Shares in Power Metal Resources (LSE:POW) shot up by a fifth to 0.48p on Tuesday morning after the Africa-focused business announced that it had completed a major strategic and operational review. The firm has been conducting the work since Andrew Bell and Paul Johnson joined as chairman and executive chairman respectively in February this year as part of a restructuring package.
In Tuesday’s update Power Metal said that the company’s focus will remain on large scale metal discoveries with a particular focus on nickel, copper, and cobalt. Although its operations are currently centred around Africa, the firm said it would be open to buying project in other areas of the world if a compelling opportunity arose. Likewise, it said that it may look at other metal markets or shift its focus more aggressively towards a particular project in the future if required.
For the time being, Power Metal said it will continue to complete ‘proactive exploration activities’ in Botswana, Cameroon, the DRC, and Tanzania. Since joining, Bell and Johnson have conducted a review of the organisation’s historical interests in these countries. The pair have relaunched operations in Cameroon and the DRC in the months since, delivering significant progress at both.
Indeed, Power Metal recently revealed that its licence area in Cameroon shares a similar geology to a nearby, substantial cobalt deposit called Nkamouna. Meanwhile, in the DRC, the organisation has identified a 6.8km copper anomaly running through the centre of its 70pc-held Kisinka copper-cobalt licence. Elsewhere, Power Metal remains in discussions with the vendors of the Lizetta II chrome-nickel-cobalt project in the Ivory Coast, where it is assessing development options.
Power Metal also took the opportunity on Tuesday to highlight the new project acquisitions Bell and Johnson have made since their appointments. In Botswana, the company has acquired a stake in a business called Kalahari Key Mineral Exploration, which owns a substantial nickel-copper-platinum group metal project called the Molopo Farms Complex (MFC). Power Metal can acquire a 40pc direct stake in MFC by spending $500,000 on the project by the end of next year. Meanwhile, the firm has also purchased a 25pc holding in a nickel project called Haneti in Tanzania. This is held though a joint venture with Katoro Gold (LSE:KAT) that gives Power Metal the right to increase its project stake to 35pc through a $25,000 payment by May next year.
Beyond its portfolio of interests, Power Metal also highlighted its improved financial position on Tuesday. Following a refinancing in February, the company has settled all historical creditor balances through either a cash or share settlement and now has ‘no material debt and a secure working capital position’.
Finally, Power Metal revealed that Johnson has become its chief executive with immediate effect following a management and technical advisory review. The business also said that it ‘recognises the need to add additional technical capabilities at senion management and consultancy level’.
Discussing his new appointment and the completion of Power Metal’s review, Johnson said the following:
‘I am pleased to be given the opportunity to take the role of Chief Executive Officer and with the support of the team, and shareholders, I intend to make a long-term commitment to building Power Metal Resources into one of the strongest exploration and development companies in London. In line with this objective we have made a great start in recent months with exploration success in Cameroon (cobalt) and the DRC (copper), where both projects have to date exceeded our expectations.
The Company has also added new operational activities in Botswana and Tanzania, predominantly nickel focused, and where all results achieved to date have been highly encouraging.
I would like to thank my fellow directors and our advisory team for their vital help and support so far in 2019 and also our shareholders, including those who have held for a long period and more recent holders. Junior resource exploration is high risk and at times holding shares can be a tortuous process, not least when sector conditions are very challenging.’