The markets bob along as we start a new week. Here's the view from The Trader's desk on this, pre-pack administration procedures and the latest on Libor rates.
IC TIP UPDATES:
A Carillion (CLLN) joint venture has been awarded a contract with the Ministry of Defence potentially worth up to £200m over five years. The support services group will be responsible for “soft facilities management” services such as catering, retail and leisure across 87 defence sites in Kent, Sussex, Surrey, Berkshire and London. The company is due to start work in September 2017. Buy.
Bacanora Minerals (BCN) shares are trading 10 per cent higher this morning, after the prospective miner announced a deal to supply Japanese trading house Hanwa with up to 100 per cent of the lithium carbonate produced from the Sonora project in Mexico. The offtake agreement has been struck in return for a £10.2m stake in Bacanora, raising money for the miner at a price of 82.5p per share. Announcing the move, Bacanora said the deal validates the quality of the Sonora deposit and should aid attempts to raise long-term project debt funding. Buy.
Tharisa (THS) shares rose 3 per cent this morning on a positive second-quarter trading update from the platinum and chrome producer. Against a nervous backdrop for the South African mining industry, Tharisa has benefitted from chrome prices, which have surged from $80 to $390 per tonne in a year. Buy.
To a fault, Amerisur Resources (AMER) has been very good at keeping investors updated on its progress in Colombia’s Putumayo basin in recent years. Full-year results for the Aim-listed driller therefore contained quite a few pieces of information already known to the market, though news that OBA pipeline volumes passed the 5,000-barrels-a-day mark last week will be welcomed by investors. The company also ended 2016 with a cash balanced of $42m, following a post-tax loss of $28.5m. We remain buyers.
The Financial Conduct Authority and the Prudential Regulatory Authority have commenced investigations into Barclays (BARC) chief executive, Jes Staley, after he sought to identify the author of a whistleblowing letter in 2016. Barclays conducted an internal investigation at the start of the year, after an employee raised concerns around the adequacy of the banking group’s whistleblowing procedures. A very significant adjustment will be made to Mr Staley’s variable compensation award and he has been formally reprimanded by the board. While this is embarrassing for a bank that has already received a fair amount of publicity for its governance mishaps, we think this latest piece of news does not affect the investment case. Buy.
KEY STORIES:
Hornby (HRN) is back in the news as shareholders gang up to remove chairman Roger Canham. The model train maker received a letter from Ian Alexander Anton, signed by a group of shareholders, who together own 20 per cent of the company. The shareholders want a general meeting to remove Mr Canham from office and appoint Mr Anton to the board instead. Mr Canham is also chairman of Phoenix Asset Management Partners, one of Hornby’s largest shareholders. A meeting is expected to be held within the next month or so.
OTHER COMPANY NEWS:
The coal asset sell-off continues. Today, Anglo American (AAL) announced its plans to sell the Eskom-tied South African thermal coal operations for $164m, following last year’s sale of the Callide thermal mine and Rio Tinto’s $2.45bn divestment of its Coal & Allied subsidiary, announced in January. Eskom’s buyer is Seriti Resources, a company majority-owned by historically disadvantaged South Africans.
