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Summary
- The British finance minister, Rishi Sunak, announced a bonus plan under which employers would be paid £1000 for workers who return to work after the end of the furlough scheme in October 2020.
- Aura Energy forms a JV with Chilean Metals Inc to explore Tasiast South site in Mauritania.
- Alien Metals to begin exploration work at Los Campos Silver and San Celso projects in Mexico.
- Alien Metals acquired silver mining projects in Australia.
Given the above market conditions, we will review two basic materials stocks - Aura Energy Limited (LON:AURA) and Alien Metals Limited (LON:UFO). The shares of both AURA and UFO were up by 10.86 percent and 10.32 percent, respectively (as on 8 July 2020, before the market close at 2.36 PM GMT+1). Let’s discuss their financial and operational updates in detail.
Aura Energy Limited (LON:AURA) – Formed joint venture PubCo with Chilean Metals
Aura Energy is an Australia based minerals company involved in the exploration and evaluation of polymetallic and uranium projects in Europe and Africa. The Company has an interest in Haggan Project, located in Sweden and the highly prospective Reguibat Province in Mauritania. The Company is listed on the FTSE AIM All-Share index.
Quarterly Report (ended March 2020) as reported on 30 April 2020
During the quarter, cash outflow from operating activities was AUD 589,000, whereas cash inflow from financing activities was AUD 678,000. The Company had a cash balance of AUD 256,000 as on 31 March 2020. The Company’s primary focus was financing Tiris Uranium project from Export Credit Agency. An increase in the uranium price supported the financing process. The Company completed the Tisris definitive feasibility study (DFS) in 2019.
A group of minority shareholders raised a proposal to get a royalty of AUD 27 million from Tiris Uranium project for financing AUD 3 million. The board highlighted that such demand is not in favour of the overall well being of the Company business.
Aura signs a deal with Chilean Metals for Tasiast South project in Mauritania
Aura Energy signed a term sheet with Chilean Metals Inc to form a joint venture (PubCo) for development of gold and battery metals at Tasiast South project in Mauritania. Aura’s Tasiast South project is spread over 435 km2 area, covers the portion of the Tasiast and Tijirit greenstone belts. Aura Energy and Chilean Metal would equally own the joint venture.
As part of the deal, Chilean metals would contribute CAD 4.5 million in PubCo, and Aura Energy would receive 1 million shares in Chilean Metals. The JV would receive payment from Chilean Metals in four tranches before October 2021. Aura’s contribution will be complete gold and base metals tenements at the project. The Company will provide the technical and management expertise in the JV and will receive a management fee for operating PubCo.The plan is to list PubCo, the JV at the TSX Venture Exchange in Canada.
Payment schedule of CAD 4.5 million by Chilean Metals into JV
(Source: Company Website)
Share Price Performance
1-Year Chart as on July-8-2020, before the market close (Source: Refinitiv, Thomson Reuters)
Aura Energy Limited’s shares were up by 10.86 percent and trading at GBX 0.39 per share (as on 8 July 2020, before the market close at 2.36 PM GMT+1). Stock 52-week High and Low were GBX 0.77 and GBX 0.15, respectively. The Company had a market capitalization of AU$10.23 million.
Business Outlook
The transaction with Chilean Metals for development of the project in Mauritania will undergo due diligence and would remain non-binding until an agreement is achieved. The Company is seeking prospects for long-term uranium contracts with separate listing of gold and Haggan assets. The Company is in discussion for getting independent funding for the Haggan Battery Metals project in Sweden.
Alien Metals Limited (LON:UFO) – Added new silver and iron ore projects in Australia
Alien Metals Limited is a British Virgin Islands domiciled metal and mining company. The Company is involved in silver exploration, development and production with a focus on mineral resource properties located in Mexico and Western Australia. The Company is listed on the FTSE AIM All-Share index.
FY2019 Annual results (ended 31 December 2019) as reported on 30 June 2020
The Company incurred an operating loss narrowed to USD 1.0 million from a loss of USD 1.5 million in a year ago period. The loss per share was 0.1 cents. As on 31 December 2019, the Company had cash of USD 0.2 million and total assets of USD 0.7 million. The total liabilities stood at USD 0.1 million.
In FY19, the Company completed exploration over 1,500 hectares of mining projects. The Company acquired iron ore projects in Brockman and Hancock Range and silver mine in Elizabeth Hill; both sites are situated in the Pilbara region, Western Australia. The high-grade iron is in high demand by steel mills as it is energy efficient and reduces costs of production. In 2019, the Company evaluated mining projects Namibia, West Africa and Australia.
Commencement of exploration activity at San Celso and Los Campos Silver projects, Mexico
On 16 June 2020, the Company announced that it would start the fieldwork at the silver projects in Mexico. The project will include exploration of Los Campos and San Celso situated in the Zacatecas Silver belt of Mexico. The Company has shown an intention to acquire the southeastern side of the San Celso project, which is expected to be completed shortly.
FY2019 Financial Statement (figures in ‘000 USD)
(Source: Company Website)
Share Price Performance
1-Year Chart as on July-8-2020, before the market close (Source: Refinitiv, Thomson Reuters)
Alien Metals’s shares were up by 10.32 percent and trading at GBX 0.1048 per share (as on 8 July 2020, before the market close at 2.36 PM GMT+1). Stock 52-week High and Low were GBX 0.2800 and GBX 0.0610, respectively. The Company had a market capitalization of £2.24 million.
Business Outlook
The Company targets to bring all the projects into the production phase. The Company would also seek partners for joint venture and earned-in agreement to minimize the development cost of the projects. The Company’s vision is to create a diverse commodity portfolio.
