African Battery Metals (LSE:ABM) jumped 11.1pc to 0.5p on Thursday after returning from the first stage of its strategic and operational review with a ‘robust financial position’.
The exploration player was suspended from trading in December as demands from short-term creditors exceeded available working capital. However, it was re-admitted to the market last month days after shareholders voted in favour of a host of proposals aimed and restructuring the business. This included a conditional placing and subscription to raise £1m at 0.5p a share and help pay off creditors.
In Wednesday’s update, African Battery said it has now paid all material creditor balances through either cash or share settlements. It now has no material debt and free working capital of around £860,000. It believes this figure will cover corporate plc costs, anticipated project exploration, and expenditure on existing interests for 12 months.
News of this the financial progress came alongside the initial results of a strategic and operation review under African Battery’s new managers Paul Johnson and Andrew Bell. The pair, both well-known figures in the AIM community after holding numerous senior roles at mining firms, replaced the company’s former management team following last month’s vote.
As well as joining the African Battery’s board, both Bell and Johnson each subscribed to £50,000 worth of shares in its placing. On top of this, Red Rock – where Bell is CEO and chairman, subscribed to an additional £100,000 in shares.
Discussing the firm’s restructured cash position on Wednesday, Johnson said: ‘Since the December 2018 suspension and with the support and assistance of existing shareholders, new investors, Company advisors, Company management and, importantly, the AIM exchange itself, ABM is now in a robust financial position and able to take the steps it needs to drive its business forward and potentially flourish.’
To support this potential, Johnson and Bell have begun to assess African Battery’s business administration and management as part of their review. On Wednesday, the firm said that its priority focus is now on completing its audited financial statements for the year ended 30 September 2018. These are due on 29 March 2019 and will be followed by an AGM to discuss progress with shareholders.
Elsewhere, management has been reviewing African Battery’s existing project interests to identify the most optimal way of progressing exploration and related costs. The work is being led by Bell, who is currently visiting the DRC to review the company’s assets and capabilities in the country as well as exploration options for its Kisinka copper-cobalt project.
Moving forward, African Battery’s executive team intends to review the organisation’s operational interests in Cameroon and the Ivory Coast as well as the DRC over coming weeks. It plans to communicate its findings through individual market updates. It added that the allocation of project management and exploration spend will be focused on projects with the highest potential impact per exploration dollar.
Although the company plans to stay broadly in line with its previous management’s exploration strategy, it said its approach might differ and build on knowledge acquired from previous work.
Elsewhere, Bell and Johnson have been identifying and review appropriate new acquisition opportunities for the outfit. The firm said the funding climate for early-stage resource opportunities is still very poor, meaning vendors are willing to undertake transactions on reasonable.
Through its network, it said it has already received direct approaches from third parties with new opportunities in battery metals, precious metals and other commodity groups. It is now reviewing a range of possible options. However, it will only proceed if a new asset is sufficiently attractive, complements and strengthens existing interests, and does not place undue pressure on cash requirements.
Finally, African Battery said that it intends to remain focused on Africa and battery metals for the ‘foreseeable future’. However, it is also considering investment opportunities that can bolster its financial strength and give it exposure to strategically attractive areas for future business development.
‘Any recovery scenario should look to focus on existing interests first, extracting the best opportunities and building from that core. We are doing just that,’ added Johnson. ‘It is our intention to report our progress regularly to the market, providing individual project updates to enable investors and shareholders to have a clear understanding of each Company project in respect of its current status, our operational plans and our project level objectives.
‘I would like to thank all the parties who have assisted with the initial recovery of the Company. And I assure you the ABM team are working very hard to secure to build a sustainable recovery over the coming weeks and months.’
Author: Daniel Flynn
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