Blencowe Resources PLC (Graphite and Nickel)

[spasmodicus]

Blencowe Resources BRES was tipped on MS money yesterday / Marketwatch today, so I took a closer look.

Share price on HL today 5.0p / 5.2p, so spread 4%. Share price 1 year ago was 9p.

It has a Uganda graphite project, described in 2020 thus
https://www.proactiveinvestors.co.uk/companies/news/921910/blencowe-resources-developing-ugandas-graphite-potential-921910.html


It recently agreed to acquire Akelikongo Nickel sulphide deposit licence from Sipa resources see
https://www.resourcesrisingstars.com.au/sites/default/files/SRI_040519.pdf
This nickel prospect was originally held by RTZ, who spent $15m on it before abandoning as being too small (by their standards).

The role for nickel and graphite in the global battery supply chain is unquestionable (until some churlish fool questions it, of course) and the technical miney stuff above looks OK, but as always the downside risk is all in the finances and how the directors choose to manage their upcoming (or maybe downgoing?) company.

Graphite production is claimed to be potentially simple, from an open cast mine without the need for explosives or much stripping.
For the Akelikongo nickel prospect, BRES will spend $2.8m over 3 years and issue 1.5 million shares to Sipa to achieve 100% ownership.

Blencowe (2019 accounts on HL and more recently on website) balance sheet is apparently devoid of significant cash and tangible assets. The intangibles represent the monies spent on exploration etc. Director salary costs seem reasonable, which is refreshing to see.
As far as can be judged from the annual reports, BRES has approx 120,000,000 shares in issue. At current share price in the 5 to 6p range its market cap is around £7 million. A previous loan has been capitalized in the balance sheet, but cash reserves are low and the company effectively has no other tangible assets, so it will be entirely dependent on raising money from the markets to make significant progress (that’ll be dilution, folks)

As with all miners in 3rd world countries such as Uganda, risks are high.
BRES will have to raise a substantial amount of cash to get things moving. (These days, the cost of the bribes which are usually necessary in such environments is truly shocking, especially the fees of the accountants hired to cover up the evidence)

All in all, I judge this to be worth a modest punt and it has now joined my small high risk miners and oilies portfolio.

Finally, there is a show and tell which has been rescheduled to Thursday Feb 24th, see
https://blencoweresourcesplc.com/2022/02/17/rescheduling-of-investor-webinar/

all the best and DYOR,

S

[spasmodicus]

I still like the concept of this one, despite the many risks and there's been considerable upward movement in the SP of BRES recently such that my modest holding is now in positive territory.
Recent RNSs give news of some developments, on the financial side
26th Oct RNS
- £750,000 raised at 4p per share with 3 existing investors
- Jangada Mines plc to increase holding from 2% to 9.5% of enlarged share capital
- Existing major shareholders RAB Capital and JUB Capital continue to invest pro rata to their existing 10.0% and 8.2% shareholdings respectively
- Asset-level transactions now targeted for DFS and ultimate development of Orom-Cross
Blencowe Resources Plc ("Blencowe Resources" or the "Company") (LSE: BRES) is pleased to announce a placing of 18,750,000 new ordinary shares ("Placing Shares") at 4 pence per share to raise a total of £750,000 ("Placing") from three existing shareholders. The placees will receive 1 warrant per 2 Placing Shares, exercisable at 8p for 3 years from admission ("Investor Warrants").
So at least they will have £750,000 of cash in the bank for future development, or director's remuneration as the case may be.

That was followed closely on 27th Oct by an announcement of options for 5 directors and consultants amounting to 5,000,000 shares at 5p (£250,000) which can be exercised on condition "Share price must be in excess of 10p for 10 consecutive trading days". They probably wouldn't grant themselves this option if they didn't think that the share price might reach that level. Nevertheless, I retain a high degree of scepticism about this kind of thing and would probably put a 9.5p stop loss in place if the share price looked like doing that.

There's more about this over on
https://www.proactiveinvestors.co.uk/LON:BRES/Blencowe-Resources-PLC

If you like wild speculation, take a look at today's
https://www.lse.co.uk/ShareChat.asp?ShareTicker=BRES&share=Blencowe-Resou
A target price of 59p is being bandied about today by "house broker" (who he?) from which you may draw your own (sceptical optimism in my case) conclusions.

happy mining!
S