Eastern Platinum (ELR-T)
“Where there’s smoke, there’s fire,” the saying goes. In the case of Eastern Platinum, the smoke was the multiple delays in closing a deal that would have seen a Chinese buyer pick up Eastern Platinum’s PGM business in South Africa.
The flames arrived yesterday after the market close when Beijing Hehe Fengye Investment Co., the majority shareholder of Chinese buyer Hebei Zhongbo Platinum Co. Limited, announced it was backing out of the $US225-million deal. The news release also announced the Chinese buyer had notified Eastern Platinum in writing on Sept. 1 that it was terminating the purchase agreement.
That wasn’t disclosed by Eastern Platinum, which did announce on Sept. 16 that South African Competition authorities had approved the agreement. The company responded in a news release this morning, questioning the authority of the cancellation and saying they had neither corresponded nor worked with Mr. Shuming Du, the person who signed the Sept. 1 cancellation letter, or purported majority shareholder Beijing Hehe. Eastern Platinum also said they had received written and verbal assurances from Hebei Zhongbo that neither Beijing Hehe or Mr. Du had authority to terminate the agreement on platinum assets.
Eastern Platinum says the episode seems related to a shareholder dispute within Hebei Zhongbo and insisted it is committed to working toward an agreement.
“The Company has spoken to Canadian counsel for HZP and has been given to understand that the issuance of the Release by Beijing Hehe may be attributable to a shareholders dispute between the principal shareholders of HZP,” the company stated.
The stock quickly skidded below 75 cents when trading resumed on the TSX this morning before rebounding to the 95-cent level.
In a morning note, TD Securities analyst Christopher Rankin noted that ELR traded at 0.8X to 1.2X cash per share, which is about 92 cents Canadian.
“Assuming (Beijing Hehe Fengye Investment Co.) really is the controlling shareholder, we look back at the purchaser reps & warranties in the original deal contract and conclude that while the purchaser did rep power to sign the original agreement, the purchaser made no representation as to authority to enter into amending agreements,” Rankin said. “If you choose to disagree with that viewpoint, contemplate trying to enforce a B.C. law contract against a Chinese shell company.”
The agreement for several mothballed platinum properties was originally struck on Nov. 7, 2014 and expected to close “within three to six months.” The price of platinum has since skidded from above US$1,200 an ounce to about US$1,000/oz.
NexGen Energy (NXE-V)
NexGen was out with more eye-popping uranium assays at its Rook 1 property in the Athabasca Basin, and the market responded in early trading by pushing NXE shares up 11% to 79 cents.
The results covered six angled holes drilled as part of the 30,000-metre summer drill program at the western Basin play. Hole AR-15-58c1 returned the highest-grade assays to date at Arrow, including:
- 35.5 metres at 9.72%, including 11 metres grading 30.61%, 3m at 72.02% and 0.5m at 80.52%.
- 80.5m at 2.48%, including 15.5m at 10.01%.
Here are the other highlights:
A2 Shear: AR-15-48c3 (55 m southwest from AR-15-44b) intersected 9.5 m at 4.11% U3O8 (552.5 to 562.0 m), 4.5 m at 7.03% U3O8 (494.5 to 530.0 m) and 10.5 m at 7.30% U3O8 (615.0 to 625.5 m).
A3 Shear: AR-15-52 (210 m southwest step-out from AR-15-44b) intersected 18.0 m at 1.48% U3O8 (751.5 to 769.5 m) in the A3 shear. Assays confirm strong uranium grades in the A3 shear, where hole -52 currently defines the southwest extent of the A3 high-grade core which currently has a total strike length of 295 m and remains open in all directions and at depth.
A4 Shear: AR-15-58c1 (53 m up-dip and southwest from AR-15-44b) intersected 5.0 m at 7.23% U3O8 (875.0 to 880.0 m) and 19.0 m at 2.01% U3O8 (883.0 to 902.0 m) in the newly discovered shear zone.
The latest results will be included in the company’s maiden resource estimate, which NexGen now says is “scheduled for the first half of 2016.”
NexGen has cash on hand of about $20 million.
The company now sports a market capitalization of about $200 million, just shy of neighbour Fission Uranium’s $235 million. A tie-up between Fission and Denison Mines was rejected by Fission shareholders earlier this month.
Teck Resources (TCK-T)
Base metals producer Teck Resources reported a third-quarter loss of $2.1 billion driven by writedowns on its coal and copper businesses.
Operationally, the company beat analyst expectations with an adjusted profit of $29 million, or 5 cents a share. Teck took a $2.2-billion impairment charge, including $1.5 million on its coal business. Teck has a cash balance of $1.8 billion currently.
The stock has plummeted from the $16 range a year ago, but was up 5% to $8.80 in early trading on the TSX.
Peregrine Diamonds (PGD-T)
Peregrine Diamonds has announced a drill program at its recently acquired project in Botswana, which is elephant country both for the animals and sparkly stones.
The company has mobilized a RAB drill rig to test the first of four kimberlite targets at its 664-sq-km Moralane license. The targets were identified using magnetics from ground geophysical surveys Peregrine undertook to try to identify the source of a “compelling” kimberlite indicator mineral anomaly on the property.
Peregrine will drill a total of 570 metres in four vertical drill holes, with work expected to be complete by early November.
It’s shaping up to be a busy few months for Peregrine, which is currently processing a bulk sample from the CH-7 kimberlite at its flagship Chidliak project on Baffin Island, Nunavut. An updated resource estimate and a PEA are scheduled to land in the first half of 2016.
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Author owns shares of NexGen Energy and Peregrine Diamonds. This is not investment advice and all investors should do their own due diligence. Own your trades.