PROACTIVE NEWS SUMMARY: Pura Vida, Leni Gas & Oil, Dart Energy, Orogen Gold, Gemfields

Proactive Investors UK

Morocco focused oil explorerPura Vida (ASX:PVD) and sector peer Leni Gas & Oil (LON:LGO) were under the spotlight today after broker N1 Brewin issued a bullish note on Pura Vida, while LGO said it expects to complete a deal to sell its Spanish assets by the end of this month.

According to N1 Brewin, which today repeated a ‘buy’ recomendation and upgraded its price target to A$0.95 from A$0.80, Pura Vida is a stock with the potential for near-term high impact events.

Analyst Tracy Mackenzie says these events will come in the form of farm-out negotiations, acquisitions and additional resources.

A farm-out would be significant and it would open the door to a pivotal drill programme, the analyst says.

The probable plan would be to drill the large Toubkal structure first. This is just one part of the Mazagan offshore liecence block that was the subject of a significant increase in resource potential this week

On Monday it was revealed that a recently completed review had identified an additional 1.6 Billion barrels of resources potential – in new prospects and leads.

It is now estimated that the Mazagan offshore area may contain 3.2 billion barrels of oil, up from the previous estimate of 2.6 billion barrels.

Most of the potential resources reported previously comprised the Miocene prospects whereas many of the company’s peers in the region have focused their efforts on the Lower Cretaceous.

Mackenzie explains that with the review Pura Vida has now included additional estimates for the Lower Cretaceous (LC) age horizons within Mazagan.

“In essence the existing LC prospects have been upgraded and new leads have been identified, with the LC now being acknowledged as a major prospective play fairway in the deep water of Morocco (due to work combining historical well data with recently added deeper water 2D seismic),” Mackenzie said in a note to clients.

Meanwhile, LGO’s statement came as it selected a ‘preferred bidder’ and granted it exclusivity to complete definitive documentation. This exclusivity period runs until May 31.

Leni told investors that due diligence is now well advanced. And it added that preliminary talks have been held about the deal structure.

The company had been seeking a partner for the Spanish assets but as its Trinidad portfolio has become increasingly attractive, and it added new opportunities there, Leni decided that a full divestment would potentially represent the best outcome.

“Following the board’s decision to divest the Spanish assets to the highest bidder we have now reached a point where we are more confident that a sale can be concluded on mutually advantageous terms and have therefore granted the bidder exclusivity in return for a cash deposit,” said chief executive Neil Ritson.

“We are optimistic about the successful conclusion of the divestment process and we look forward to being able to start reinvestment into our various new ventures in Trinidad.”

Proactive Investors also dedicated another main story of the day to Unconventional gas specialist Dart Energy (ASX:DTE), which has taken full control of 14 UK coal bed methane licences as part of a restructuring of its operations in Britain.

Under the licence deal, partner BG (LON:BG) transferred its 50 per cent ownership of the licences in exchange for Dart completing the drilling programme. The transfer boosts Dart’s UK portfolio by 1.2 Tcf of 2c contingent gas.

Talks are still ongoing with BG over a sales agreement that will see gas from the licences sold to the FTSE 100 company.

The ownership of Dart’s PEDL 133 prospect in Scotland remains unchanged. It holds 100 per cent of the coal bed methane (CBM) and shale resource in the Black Metal Shale layer, and 49 per cent of the shale resource in the Lothian (Broxburn) shale layer.

Dart added it has also decided to take up an option over two licences in Germany, Saxon 1 and 2, offered by BG as part of the restructuring.

Both licences are believed to be prospective for both CBM (carboniferous) and shale (lower carboniferous) with a multi-TCF gas in place potential in aggregate. The licences were acquired for no cost.

The Australia-listed firm added today that it has also completed the A$42 million acquisition of Greenpark Energy’s unconventional gas assets and paid the first tranche of US$6 million cash and US$10m worth of shares.

Greenpark has a portfolio of UK licence assets that Dart said complements its existing acreage in the UK with a similar footprint, similar CBM and shale potential, a sizeable certified 2C resource base in excess of 1.7 Tcf, initial 3P reserves, an early stage development option at PEDL 159 (the Canonbie project), and 100 per cent working interest and operatorship of most licences.

As part of the transaction, Dart also secured an exclusive option over Greenpark’s interests in licences prospective for CBM and shale gas in Poland and Spain. This option is exercisable within 3 months of completion.

Elsewhere, Dart said that the its flagship UK project, PEDL 133 at Airth in Scotland, has had a pilot well on stream since January with stable gas production since mid-April.

Away from oil and gas, Proactive covered today’s note on Orogen Gold (LON:ORE) from XCap. According to the broker, investors should see a steady stream of updates this summer from Serbia-focused explorer as it begins drilling the Deli Jovan project.

The drilling is aimed at exploring the historic Gindusa and Rusman gold mines, from where this week the firm received high grade sampling results.

“The coming months are set to provide a steady stream of updates as assay results become available, with this fully funded phase of drilling expected to complete the spending requirements to earn 55 per cent of the project,” said XCAP analyst Sam Brindle in a note to clients.

“Positive results should quickly lead to further resource drilling, completion of the 75 per cent earn-in and the initial target of a 100,000 ounces inferred gold resource over the following 12-months.”

The historic mining camp at Deli Jovan, 150km from Belgrade, was last in production before World War II with the major part of gold production between 1900 and 1912.

It comprises two former gold mines – Gindusa and Rusman – and there has been little exploration of the property since mining stopped in 1938.

On Monday, the company announced the results from an underground channel and grab sample programme at the two former mines.

Assays included very high gold grades of up to 63.4 grammes per tonne (g/t) gold over one metre from underground sampling at the Gindusa mine, where chip samples returned grades of up to 133 g/t gold.

In the meantime, Proactive has talked to chief executive of Gemfields (LON:GEM) Ian Harebottle. He said the company’s revival has been impressive, but the process of restoring emeralds, rubies and sapphires to their former glory has only just begun.

The emerald and coloured gemstone miner has undergone a radical turnaround in the past three years, but with its base stabilised the company is looking hard at the markets traditionally dominated by diamonds.

Harebottle joined in 2009 when the share price was just three pence.

Today it is 41.3 pence, having more than doubled in the last year alone.

Majority-owned by mining-focused private equity group Pallinghurst Resources, which has a 63 per cent stake, to-date Gemfields’ core business has been primarily concentrated on emeralds.

However, it also has amethyst and ruby mines within its portfolio of companies plus some sapphire and other coloured gemstone prospects spread across Zambia, Madagascar and Mozambique.

Harebottle says the methodology that has underpinned the company’s turnaround stems from their belief that, “we are a gemstone mining company that markets and that’s exactly what we do.”

But to knock diamonds off their pedestal, more coloured stones need to be consistently mined, processed, and delivered into the hands of fine jewellers across the world.

“You see people walking past jewellery shops. They stop and take a second look at the windows with colours in them, it is part of our inherent latent-psyche as humans that we are naturally drawn to and enticed by colour,” says Harebottle.

“The short term success of gems with less or little colour is purely as a result of a lack of supply and extensive marketing campaigns which have mislead us into suppressing our natural passion and love for colour.”

That, he says, is largely due to the historic unpredictability of the coloured gemstone market and the lack of supply resulting in pricing volatility and the potential for investment losses.

But under Gemfields’ guidance, market demand and discipline is slowly being re-introduced to the coloured gemstone sector.

This is something which can only be good for the miners, retailers and consumers of these precious gems.