Ghost Bites (Anglo American | Clicks | Cilo Cybin | Orion Minerals)

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Another setback at Anglo American – this time in coal (JSE: AGL)

The company has had to suspend production at the Grosvenor mine in Queensland

Mining really isn’t an easy industry, with Anglo American as just the latest example of how the risks play out in real life. There’s been an underground coal gas ignition incident at the Grosvenor steelmaking coal mine in Queensland, leading to an evacuation of the mine.

The procedures to assess the steps towards a safe reopening of the mine will take several months. This is the right call as safety is always the first priority in mining, but it’s obviously also a major financial setback.

For 2024 as a whole, Anglo’s total steelmaking business was due to produce 15 to 17 million tonnes. Grosvenor was expected to contribute 3.5 million tonnes of this. It looks as though they’ve already managed 2.3 million tonnes from Grosvenor this year, as they were expecting lower production from the asset in the second half anyway.

Goodness knows this could’ve been much worse, but it’s still an unhelpful addition to Anglo’s current challenges.

Clicks has agreed to sell Unicorn Pharmaceuticals (JSE: CLS)

This is to appease the regulator

In March 2023, the Constitutional Court ruled against Clicks in the battle with the Independent Community Pharmacy Association and referred the matter to the Director General of the Department of Health.

Through a further process of engagement, Clicks suggested that its position could be regularised through the disposal of manufacturing pharmacy Unicorn Pharmaceuticals. The Department of Health has accepted this proposal and has noted that no further new pharmacy licences will be processed for Clicks until the sale has happened.

Clicks believes that the sale of Unicorn will be completed by the end of July 2024. There are no details around the disposal at this stage, but an opportunistic buyer might have gotten a great deal here. The negotiating power certainly doesn’t sit with Clicks in this situation, as they need to get the deal done as soon as possible.

Cilo Cybin begins its listed journey (JSE: CCC)

The first step is to acquire a viable asset

Cilo Cybin has listed on the JSE as a special purpose acquisition company, or SPAC. This is like buying an unfurnished house. The structure is there but there’s nothing inside it – yet.

A SPAC listing is a useful way to get all the building blocks in place as part of attracting investors and lining up what is referred to as a “viable asset” – one that meets the necessary criteria to ensure that the SPAC is transformed into a normal listing within the required timeframe.

For Cilo Cybin, that viable asset is Cilo Cybin Pharmaceuticals. They are in negotiations to acquire that asset.

Separately, the company announced that resignation of HB Aucamp as financial director, to be replaced by Reshoketswe Ledwaba with effect from August 2024. Ledwaba has been the acting CFO since February 2024.

Orion Minerals announces the details of its capital raise (JSE: ORN)

Orion is raising A$7.7 million – which works out to R92.3 million

Orion Minerals has received firm commitments for a placing to sophisticated and professional investors (i.e. this wasn’t an offering to the general public) worth A$7.7 million. This works out to around R92.3 million, so that’s a meaningful capital raise.

The funds will be used for the Prieska Copper Zinc Mine, as well as infrastructure development at Okiep Copper and drilling at Okiep.

There’s also a rather interesting structure called a Share Purchase Plan that allows eligible shareholders to subscribe for shares in parcels starting from R2,000 up to R365,000 at an issue price of R0.18 per share. They will raise around R60 million in this way.

Orion has found a clever way to include not just institutional investors, but retail investors as well through the Share Purchase Plan. Junior mining is all about having enough money to take an asset to full production, so these capital raising activities are critical.

Little Bites:

• Director dealings:
  • Dr Christo Wiese is taking advantage of the bloodbath in the Brait (JSE: BAT) share price, buying up nearly R25 million of shares in the company. Tread carefully here, as Dr Wiese gets to enjoy many privileges that you don’t as a minority shareholder, like the ability to underwrite discounted rights offers and pick up even more shares at a great price.
  • Three directors of Lewis (JSE: LEW) sold shares worth R8.1 million. The announcement doesn’t make it clear whether this was to settle tax from vested awards, so I assume that it wasn’t.
  • The chairman of London Finance & Investment Group (JSE: LNF) has bought shares in the company worth £87k.
  • A prescribed officer of Capitec (JSE: CPI) bought shares worth R374k.
  • A director of Copper 360 (JSE: CPR) has bought shares worth R67.5k.
  • A director of Vukile (JSE: VKE) bought shares worth R29.6k under the dividend reinvestment alternative.

• Collins Property Group (JSE: CPP) announced that KR Collins will take over as CEO from 1 July 2024, as FH Esterhuyse moves into a non-executive role. As part of the restructuring that saw Tradehold become Collins, the focus is on growing the business as a REIT. This has led to a reshuffling of the chairs and changes to priorities going forward, with the restructuring now behind them.

• Holders of 67.5% of Vukile (JSE: VKE) shares elected the dividend reinvestment alternative. The reinvestment price is R14.50 per share.

• Pepkor (JSE: PPH) has confirmed that Ibex Topco (the old Steinhoff investment structure) now holds 28.271% of the shares in Pepkor, down from 42.038% after the recent disposals. Combined with other Ibex Group companies, the total holding in Pepkor is 30.171%.

• Sable Exploration and Mining (JSE: SXM) has reported a headline loss per share of 51.45 cents for the year ended February 2024. The auditors have noted a going concern risk.

• Kore Potash (JSE: KP2) has raised $1.28 million through the issue of new shares to existing shareholders as well as institutional and high net worth investors. They need the money to continue with the process of getting to a signed EPC contract for the Kola Potash Project in the Republic of Congo.

• Momentum Metropolitan (JSE: MTM) is changing its name to the far simpler Momentum Group. Yay for that.

• Kibo Energy (JSE: KBO) continues to win the SENS-announcements-to-market-cap ratio award, with yet another one on Monday. Mast Energy Developments (MED), the Kibo subsidiary, has finished refurbishing the Pyebridge gensets with the funding from Riverfort. They are also looking at a potential acquisition of an existing operational flexible power generation site in England. The various restructuring activities at Kibo don’t affect MED directly, which is a separately listed company. And in a separate announcement, Kibo announced that the London Stock Exchange will suspend trading in the company’s shares until financials for the year ended December 2023 have been released.

• Hulamin (JSE: HLM) announced the appointment of Pravashni Nirghin, currently the interim CFO, as the permanent CFO of the company.

• In what is hopefully a step towards dealing with the suspension of its shares from trading, Chrometco (JSE: CMO) announced the appointment of Stephen Rowse as CFO.

• The JSE released a list of companies in the naughty corner for being late on the submissions of their annual reports: African Dawn Capital (JSE: ADW), Copper 360 (JSE: CPR), Visual International (JSE: VIS) and Acsion (JSE: ACS).

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