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Summary
- The FTSE-100 retreated 0.93 percent against the previous day close, and it was trading at 6,211.39 (as on 22 July 2020, before the market close at 3.29 PM GMT+1).
- Altus Strategies touched the 52-week high of GBX 46.50 (on 22 July 2020, before the market close at 1:20 PM GMT+1), as it highlights after-tax NPV of USD 81 million from Preliminary Economic Assessment of Diba gold project.
- Altus Strategies signed a term sheet with Stellar Africa Gold for sale and royalties on Prikro and Zenoula gold projects.
- Sareum Holdings raised nearly £1.0 million through equity placing.
- Sareum Holdings targeted completing one inhibitor under TYK2/JAK1 development programme in Q4 FY20.
Given the above-market conditions, we would review two stocks - Altus Strategies PLC (LON:ALS) & Sareum Holdings (LON:SAR). As on 22 July 2020 (before the market close at 3.10 PM GMT+1), ALS and SAR were up by 38.71 percent and 48.45 percent, respectively, against the previous day closing. Let's skim through their financial and operational updates to understand the stock better.
Altus Strategies PLC (LON:ALS) - La Mancha owns 36.9 percent stake in the Company
Altus Strategies PLC is a UK based company engaged in the development and exploration of minerals. The Company operates 16 projects in six countries in Africa with ten gold projects, four copper projects and four projects of Iron, Aluminum and Zinc.
Q1 FY2020 results (ended 31 March 2020) as reported on 27 May 2020
The Company reported revenue & costs recovered from JV of £159,814 in Q1 FY20, which improved significantly from £5,951 a year ago. The loss from operations was £367,355 and a total loss for the period was £37,459. As on 31 March 2020, Altus had cash of £7.9 million. In February 2020, La Mancha, an African mining investment group, invested £6.45 million in Altus and owned a 36.9 percent stake in the Company.
Positive Results from Preliminary Economic Assessment of Diba gold project
The Company received positive results from the Preliminary Economic Assessment (PEA) of Diba gold project in western Mali. The PEA of open-pit oxide gold mine outlines steady cashflow. The project is expected to have an average production of 52,000 ounces per year with a project life of 3.25 years. The project is expected to make a pre-tax NPV of USD 115 million and an IRR of 728 percent with a payback period of 6.2 months. The after-tax NPV is expected to be USD 81 million. The results are calculated using a discount rate of 10 percent and a gold price of USD 1,500 per ounces of gold. The Company has 100 percent of the ownership in the project.
Recent Events
- On 29 June 2020, the Company signed a non-binding term sheet with Stellar Africa Gold for sale and royalties on Prikro and Zenoula gold projects, both projects are situated in the Republic of Côte d'Ivoire (Ivory Coast). The agreement is for 100 percent sale in both projects for which Altus would receive 2.5 million shares of Stellar worth CAD 87,500 at the reported date market price and 2.5 million warrants exercisable to purchase Stellar shares at CAD 0.07 per share. In addition to the above, the Company would get 2.5 percent net smelter return royalty on the projects.
- On 17 June 2020, the Company entered a gold JV and royalty agreement with Graphex Mining for Lakanfla and Tabakorole gold projects located in southern Mali. Altus would retain a 2.5 percent net smelter return royalty on the projects. Graphex would raise the capital to support the exploration of the projects.
Current Royalties and JVs of Altus
(Source: Company Website)
Share Price Performance Analysis
1-Year Chart as on July-22-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Altus Strategies PLC's shares last traded at GBX 43.00 (as on 22 July 2020, before the market close at 3:10 PM GMT+1). Stock 52-week High and Low were GBX 46.50 and GBX 17.98, respectively. The Company had a market capitalization of £21.73 million.
Business Outlook
The Company has received interest from groups for potential transactions of royalty acquisition. The focus would be to expand the portfolio and advance the development in the existing projects. At the Diba gold project, the Company intends to perform systematic drill testing of seven oxide gold targets that are located within 7 kilometres of the deposit. The Company would also conduct the metallurgical test to determine the availability of sulphide material at the site.
Sareum Holdings (LON:SAR) – Secured licensing deal for FLT3+Aurora inhibitor programme
Sareum Holdings is a UK based company that designs and develops new drugs for licensing to larger pharma and biotech companies. The Company generates revenue through upfront and success-based milestone and royalties.
H1FY2020 (ended 31 December 2019) as reported on 26 March 2020
The Company reported a loss of £0.61 million in H1 FY20, which was £0.76 million in the same period a year ago. As on 31 December 2019, it had cash of £1.23 million that included £0.23 million of the tax credit. The Company secured a global licensing deal with a China-based pharma company for FLT3+Aurora inhibitor programme targeting blood cancers. The Company is seeking partner for advance development of SRA737, Sierra. SRA737 is an oral small molecule inhibitor for cancer therapy.
Recent Events
- On 1 July 2020, the Company announced that it had deferred 33 percent salary of all directors until further notice. To compensate for the deferred pay, the Company issued 13,680,485 new shares to the directors for 0.6 pence per share. The proceeds from the deferred salary shares would be used along with cash to pay £124,152 for accrued liabilities.
- On 3 June 2020, the Company issued 50,620,400 new shares at 0.6 pence per share to raise gross proceeds £303,722.40. On 2 June 2020, the Company placed 119,750,000 new shares at 0.6 pence per share to raise gross proceeds of £718,500. The net funding from placement, £980,000 cash and expected tax credits of £150,000 in January 2021 would be used for TYK2/JAK1 drug development programme. Sareum plans to complete at least one inhibitor of TYK2/JAK1 in Q4 FY20.
Advancing Pipeline of Sareum Holdings
(Source: Company Website)
Share Price Performance Analysis
1-Year Chart as on July-22-2020, before the market close (Source: EODHD/Others, Thomson Reuters)
Sareum Holdings PLC's shares last traded at GBX 0.82 (as on 22 July 2020, before the market close at 3:10 PM GMT+1). Stock 52-week High and Low were GBX 1.10 and GBX 0.22, respectively. The Company had a market capitalization of £17.90 million.
Business Outlook
The Company is focused on the development of proprietary TYK2/JAK1 inhibitors, the development is currently in the preclinical stage, and it is expected to be complete by the end of 2020. However, the completion of TYK2/JAK1 programme is also dependent on positive progress and funding. The Company is confident over the prospects of SDC-1801 and SDC-1802 and on the successful development of TYK2/JAK1 programme. SDC-1801 would meet the need for Autoimmune diseases, and SDC-1802 would be for anti-cancer. The Company expects milestone payment and future revenue from commercialization of FLT3+Aurora deal.
