 7.34 million a year ago, the decline in NAV was mainly due to the foreign currency translation losses. The NAV per share was USD 1.32 cents. In H1 FY20, the Company generated revenue of USD 1.30 million, which declined by 70 percent year on year. The consolidated EBITDA was down to USD 0.55 million in H1 FY20 from USD 2.06 million in H1 FY19. The profit after tax excluding minority interest was USD 0.1 million for the reported period. The earnings per share declined from USD 0.27 cents in H1 FY19 to USD 0.02 cents in H1 FY20. As on 29 February 2020, the Company had cash of USD 2.3 million, USD 1.4 million of the total cash is held outside Zimbabwe.
Business Performance of Subsidiaries
The Company's subsidiary Payserv Africa reported H1 FY20 revenue of USD 0.56 million and profit after tax of USD 0.05 million. The revenue of Payserv declined by 85 percent year on year from USD 3.67 million in H1 FY19 due to the suspension of Paynet's services. Millchem Zimbabwe reported revenue of USD 0.74 million in H1 FY20, which increased by 3 percent year on year. The profit after tax was USD 0.15 million in H1 FY20. Paynet Zimbabwe increased the shareholding in Radar Holdings Limited from 8.98 percent to 9.74 percent following the subscription of shares in AF Philip & Company. Autopay, a payroll management company in Zimbabwe, reported a profit in half-year 2020. Tradenet a loan processing company in which Cambria Africa owns 51 percent stake reported an increase in loan book from ZWL 186 million in H1 FY19 to ZWL 265 million in H1 FY20.
H1 FY2020 Financial Summary
(Source: Company Website)
Share Price Performance Analysis
1-Year Chart as on July-23-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Cambria Africa PLC's shares last traded at GBX 0.33 (as on 23 July 2020, before the market close at 11.47 AM GMT+1). Stock 52-week High and Low were GBX 0.75 and GBX 0.18, respectively. Cambria Africa had a market capitalization of £1.69 million.
Business Outlook
Millchem, the Company's chemical business, is expanding the disinfection business that is currently manufacturing sanitizers. The Company is cautious over the competition in the chemical business but expects the expansion of sanitizer business to have a positive effect on Millchem's profitability. The Company would invest excess earnings generated from the local business into discounted marketable securities of the top-grade Companies in the current economic situation.
Orosur Mining Inc (LON:OMI) – Assets in Uruguay held for sale
Orosur Mining Inc is a Canada based Company engaged in the development and exploration of gold projects in South America. Orosur has operations in Colombia and Uruguay. In Colombia, it has projects such as Buritica, Titiribi, Marmato and La Colosa at Anza gold projects. The Company is included in the FTSE AIM All-Share index.
Q3 FY2020 results (ended 29 February 2020) as reported on 14 April 2020
In Q3 FY20, the Company incurred a net loss from continued operations of USD 370,000 and a net loss of USD 203,000. As on 29 February, the Company had cash and cash equivalents of USD 463,000. Orosur Mining is not generating any cash from operations, and it is dependent on funds from Newmont to run the service in Colombia.
Creditor Agreement for Loryser
In September 2019, the Company attained a creditor agreement for the Company's subsidiary in Uruguay, Loryser. As per the agreement, the Company issued 10 million common shares of Orosur to the creditors and would provide funds from the sale of Loryser's asset in Uruguay to the creditors. The new shares were issued in December 2019 and assets in Uruguay are held for sale. The Company is uncertain about whether the sale proceeds from assets would be sufficient to fulfil the payment to the creditors.
Anza gold project updates
Newmont made a payment of USD 690,000 in November 2019 to maintain the exploration rights as per the deal. On 5 March 2020, Newmont made an additional payment of USD 500,000 for earn-in rights of the Anza gold project. In 2018, the Company entered into an exploration agreement with Newmont Colombia for the Anza project in Colombia that comprised three-phase earn-in structures. The contract required Newmont to make a cash payment of USD 4 million to Orosur over phase 1 and 2 and spend a capital expenditure of USD 30 million over twelve years to earn a 75 percent stake in Anza project.
Strategic Alliance with Newmont for Anza gold project
(Source: Company Website)
Share Price Performance Analysis
1-Year Chart as on July-23-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Orosur Mining Inc's shares last traded at GBX 4.07 (as on 23 July 2020, before the market close at 1.20 PM GMT+1). Stock 52-week High and Low were GBX 7.70 and GBX 1.45, respectively. The Company had a market capitalization of CAD 11.98 million.
Business Outlook
The Company has advanced on the Anza gold project in Colombia and working on the progress of other projects. The Company had received three payments from Newmont under the exploration agreement for Anza gold project and expects to receive the fourth payment in September 2020. The Company is regularly evaluating opportunities for acquisition and divestment.
